Goodlatte Statement at Regulatory Reform Subcommittee Hearing on the Financial Institution Bankruptcy Act

Washington, D.C. - House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks at the Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing on the Financial Institution Bankruptcy Act of 2017.Chairman Goodlatte: Our Nation’s financial system provides the life blood for industry, small businesses, and our communities to develop, grow and prosper. Ensuring that this system functions efficiently in both good times and bad is critical to the ongoing vitality of our economy. The 2008 financial crisis illustrated that the financial system and existing laws were not adequately prepared for the insolvency of certain institutions, which threatened the very stability of the global economy and our financial industry. There has been considerable debate over whether Congress’ main response to the financial crisis—the Dodd-Frank Wall Street Reform and Consumer Protection Act—is adequate to respond to a future crisis. Today’s hearing, however, is not focused on that debate. Instead, we turn our attention to the private and public efforts to strengthen the Bankruptcy Code so that it may better facilitate the resolution of an insolvent financial firm while preserving the stability of the financial markets. The subject of today’s hearing, the Financial Institution Bankruptcy Act of 2017, is a reflection of these efforts. The bill is calibrated carefully to provide transparency, predictability and judicial oversight in a process that must be executed quickly and in a manner that is responsive to potential systemic risk. Additionally, the bill incorporates the ‘‘single point of entry’’ approach, which facilitates a quick transfer of the assets and some of the liabilities of the financial institution’s holding company to a newly formed bridge company. The consensus of experts in public and private industry believes this is the most effective and feasible method to resolve a financial institution that has a bank holding company. The Judiciary Committee has a long history of improving the Bankruptcy Code to ensure that it is properly equipped to handle all failing companies. The Financial Institution Bankruptcy Act adds to this history by enhancing the ability of financial firms to be resolved through the bankruptcy process. The development of the legislation before us today has been a collaborative effort that included the financial and legal communities, Members of Congress on both sides of the aisle, the Federal Reserve, the FDIC, the courts, and the Department of the Treasury. I applaud Chairman Marino for continuing this important effort to strengthen the Bankruptcy Code and for holding today’s hearing. I look forward to hearing from today’s witnesses on the Financial Institution Bankruptcy Act and whether there is a need for any further revisions to the bill.