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House Financial Services Committee Markup

House Financial Services Committee

Markup

Tuesday, June 11 to Wednesday, June 12, 2019

Bills Considered

Opening Statements

Chairwoman Maxine Waters (D-Calif.)

In her opening statement, Waters said the legislation being considered would make homeownership more affordable and sustainable, as well as crack down on illicit uses of the financial system and other issues. She introduced the bills being marked up, noting that the housing bills would reverse actions taken by the Trump administration, and added that there are also bills to strengthen and authorize the National Flood Insurance Program (NFIP).

Ranking Member Patrick McHenry (R-N.C.)

In his opening statement, McHenry voiced his support for reauthorization of the NFIP and the goals of H.R. 2162. However, he noted his concern about H.R. 2513 as privacy implications are unknown, adding that while “every tool” must be “deploy[ed]” to stop terrorist financing and criminal activity, he is concerned there is not enough data showing the bill’s impact or whether such legislation is even needed. McHenry questioned the housing bills, saying H.R. 3141 is a “solution in search of a problem” and that H.R. 3018 “may be premature.”

H.R. 2162, the Housing Financial Literacy Act of 2019

Rep. Joyce Beatty (D-Ohio) introduced her bill and her Amendment in the Nature of a Substitute, which would provide a 25-point discount on FHA upfront mortgage insurance premiums to first-time home buyers who complete a HUD-approved housing counseling program. Reps. Steve Stivers (R-Ohio), David Scott (D-Ga.), and Waters spoke in support of the bill. Reps. French Hill (R-Ark.), Andy Barr (R-Ky.), Ann Wagner (R-Mo.), Bill Foster (D-Ill.) and McHenry raised concerns about certain provisions, but ultimately voiced support pending a Congressional Budget Office (CBO) score of the bill.

The amended measure was favorably reported to the House by a vote of 53-6.

H.R. 2513, the Corporate Transparency Act of 2019

Rep. Carolyn Maloney (D-N.Y.) introduced her bill, her Amendment in the Nature of a Substitute, and her Manager’s Amendment which included “robust” privacy safeguards for the Financial Crimes Enforcement Network’s (FinCEN’s) beneficial ownership information database. She explained that in the previous markup, she heard concerns from colleagues regarding the privacy of beneficial ownership information, so she worked with Rep. Blaine Luetkemeyer (R-Mo.) to make several changes. Maloney noted that some of the changes include language to have an existing investigatory basis for any beneficial ownership information requirement, only allowing authorized users and law enforcement agencies who have completed special training to use the database, an audit log requirement for all requests for beneficial ownership information with annual audits to ensure the database is being used appropriately, and additional privacy safeguards similar to those FinCEN uses for the suspicious activity report (SAR) database. She continued that the Manager’s amendment also includes categories of business exemptions for those who disclose beneficial ownership information publicly or to regulators. Waters voiced her support for the bill, noting that without it, the U.S. will “attract more illicit activity,” as Europe and the UK have “closed the door” to shell companies. Reps. Luetkemeyer, Peter King (R-N.Y.), Emanuel Cleaver (D-Mo.), Stephen Lynch (D-Mass.), Alma Adams (D-N.C.), and Juan Vargas (D-Calif.) also voiced their support for the bill.

McHenry noted that while the amended measure is a “better bill than the last markup,” he noted that there are still “legit” concerns when it comes to small businesses and privacy. He continued that he still has not received the specific data he asked FinCEN for that would “justify” the burden placed on small businesses. McHenry voiced his concern regarding data breaches and how steps must be taken to ensure the information FinCEN is collecting and maintaining is protected. McHenry maintained his opposition to the bill in its current form without additional data from Treasury, FinCEN, the Justice Department and the Government Accountability Office (GAO). Reps. French Hill (R-Ark.) and Warren Davidson (R-Ohio) also voiced their concern for the bill.

The Manager’s amendment was agreed to by vote of 43-16.

Amendment Offered by Rep. Ann Wagner (R-Mo.)

Wagner introduced her amendment, which would create a fast-track process for beneficial ownership, as any citizen who is a frequent investor can be pre-verified. She explained that her amendment will allow someone to proactively give information to FinCEN and receive an identifying number that can be used in place of their personal information on the beneficial ownership form submitted to FinCEN. Reps. Maloney and Luetkemeyer voiced their support for the amendment, and it was agreed to by a voice vote.

Amendment Offered by Rep. Blaine Luetkemeyer (R-Mo.)

Luetkemeyer introduced his amendment, which would eliminate the “substantial economic benefit” portion of the definition of beneficial owner and alter the small business exemption language to only require businesses with over $1 million in revenue or assets to file beneficial ownership information with FinCEN. Maloney said she is fully committed to working on the issues raised concerning small businesses as the bill moves to the floor, and Luetkemeyer withdrew his amendment.

Amendment Offered by Rep. Warren Davidson (R-Ohio)

Davidson introduced his amendment, which would require law enforcement to obtain a subpoena or warrant before accessing the beneficial ownership information collected by FinCEN. Maloney spoke against the amendment, saying it would “undermine” the bill. Rep. Greg Meeks (D-N.Y.) also spoke in opposition to the amendment. Rep. Alexander Mooney (R-W.V.) spoke in favor of the amendment. The amendment was not agreed to by a vote of 25-29.

Amendment Offered by Rep. French Hill (R-Ark.)

Hill introduced his amendment, which would require companies to disclose their beneficial owners annually to the IRS as part of their tax returns. Maloney spoke against the amendment, saying that because tax return information is protected, reporting beneficial ownership information in this way would prevent law enforcement from ever accessing it. Rep. Scott Tipton (R-Colo.) spoke in favor of the amendment. The amendment was ruled not germane such that it did not fully fall within the jurisdiction of the committee.

Amendment Offered by Rep. Warren Davidson (R-Ohio)

Davidson introduced his amendment, which would repeal the Customer Due Diligence (CDD) rule, require FinCEN to carry out a study reviewing all existing data collected by the Department of Treasury, IRS, Secretaries of State, financial institutions, and other federal agencies that in whole or in part would allow FinCEN to discern the beneficial owners of companies operating within the U.S. financial system,  as well as provide a way to assess the cost of compliance. Maloney spoke against the amendment, saying it would “gut” the bill. The amendment was not agreed to by a vote of 8-50.

The amended measure was favorably reported to the House by a vote of 43-17.

H.R. 2763, the Keeping Families Together Act of 2019

Rep. Sylvia Garcia (D-Texas) introduced her bill and her Amendment in the Nature of a Substitute, which would prevent the Department of Housing and Urban Development (HUD) from finalizing proposed rules that would force families of mixed immigration status to separate in order to receive housing assistance, to forego the assistance altogether, or force termination from public housing, Section 8 vouchers, Section 8 project-based housing, rental assistance, the rental supplemental program, and the housing development grant program. Barr spoke in opposition to the bill, saying the proposed rule is already in accordance with existing law and would not deny any resources to which a person is legally entitled.

The amended measure was favorably reported to the House by a vote of 32-26.

H.R. 3018, the Ensuring Equal Access to Shelter Act of 2019

Rep. Jennifer Wexton (D-Va.) introduced her bill and her Amendment in the Nature of a Substitute, which would prohibit HUD from implementing a proposed rule to limit access for transgender individuals to HUD-funded shelters consistent with their gender identity. Reps. Vargas and Waters spoke in support of the bill. Reps. Barry Loudermilk (R-Ga.), Stivers, and McHenry spoke against the bill, calling it “premature.”

The amended measure was favorably reported to the House by a vote of 33-26.

H.R. 3111, the National Flood Insurance Program Administration Reform Act of 2019

Rep. Nydia Velazquez (D-N.Y.) introduced her bill and her Amendment in the Nature of a Substitute, which would make administrative reforms to the National Flood Insurance Program to improve the language and disclosures in the standard flood insurance policy, enhances the administration of claims, and establishes penalties for fraud and false claimants.

The amended measure was favorably reported to the House by a vote of 58-0.

H.R. 3141, the FHA Loan Affordability Act of 2019

Rep. Dean Phillips (D-Minn.) introduced his bill and his Amendment in the Nature of a Substitute, which would reverse the policy that requires mortgage insurance premiums be paid over the life of the loan, saying it disproportionately impacts first-time homebuyers, minorities, lower-income families and residents of underserved areas, and reinstate the FHA’s previous policy of only requiring borrowers to pay premiums until the loan-to-value ratio reaches 78 percent. Reps. Maloney and Sylvia Garcia (D-Texas) spoke in support of the bill. McHenry and Hill spoke in opposition to the bill.

The amended measure was favorably reported to the House by a vote of 53-6.

H.R. 3154, the Homeownership for Dreamers Act

Rep. Juan Vargas (D-Calif.) introduced his bill and his Amendment in the Nature of a Substitute, which would clarify that DACA recipients cannot be deemed ineligible for mortgage loans backed by FHA, Freddie Mac, Fannie Mae, or USDA solely based on their status as DACA recipients. Reps. Al Green (D-Texas) and Velasquez spoke in support of the bill. McHenry spoke in opposition to the bill.

The amended measure was favorably reported to the House by a vote of 33-25.

H.R. 3167, the National Flood Insurance Program Reauthorization Act of 2019
Rep. Maxine Waters (D-Calif.) introduced her bill and her Amendment in the Nature of a Substitute, which would reauthorize the National Flood Insurance Program (NFIP) for five years, as it is currently set to expire on September 30th, 2019. The bill additionally addresses unaffordable premium costs for low-income households by creating a five-year demonstration program that will provide means-tested assistance to low-income policy holders. It also maintains premium caps and repeals surcharges. Reps. Roger Williams (R-Texas), Sean Duffy (R-Wis.), Al Lawson (D-Fla.), Wm. Lacy Clay (D-Mo.), Brad Sherman (D-Calif.), Lee Zeldin (R-N.Y.), Lynch, Velazquez, Luetkemeyer, Scott, Garcia, Wagner, and McHenry spoke in support of the bill.

Waters offered a Manager’s Amendment that included language to ensure disclosure of information for homeowners and homebuyers on property-specific flood risk, as well as language to ensure that homeowners can switch from an NFIP policy to a private policy and receive a prorated refund of their annual premium. McHenry spoke in favor of the amendment.

Amendment Offered by Rep. Blaine Luetkemeyer (R-Mo.)

Luetkemeyer introduced his amendment, which would make technical changes to the National Flood Insurance Act of 1968 to modernize Part A of the act and grant the Federal Emergency Management Agency (FEMA) the authority to conduct risk-sharing demonstration programs. Luetkemeyer withdrew his amendment.

The amended measure was favorably reported to the House by a vote of 59-0.

For more information on this markup, please click here.