WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following opening statement at today’s hearing to consider the nominations of Randal Quarles to be a Member of the Board of Governors of the Federal Reserve System and Joseph Otting to be Comptroller, Office of the Comptroller of the Currency.
Brown’s remarks, as prepared for delivery, follow.
Hearing on the Nominations of Randal Quarles and Joseph Otting
Thank you, Chairman Crapo, for holding today’s hearing, and I thank the witnesses for their willingness to enter public service.
You are seeking to follow in the footsteps of two people who were dedicated public servants and did a great deal to make our financial system safer.
Mr. Quarles served as Treasury’s Undersecretary for Domestic Finance in the years leading up to the 2008 financial crisis. It was his job to coordinate oversight of the financial industry and ensure government watchdogs were looking out for the best interest of American taxpayers.
However many of his statements leading up to the crisis lead me to wonder whether he was asleep at the switch or willfully turning a blind eye to Wall Street abuses.
Contrary to Mr. Quarles’s predictions in 2006, the economy was not “strong,” the financial sector was not “healthy,” and our future was not “bright.”
The banks were not, in fact, as he said at the time, “well capitalized.” And as a result, taxpayers paid billions to bail those banks out, while Mr. Quarles and his company turned a profit off of the crisis.
Exotic mortgage products were not confined to, as he said, “upper income individuals that can manage a sizable increase in their monthly mortgage payment.” Shady loans were pitched to sheet metal workers in Parma, school teachers in Cleveland, and servicemembers in Dayton.
The financial crisis devastated the Ohio families that lost their jobs, their homes, and their savings.
But for wealthy bank executives and private equity investors, the crisis wasn’t a life-changing event. It was an opportunity to profit by flipping failing banks bought at rock-bottom prices and foreclosing on working families – all while raking in taxpayer dollars.
Mr. Otting’s bank made money by kicking seniors out of their homes, and then turned around and said the government made them do it.
Mr. Quarles bemoaned the role of “the government” as a “player in the financial sector” rather than a “referee.”
These sentiments would ring a little less hollow had their banks not accepted $2.5 billion from the FDIC to protect them from losses.
Apparently they believe in government help for Wall Street, just not working families.
In the wake of the crisis, the FDIC was forced to step in to share losses at failed banks – banks like IndyMac and BankUnited – to prevent a bigger hit on the insurance fund.
And Mr. Quarles and Mr. Otting then stepped in and made good money after those banks had been propped up by taxpayers.
According to the Columbus Dispatch, nearly 2,000 Ohioans were foreclosed on by OneWest, in our six largest counties alone, from 2009 to 2015, while Mr. Otting served as its CEO.
In fact, he was held accountable for robosigning by the Office of Thrift Supervision – the predecessor to the agency he now hopes to run.
My concern isn’t whether today’s nominees have a great deal of experience working for banks. They do.
My concern is whether they will work for American taxpayers and working families.
We’ve made a lot of progress in the seven years since we passed Wall Street reform, but one-fifth of the rules remain unfinished.
Instead of finishing the job, Wall Street’s allies in Washington are trying to take us backward, weakening or eliminating important safeguards.
We are already seeing this at some of the agencies that have removed Wall Street Reforms from their agendas, and attacked other agencies for doing their jobs.
This collective amnesia reminds me all too well of 2006: the big banks are making record profits, yet they claim they’re besieged by their watchdogs.
The banks’ refrain is to be expected. What is not acceptable is for the referees to join the chorus.
I look forward to hearing from our witnesses.
Thank you, Mr. Chairman.