Tammy Baldwin Slams GOP: Your Candidate For President ‘Is Facing Multiply Indictments’

7 months ago

On Thursday, Sen. Tammy Baldwin (D-WI) questioned witnesses on financial regulator oversight during a Senate Banking Committee hearing.

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00:00 It's ironic to me that my Republican colleague thinks that Chair Grunberg can't do his job

00:06 because he will be in court when his candidate for president is currently facing multiple

00:13 indictments and is actually in court.

00:17 Chair Grunberg, you and I have had a conversation about the FDIC, and as I said to you when

00:21 we last spoke, I believe that it can be your legacy to repair the damage that has been

00:28 done to employees at the FDIC, and knowing the agency as you do, you have the potential

00:34 to make the changes that need to be made in this agency for the good of everybody there

00:39 and for this agency that I do believe that you care deeply about, and as you have heard,

00:42 we will all hold you accountable to that.

00:49 Mr. Barr, I wanted to direct a question to you and really to everybody on the panel,

00:53 and this is to do with what is happening with home insurance rate surges around the country.

01:00 So homeowners have seen their insurance rates surge in recent years, and why is this happening?

01:05 It's happening because of bigger, more destructive, and more frequent severe weather events, and

01:10 this of course is the cost of climate change, and it's hitting homeowners hard.

01:14 A recent study by LexisNexis found that 97% of catastrophic losses to homeowners in 2022

01:22 were caused by hail and wind and weather-related events.

01:26 Now so you're probably thinking this is a big problem for states like Florida or Louisiana

01:31 or South Carolina, and of course it is.

01:34 It is a huge economic problem, but it is, you may not know that it is a huge issue in

01:38 the Midwest.

01:39 From 2016 to 2022, my home state of Minnesota incurred the highest loss cost of any state

01:48 for severe weather events, and so what does this mean?

01:50 It means that insurance companies are not keeping up, and the cost of this rolls down

01:55 to homeowners in the form of massive rate hikes, high costs to pay for improvements

02:00 on their properties, or worst case, they just lose their property insurance.

02:05 So my question is, obviously these spiking costs for property and casualty insurance

02:10 are an issue for homeowners, but it also seems like it could be a big issue for financial

02:15 institutions who need to manage this risk.

02:18 Would you agree with that, and just tell me how you see this issue panning out as a systemic

02:21 risk?

02:22 Thank you, Senator.

02:23 It's an excellent question.

02:25 We do look carefully at the way in which the largest banks are managing these kinds of

02:31 risks.

02:32 We recently went through an exercise with six of the largest banks to understand their

02:36 risk measurement and risk management practices, and one of the things that the banks learned

02:41 through that process, many of them, is that they did not have complete information about

02:47 how their properties were covered or were not covered by property and casualty insurance,

02:53 and that, of course, affects losses to the banking sector.

02:58 So it is a really, I think, quite critical issue.

03:00 The prospect of trillions of dollars of properties becoming uninsurable because of this risk

03:09 seems to me to be something of significant concern, and I think it's very important that

03:16 as regulators you look at this issue and you think clearly about what that might mean in

03:22 terms of a systemic risk.

03:24 I also want to ask you about the Community Reinvestment Act.

03:29 You know that this is something that I've been paying a lot of attention to.

03:32 I care a lot about this.

03:33 I think that the recently finalized updates to the CRA were important and long overdue,

03:39 and so I'm dismayed, of course, that the rulemaking has been struck down by this activist judge

03:46 in a case where I think plaintiffs were clearly shopping for a friendly judge.

03:50 I'm not asking you to comment on that, and I understand with pending litigation you can't

03:55 comment on that, but I wonder if you could maybe clarify a few things about the rulemaking

04:00 itself.

04:01 First, it is true that this was the first update to CRA regulations in about 29 years.

04:06 Is that right?

04:07 That's correct.

04:08 And since those old rules, there's been many significant changes in banking, correct?

04:13 I mean, a big shift to mobile and online banking is just one example.

04:16 Yes, Senator.

04:18 And these new rules take into account how remote lending works.

04:22 Is that correct?

04:23 Yes, the rule does do that.

04:24 And is it also true that these new rules are not overly inclusive?

04:29 So for example, they don't pull in community banks that still largely operate locally.

04:35 Well, the particular provision with respect to outside lending areas applies to large

04:40 banks that don't have large branch bases, so they're doing a lot of remote lending.

04:46 Right.

04:47 Thank you.

04:48 I think that it is just important that we understand that a very thoughtful, in my view,

04:51 and tailored approach has been taken with these CRA rules that reflects the realities

04:56 of banking today, and I hope that they will be allowed to go into effect.

05:00 Thank you, Mr. Chair.

05:02 Thank you, Senator Smith.

05:03 Senator Hagerty of Tennessee is recognized.

Tammy Baldwin Slams GOP: Your Candidate For President ‘Is Facing Multiply Indictments’

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