Washington, D.C. – House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks today on the Financial Institution Bankruptcy Act of 2017 (H.R. 1667).
Chairman Goodlatte: In 2008, our economy suffered one of the most significant financial crises in history. In the midst of the crisis and in response to a fear that some financial firms’ failures could cause severe harm to the overall economy, the federal government provided extraordinary taxpayer-funded assistance in order to prevent certain financial firms’ failures.
In the ensuing years, experts from the financial, regulatory, legal and academic communities have examined how best to prevent another similar crisis from occurring and to eliminate the possibility of using taxpayer monies to bail out failing firms.
The Judiciary Committee has advanced the review of this issue with the aim of crafting a solution that will better equip our bankruptcy laws to resolve failing firms, while also encouraging greater private counter-party diligence in order to reduce the likelihood of another financial crisis. Among other things, this effort responded to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that called for an examination of how to improve the Bankruptcy Code in this area.
During the past two Congresses, the Judiciary Committee favorably reported the Financial Institution Bankruptcy Act, legislation that improved the Bankruptcy Code to better facilitate the resolution of financial firms. That legislation was the culmination of a bi-partisan process that solicited and incorporated the views of a wide range of leading experts and relevant regulators. In both instances, the bill passed the House by a voice vote under suspension of the rules.
This Congress, Regulatory Reform, Commercial and Antitrust Law Subcommittee Chairman Marino re-introduced the Financial Institution Bankruptcy Act as H.R. 1667. Following its introduction, the Subcommittee on Regulatory Reform, Commercial and Antitrust Law conducted a hearing on the bill. H.R. 1667 is identical to previous legislation, with one minor change to refine the director liability protection provision. Last week, the Judiciary Committee approved the legislation by a unanimous voice vote.
The bill before us today is the product of a careful, deliberate and thorough process and reflects a diverse range of views from a variety of interested parties.
The Financial Institution Bankruptcy Act makes several improvements to the Bankruptcy Code in order to enhance the prospect of an efficient resolution of a financial firm through the bankruptcy process. The bill allows for a speedy transfer of the operating assets of a financial firm over the course of a weekend. This quick transfer allows the financial firm to continue to operate in the normal course, which preserves the value of the enterprise for the creditors of the bankruptcy without a significant impact on the firm’s employees, suppliers and customers.
The bill also requires expedited judicial review by a bankruptcy judge randomly chosen from a pool of judges designated in advance and selected by the Chief Justice for their experience, expertise and willingness to preside over these complex cases. Furthermore, the legislation provides for key regulatory input throughout the process.
The Financial Institution Bankruptcy Act is a bi-partisan, balanced approach that increases transparency and predictability in the resolution of a financial firm. Furthermore, it ensures that shareholders and creditors, not taxpayers, bear the losses related to the failure of a financial company.
I would like to thank Chairman Marino (R-Pa.), who chaired the hearing on this legislation and is the lead sponsor of the bill. I am also pleased that Ranking Member Conyers D-Mich.) and Subcommittee Ranking Member Cicilline (D-R.I.) joined in introducing this important legislation and want to thank them and their staff for their efforts in developing this bill.
I urge my colleagues to vote in favor of this important legislation and reserve the balance of my time.