Upon hearing the news that the US House of Representatives had passed HR 6392, Paulina Gonzalez, executive
director of the California Reinvestment Coalition released this statement today:
“The representatives who voted to pass HR 6392 not only committed a disservice to American taxpayers who
bailed out Too big to Fail banks to the tune of trillions of dollars less than 8 years ago, but it is a slap in the face
to the countless victims of foreclosures of the financial crisis. If HR 6392 advances, our next Treasury Secretary
would have the power to relax important rules around risk management for 27 large banks that collectively hold
over $4 trillion in assets.
One of the banks who could benefit from the looser rules under HR 6392 is CIT Group, a bank with a troubled
history when it comes to bank bailouts.
In 2008, CIT Group got a $2.3 billion bailout from taxpayers, with the Federal Reserve suggesting the bailout
would be enough to get CIT Group back on its feet and was necessary so that CIT could help small businesses.
In the year after receiving the bailout, CIT Group actually made 1,024 fewer small business loans and it couldn’t
get back on its feet. CIT Group then pressured bank regulators into giving it a second bailout, which they
refused. CIT Group subsequently filed bankruptcy, magically erasing its $2.3 billion loan from taxpayers.
Ironically, CIT Group couldn’t scrape together enough money to pay back American taxpayers, but it was able
to scrape together enough money to spend over $6,000 a day on lobbying in Washington DC, including against
rules that were put in place to address systemic risk. It seems that lobbying is now paying off.
While Mr. Mnuchin, president elect’s nominee for Treasury Secretary, resigned his position as a CIT board
member this morning, media reports suggest he still has $100 million worth of CIT stock.
Even if he were to sell his stock (something he’d have to do if confirmed for Treasury Secretary), HR 6392
doesn’t pass the conflict of interest smell test.
If HR 6392 moves forward, taxpayers should keep a close eye on their wallets and an even closer eye on
their senators who will also be voting on this bad bill which is nothing more than a gift to the banks.”