WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking and Foreign Relations Committees and former U.S. Ambassador to Japan, yesterday joined Balance of Power on BloombergTV to discuss yesterday’s Banking committee hearing with Bank CEOs, the necessary reforms that must be made to section 702 of the Foreign Intelligence Surveillance Act (FISA), and Senate Republicans demanding that policy changes are implemented to fix the southern border crisis before more money is sent to Ukraine.
Hagerty on the harmful impacts of Basel III Endgame Proposal highlighted by top Bank CEOs in yesterday’s Banking Hearing: “It’s a matter of what’s practical. For years, we’ve heard [Federal Reserve] officials say that the banking system here in America is adequately capitalized. Suddenly, we need to raise capital requirements by 20 percent? Think about it: None of these banks have failed their stress test. The [Capital Analysis and Review] test is very, very stringent. It presumes a 10 percent unemployment rate, a 40 percent drop in housing, and the complete collapse of the equity markets. None of these banks have failed that test. So why now? Why now? I think the reason is pretty simple: you’ve got Vice Chair Barr—a Biden appointee that’s come in with a different ideology—this is philosophical. This is not practical; there’s no practical need for it. But the practical consequence, I think, was very well articulated today. [JP Morgan CEO] Jamie Dimon mentioned the impact on the mortgage markets. You heard other bankers mention the impact on agriculture, on farmers not being able to hedge their crops, on airlines not being able to hedge their fuel. All of that means higher cost for the consumer, fewer consumers able to access banking products they need, less home ownership. It’s going to be hard on the economy if this were to pass as it’s been proposed […] The failure of these banks would not be addressed by the proposals whatsoever. You had a mismatch of maturities in these banks; you had basically a targeting of any bank that had crypto in its model; I think Signature Bank is exhibit A in that. What happened to Silicon Valley Bank is just bad banking. That’s bad management; it doesn’t have anything to do with these [regulations]. These [regulations] would not address it […] If you take into account what David Solomon of Goldman Sachs just said, he got at the root of this. If this is implemented as it’s planned, it’s going to diminish the competitiveness of the United States financial system. This is one of our greatest sources of competitive advantage. I hope that Michael Barr and the other members of the Fed were listening today. I think that they probably were. Because what you saw was a uniform concern about the impact of these proposed regulations on our competitiveness as a nation. We have the strongest, deepest capital markets in the world—that’s a true source of competitive advantage—we need to preserve it, not attack it.”
Hagerty on Banks’ desire to eliminate cryptocurrency: “I can understand why anybody at a large bank would say that their business model is quite different. Cryptocurrency could be a threat to a number of things that the traditional banking community is working on [and] it puts forward. But I’m not concerned about that; we need to come back and look at this industry and maintain the innovative aspects of the cryptocurrency industry rather than push it offshore. And we’ve seen the problems that are created like that. We need to figure out a good way, a proper way, an appropriate way to regulate cryptocurrency here with a light enough touch that will allow us to continue to lead the way with innovation.”
Hagerty on the FISA 702 extension: “The extension is going to be a short-term extension, but I’m not going to vote for any sort of long-term extension of 702 until we have some serious reforms. Look, there are very serious concerns here in terms of civil liberties of American citizens. Look, I’ve been a big user of intelligence when I was U.S. Ambassador to Japan, and certainly, I’m a big consumer of it today as United States Senator. But despite the value of that information, in terms of preventing bad things from happening, we need to be very, very careful about American civil liberties and not violate their constitutional liberty. So, the reforms that are underway, that are being discussed, I think are very healthy. We need to get down to a package that will work. But we’ve seen too many errors take place, and frankly, the American public has lost confidence in our intelligence agencies, precisely because of the misuse of the [Foreign Intelligence Surveillance Act] process.”
Hagerty on the need to secure the southern border and implement real policy changes before considering sending any more money to Ukraine: “It’s going to be challenging, but the challenges have never been as great as they are right now. Again, the magnitude of this problem is being felt in every major city in the United States. The cities [and] their resources are being overrun. If you think about the people that have come into this country, particularly after the attack that took place [on] October 7th from Hamas and Israel, we’ve seen national security alerts go up around the globe […] We have a large number of changes that are going to have to be addressed in terms of how asylum works, how parole works. The fact that the Biden Administration at this point has actually asked for the ability to reprogram the entirety of [Immigration and Customs Enforcement’s] budget to turn it into a resettlement agency. ICE is the only law enforcement agency we have that can actually deport dangerous people who’ve come to this country illegally, who are criminals, who have violated other laws. They’re the only agency that has the authority to do it, and the Biden Administration, as of its last request, is asking for the ability to completely reprogram their budget, to resettle more people more rapidly here in America. That’s just a non-starter.”