HFSC Markup of Legislation
House Financial Services Committee
Markup of Legislation
Thursday, September 13, 2018
- All the bills considered were favorably reported out of Committee.
- H.R. 2128, the “Due Process Restoration Act of 2017”
- H.R. 4753, the “Federal Reserve Supervision Testimony Clarification Act”
- H.R. 4758, the “FOMC Policy Responsibility Act”
- H.R. 5534, the “Give Useful Information to Define Effective Compliance Act”
- H.R. 6021, the “Small Business Audit Correction Act of 2018”
- H.R. 6158, the “Brokered Deposit Affiliate-Subsidiary Moderation Act of 2018”
- H.R. 6729, the “Empowering Financial Institutions to Fight Human Trafficking Act of 2018”
- H.R. 6737, the “Protect Affordable Mortgages for Veterans Act of 2018”
- H.R. 6741, the “Federal reserve Reform Act of 2018”
- H.R. 6743, the “Consumer Information Notification Requirement Act”
- H.R. 6745, the “Access to Capital Creates Economic Strength and Supports Rural America Act”
- H.R. 6751, the “Banking Transparency for Sanctioned Persons Act of 2018”
H.R. 6751, the “Banking Transparency for Sanctioned Persons Act of 2018”
Rep. Mia Love (R-Utah) introduced an Amendment in the Nature of a Substitute, explaining that the legislation will allow the Committee to better oversee financial sanctions in place against state-sponsored terrorism by requiring Treasury to send Congress a report every 180-days. She continued that the report will contain information with copies of any licenses issued by Treasury authorizing financial services that will benefit state-sponsored terrorism and will also include a list of those foreign financial institutions conducting significant transactions for people facing sanctions for “serious human rights abuse and corruption.” Ranking Member Maxine Waters (D-Calif.)
Amendment Offered by Rep. Perlmutter
Waters introduced an amendment offered by Rep. Earl Perlmutter (D-Colo.) that would allow information from mandatory submissions to be classified if necessary. The amendment was agreed to by a voice vote.
The measure was favorably reported by a vote of 48-0.
H.R. 6737, the “Affordable Mortgages for Veterans Act”
Rep. Lee Zeldin (D-N.Y.) introduced his legislation that would correct issues from S. 2155 implementation that currently make certain loans financed by the Department of Veterans Affairs ineligible for the secondary market, preventing a liquidity crisis for these loans. Reps. Waters, Claudia Tenney (R-N.Y.) and David Scott (D-Ga.) voiced their support for the bill, stating that while S. 2155 attempted to protect veteran borrowers from predatory practices, such as rapid refinancing, through Section 309, it inadvertently shut them out of Ginnie Mae securitization.
The measure was favorably reported by a vote of 49-0.
H.R. 4753, the “Federal Reserve Supervision Testimony Clarification Act”
Rep. Frank Lucas (R-Okla.) introduced an Amendment in the Nature of a Substitute that would require the Vice Chair of the Board of Governors to appear before Congress to discuss the Fed’s supervision of financial institutions in the event that the Vice Chair for Supervision position is vacant. He continued that the bill would also require testimony to be written, as it currently is not required by statute. Chairman Jeb Hensarling (R-Texas) voiced his support for the bill, noting that for several years the Vice Chair for Supervision position was vacant, and this bill would fill any gap in appearing before Congress.
Amendment Offered by Rep. Heck
Rep. Denny Heck (D-Wash.) introduced his amendment that would require the Chair or their designee to testify before Congress, rather than the Vice Chair as the original bill requires. Reps. Lucas, Waters and Hensarling voiced their support for the amendment. The amendment was agreed to by voice vote.
The measure was favorably reported by a vote of 49-0.
H.R. 6729, the “Empowering Financial Institutions to Fight Human Trafficking Act
Rep. Ann Wagner (R-Mo.) introduced her legislation that would allow for the financial industry to better analyze data and recognize patterns in human trafficking by creating a “pathway” for non-profits to submit information on human trafficking to financial institutions and regulators. She continued that it will instruct the Secretary of Treasury to create a process that makes civil society experts more available to financial institutions, promoting information sharing. Reps. Hensarling, Love, Carolyn Maloney (D-N.Y.), Kirsten Sinema (D-Ariz.), Perlmutter, voiced their support for the bill.
Waters voiced her opposition to the bill, stating that the bill would enable law enforcement and financial institutions to share the personally identifiable information (PII) of U.S. citizens even if the citizen has not been convicted of a crime, it would be based on the accusation of a non-profit.
Amendment Offered by Rep. Waters
Waters explained that her amendment would require a study of the issue to be conducted before sharing any PII of U.S. citizen and would evaluate the procedures and criteria to be required to ensure there are no unintended consequences of sharing such information. Wagner argued that “countless studies” have been conducted already and voiced her opposition to the amendment. The amendment was not adopted by voice vote.
The measure was favorably reported by a vote of 44-5.
H.R. 6745, the “Access to Capital Creates Economic Strength and Supports Rural America Act”
Rep. Sean Duffy (R-Wis.) introduced his bill and his Amendment in the Nature of a Substitute, that would revise the nonaccredited investor shareholder registration threshold for issuers that receive support for providing broadband through the Universal Service Fund. Waters opposed the bill for “reducing investor protection” and criticized the low amount of information in the new disclosures that these issuers would file with the SEC.
The measure was favorably reported by a vote of 37-15.
H.R. 5534, the “Give Useful Information to Define Effective Compliance Act”
Duffy introduced his bill and Amendment in the Nature of a Substitute that would provide procedures for the Bureau of Consumer Financial Protection (BCFP) when issuing guidance. The bill defines guidance and directs the BCFP to conduct a rulemaking to create procedures for issuing, amending, and revoking guidance. The bill also directs the BCFP to develop a “penalty matrix” to be used for determining the size of any civil monetary penalties levied by the Bureau.
The measure was favorably reported by a vote of 38-14.
H.R. 6743, the “Consumer Information Notification Requirement Act”
Rep. Blaine Luetkemeyer (R-Mo.) introduced his bill and Amendment in the Nature of a Substitute that would amend the Gramm-Leach-Bliley Act (GLBA) to create a national standard for financial institution data security and breach notification, preempting state laws on the matter. Proponents of the bill argued it is necessary to rationalize the data breach notification regime in the United States and ultimately protect consumers. Waters opposed the bill for several reasons, calling it a “giveaway” for financial institutions. Waters praised state-level laws that created rapid notification regimes for data breaches affecting their residents and said that those laws are necessary to ensure that consumers are informed about breaches and their data.
Amendment Offered by Rep. Waters
Waters introduced an amendment that would repeal the bill’s federal preemption language. Luetkemeyer pushed back on the amendment and said that the federal standard is necessary to make compliance easier for regulated firms who have to notify consumers about breaches in different states. Luetkemeyer said that state Attorney Generals would still be responsible for enforcing breach laws. The amendment was voted down by a vote of 20-32.
The measure was favorably reported by a vote of 32-20.
H.R. 2128, the “Due Process Restoration Act of 2017”
Rep. Warren Davidson (R-Ohio) introduced this bill that would allow defendants in administrative proceedings to move their proceeding to federal courts. Davidson said that the bill makes sense due to the recent Lucia v. SEC decision and allows defendants to have comparable due process rights to defendants in traditional courts. Waters opposed the bill and described it as a “gift to securities fraudsters.”
The measure was favorably reported by a vote of 31-20.
H.R. 6158, the “Brokered Deposit Affiliate-Subsidiary Modernization Act of 2018”
Rep. Scott Tipton (R-Colo.) introduced this bill that would exempt funds swept into banks from affiliated and subsidiary brokerages from the Federal Deposit Insurance Corporation’s (FDIC) definition of a “brokered deposit.” Tipton noted that the definition was designed to prevent weak depository institutions from accessing less stable brokered deposits to grow in size, but that affiliate sweep programs have been caught in this rule despite the fact that the FDIC even acknowledged that affiliated sweep deposits were more stable than other forms of deposits.
Amendment Offered by Rep. Waters
Waters offered an amendment to give regulators the ability to look at broker deposits as they relate to financial stability. While the amendment drew some support from Democrats, Republicans opposed it claiming they had not had time to review the amendment or its ramifications for the bill and was not agreed to in a 20-31 vote.
The measure was favorably reported by a vote of 34-17.
H.R. 4758, the “FOMC Policy Responsibility Act”
Tenney introduced her legislation that would make the Federal Open Market Committee (FOMC) set interest rates on reserve balances rather than the Board of Governors. Rep. Barr also voiced his support for the bill. Waters voiced her opposition to the bill, arguing that it is an attempt to reduce the influence of “Presidentially nominated, Senate confirmed governors and increase the influence of bank presidents.”
The measure was favorably reported by voice vote.
H.R. 6741, the “Federal Reserve Reform Act”
Barr introduced the bill and Amendment in the Nature of a Substitute that would increase transparency and accountability of the FOMC by requiring them to create a “plain English” monetary policy strategy, and limit the Fed’s portfolio to mainly Treasury securities. He continued that the bill will not bind the Fed to any monetary policy rule, maintaining their independence. Waters voiced her opposition to the bill.
The measure was favorably reported by a vote of 30-21.
H.R. 6021, the “Small Business Audit Correction Act of 2018”
Hill introduced the bill and Amendment in the Nature of a Substitute that would exempt privately held, non-custodial broker-dealers from being required to hire a Public Company Accounting Oversight Board (PCAOB)-registered accounting firm to do their annual reporting obligations. He stressed how costly these one-size fits-all requirements are and the negative impact they have on small businesses trying to grow and succeed, noting that PCAOB guidelines are made for larger brokerage firms that hold customer funds. Hill added that Securities and Exchange Commission Chairman Jay Clayton has given his support to such a tailored exclusion, also adding that he received technical feedback from the SEC and PCAOB in the most recent version of the bill. Hensarling argued that this provision is one of the unintended consequences of Dodd-Frank and that the SEC will still have oversight responsibilities for these firms.
Waters voiced her opposition to the bill, arguing that the PCAOB can tailor inspection programs among different classes of broker-dealers, as appropriate, and that reduced auditing oversight is “unwarranted” for the class of broker-dealers in question, calling the bill “unnecessary.”
The measure was favorably reported by a vote of 36-16.
For more information on this markup, please click here.