mr. royce for five minutes. >> thank you, madame chairwoman. i would like to ask a question of mr. auer, just to get his feedback on a problem i see here, that i don't think is going to go away. and that is that the market is going to make a determination once that these firms are deemed significant by you. and it's reflected in the credit rating agencies, deciding already that the cost of borrowing, based upon their decision, they shared with us that they believe that implicitly there is a likelihood of government support. so the cost of borrowing is lower for these firms than their competitors. and the consequences of that are that when you're in a situation like that, you often can gobble up your competitors, your smaller competitors especially. you can outperform them. frankly, you can overleverage. but you require your competition and the competition shrinks in the market as a result. liquidity was supposed to imply, i think at some point, liquidation. but these firms will never fail. i want to quote back to you the new head of the fdic and mr. gruenberg's recent comments and

mr. royce for five minutes. >> thank you. madam chair, i would like to ask a question of mr. auer to get his feedback on a problem that i see here that i don't think it going to go away, and that is that the market is going to make a determination once that these firms are deemed systemically significant by you and it is reflected in the credit rating agencies deciding already that the cost of borrowing based upon their decision, they have shared with us, that they believe that implicitly there is a likelihood of government support, so the cost of borrowing is lower for these firms than their competitors, and the consequences of that are that when you're in a situation like that you often can gobble up your competitors, your smaller competitors especially. you can out perform them, frankly you can over leverage, but you acquire your competition and the competition shrinks in the market as a as a consequenc this reality. orderly liquidation authority was supposed to imply, i think at some point, lick with which dags. but these firms will never fail. i want to quote back to you

mr. royce for one minute? >> more than any other, section 165 of dodd-frank is emblematic of washington taking its eye off the ball. instead of focusing on their institutions are too big to fail, instead of getting back to less leverage and higher capital requirements for those few fints, the company instead will publicly stamp institutions, potentially dozens of institutions as systemic. the explicit statement to the market is that washington believes these states are special. and washington will never allow these firms to fail. given the propensity of government to heir on the side of intervention, heir on the side of bailouts, to save systemically important firms, it's my hope that we can cast the smallest possible net and designate only the firms that everyone agrees are too big to fail. but frankly, the approach was the wrong approach. >> mr. green for two minutes? >> thank you, madam chair, i thank the ranking member as well. of run thing i am totally absolutely and completely convinced, it is this -- re

mr. royce, one minimum zit thank you, madam chairman. more than any other section 165 of dodd-frank is emblematic of washington taking its eye off of the ball because instead of focusing on those institutions everyone knows are too big to fail, instead of getting back to less leverage and higher capital requirements for those few firms, the government instead will publicly stamp institutions, potentially dozens of institutions as systemic, and the explicit statement to the market is washington believes these firms are special and the implicit statement to the market is also going to be that washington will never allow these firms to fail. given the precedent that has been set, given the propensity of government to err on the side of intervention, err on the side of bailouts to save systemically important firms, it is my hope we can cast the smallest possible net in this and designate only the firms that everyone agrees are too big to fail and frankly the approach was the wrong approach. i yield back. >> gentlemen fields back. mr. green,