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House Financial Services Committee Markup

House Financial Services Committee

Markup

Thursday, February 27 – Friday, February 28, 2020

Bills Considered

Opening Statements

Chairwoman Maxine Waters (D-Calif.)

In her opening statement, Waters said that the Committee has been productive in advancing legislation to benefit consumers, investors and the economy, including a number of bills with broad bipartisan support. She continued that in 2020, the Committee will focus its efforts on providing a fair economy for everyone and making housing fairer and more affordable. She noted the Committee would be marking up bills on housing, capital markets, and to address Chinese debt transparency, as well as the Views and Estimates on the Fiscal Year 2021 budget.

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

In his opening statement, McHenry applauded the bipartisan work to address China’s debt traps and threats to U.S. national security. He noted that affordable housing is an important issue and it is crucial that the Committee ensure that the Department of Housing and Urban Development (HUD) and local entities have the resources necessary to combat housing discrimination, as well as to look at zoning laws and regulatory barriers. McHenry said the mandatory disclosure bills under consideration will not help families save for their first home or their retirement, but will only serve to raise compliance costs for companies that are already public and deter non-public firms from going public. Regarding the Budget Views and Estimates, McHenry said that Republicans stand ready to work with Democrats to advance policies that ensure the financial system is safe and sound and to protect consumers, but the policies put forth by the Democrats are the “polar opposite.”

H. R. 149, the Housing Fairness Act

Rep. Al Green (D-Texas) introduced his bill and his Amendment in the Nature of a Substitute, which would authorize increased funding for HUD’s Fair Housing Initiatives Program (FHIP) and make a number of reforms to FHIP. It would also establish a new competitive matching grant program at HUD to support comprehensive studies of the causes and effects of ongoing discrimination and segregation, and the implementation of pilot projects to test solutions. McHenry spoke against the bill and expressed concern that the bill does not do anything to compensate the victims of discrimination.

Amendment Offered by Rep. David Kustoff (R-Tenn.)

Kustoff introduced his amendment, which would require HUD to suspend for at least one year any Community Development Block Grants (CBDG) going to a locality or state that is determined to have neglected enforcement of fair housing laws. Green spoke against the amendment, saying it would punish people who had nothing to do with the offending activity. The amendment was not agreed to by a vote of 25-33.

Amendment Offered by Rep. Steve Stivers (R-Ohio)

Stivers introduced his amendment, which require the agencies that receive grants under the FHIP to file a financial statement with HUD about how the money was spent. Green spoke against the amendment. Rep. Bill Huizenga (R-Mich.) spoke in favor of the amendment. The amendment was not agreed to by a vote of 25-33.

Amendment Offered by Rep. Lee Zeldin (R-N.Y.)

Zeldin introduced his amendment, which would establish a victims’ compensation fund “to ensure the victims of discrimination are the ones compensated, not advocacy groups or trial lawyers.” Green and Waters spoke against the amendment. The amendment was not agreed to by a vote of 25-33.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a vote of 33-25.

H.R. 4351, the Yes In My Backyard Act

Rep. Denny Heck (D-Wash.) introduced his bill and his Amendment in the Nature of a Substitute, which would require localities that receive Community Development Block Grant (CDBG) funding to submit a plan to track and report on the implementation of certain land use policies that promote housing production. Stivers and Waters spoke in support of the bill.

Amendment Offered by Rep. John Rose (R-Tenn.)

Rose introduced his amendment, which would add a Sense of Congress that affirms support for President Trump’s White House Council on Eliminating Regulatory Barriers to Affordable Housing. Heck spoke against the amendment, saying it is not in the best interest of advancing the policy objectives of the legislation, as the underlying bill is supported by a wide array of external stakeholders. Waters also spoke against the amendment, saying it undermines the bipartisan nature of the underlying bill. The amendment was not agreed to by a vote of 25-33.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a voice vote.

H.R. 5187, the Housing Is Infrastructure Act

Waters introduced her bill and her Amendment in the Nature of a Substitute, which would authorize $100.6 billion in federal investments for the nation’s affordable housing infrastructure, including public housing, supportive housing for seniors and people with disabilities, housing affordable to the lowest-income people, as well as rural and Native American housing. Reps. Alma Adams (D-N.C.), Jesús “Chuy” García (D-Ill.) and Sylvia Garcia (D-Texas) spoke in support of the bill.

Amendment Offered by Rep. Steve Stivers (R-Ohio)

Stivers introduced his amendment, which would add the Rental Assistance Demonstration Program as an additional option under the bill. Reps. Nydia Velázquez (D-N.Y.) and Waters spoke in opposition to the amendment. Huizenga spoke in support of the amendment. The amendment was not agreed to in a vote of 25-33.

Amendment Offered by Rep. Bill Huizenga (R-Mich.)

Huizenga introduced his amendment, which would prohibit any money from going to a Public Housing Authority that has committed any fraud with federal funds or has used federal funding to violate fair housing laws. Reps. Ed Perlmutter (D-Colo.), Joyce Beatty (D-Ohio), Velázquez and Waters spoke against the amendment. Rep. Ted Budd (R-N.C.) spoke in support of the amendment. The amendment was not agreed to in a vote of 25-33.

Amendment Offered by Rep. Ted Budd (R-N.C.)

Budd introduced his amendment, which would require states and localities to contribute to public housing projects by requiring them to match funds allocated by the federal government. Waters spoke in opposition to the amendment. The amendment was not agreed to in a vote of 25-33.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a vote of 33-25.

H.R. 5929, the Shareholder Political Transparency Act of 2020

Rep. Bill Foster (D-Ill.) introduced his bill and his Amendment in the Nature of a Substitute, which would require public companies to submit quarterly reports to both the SEC and investors detailing the amount, date, and nature of the company’s expenditures for political activities. If the political expenditure was made in support of or opposition to a particular candidate, or was made to a trade association, then the company must disclose the candidate and/or trade association. The bill also requires public companies to disclose in their annual reports any political expenditures over $10,000 in the previous year, as well as the nature and amount of any political expenditures the company plans to make in the upcoming year. Reps. Brad Sherman (D-Calif.) and Dean Phillips (D-Minn.) spoke in support of the bill. Budd spoke against the bill.

Amendment Offered by Rep. Bill Huizenga (R-Mich.)

Huizenga introduced his amendment, which states that the underlying legislation will not become effective until H.R. 5959, the Union Member Protection Act, similarly becomes enacted, which would establish similar disclosures for unions as the underlying legislation would establish for public companies. Foster spoke in opposition to the amendment, noting that unions are already subject to more stringent disclosure requirements than public companies. The amendment was not agreed to by a vote of 23-33.

Amendment Offered by Rep. Bryan Steil (R-Wis.)

Steil introduced his amendment, which would clarify that public companies must only make the disclosures specified in the underlying legislation if those disclosures are material to the average investor. Foster spoke against the amendment. Rep. Van Taylor (R-Texas) spoke in support of the amendment. The amendment was not agreed to by a vote of 25-33.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a vote of 33-25.

H.R. 5930, the Workforce Investment Disclosure Act

Rep. Cindy Axne (D-Iowa) introduced her bill and her Amendment in the Nature of a Substitute, which would require the Securities and Exchange Commission (SEC) to implement petitioned rulemaking that would require public companies to disclose human capital management policies, practices, and performance. Reps. Ayanna Pressley (D-Mass.), Madeleine Dean (D-Pa.) and Sherman spoke in support of the bill. Huizenga spoke in opposition to the bill, saying it will produce disclosures that contain confusing information. Rep. French Hill (R-Ark.) also spoke against the bill.

Amendment Offered by Rep. Bryan Steil (R-Wis.)

Steil introduced his amendment, which would clarify that public companies must only make the disclosures specified in the underlying legislation if those disclosures are material to the average investor. Axne spoke in opposition to the amendment. Huizenga spoke in support of the amendment. The amendment was not agreed to in a vote of 25-33.

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

Davidson introduced his amendment, which would require an additional disclosure of the financial resources, time and labor companies expend on complying with the underlying legislation. Beatty, Axne and Sherman spoke in opposition to the amendment. The amendment was not agreed to in a vote of 25-33.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a vote of 33-25.

H.R. 5931, the Improving FHA Support for Small Dollar Mortgages Act

Rep. Lacy Clay (D-Mo.) introduced his bill and his Amendment in the Nature of a Substitute, which would require the Federal Housing Administration (FHA) to conduct a review of its policies to identify any barriers to supporting mortgages under $70,000 and report to Congress within a year with a plan for removing such barriers. Stivers spoke in support of the bill, noting that a Urban Institute study found that the number of small dollar mortgages plummeted 38 percent between 2009 and 2018, adding that it is important to address this and an FHA study can help move this forward. Waters and McHenry spoke in support of the bill.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a vote of 48-0.

H.R. 5932, the Ensuring Chinese Debt Transparency Act

Rep. French Hill (R-Ark.) introduced his bill and his Amendment in the Nature of a Substitute, which would mandate the Secretary of the Treasury to instruct the United States Executive Director at each international financial institution (IFI) that it is the policy of the United States to use the voice and vote of the United States at the respective institution to seek to secure greater transparency with respect to the terms and conditions of financing provided by the government of the People’s Republic of China to any member state that is a recipient of financing from the respective institution, consistent with the rules and principles of the Paris Club. Waters spoke in support of the bill.

The Amendment in the Nature of a Substitute was agreed to and the amended measure was reported favorably to the House by a voice vote.

FSC FY 2020 Budget Views and Estimates

Waters introduced the Budget Views and Estimates, saying the President’s budget proposal is “cruel” and cuts critical programs within the jurisdiction of the Committee, adding that Democrats will not stand for a budget that harms families, consumers, investors, and small businesses. She noted that the administration has rolled back important protections for workers, the environment, the healthcare system, consumers and the economy as a whole and is letting bad actors escape accountability. She added that the administration’s budget would also reduce access to affordable housing, cut community development initiatives, and raise rents on the country’s most vulnerable populations, including seniors.

McHenry expressed his disagreement with the majority’s Views and Estimates, noting that it includes no mention of China or that recent trade negotiations have had positive results.

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

Hill introduced his amendment, which would express the Committee’s support for the multilateral agreement to increase capital to the International Finance Corporation (IFC), the private sector arm of the World Bank. Waters expressed concern about the amendment, saying the Committee, Department of Treasury, and IFC need to come to an agreement on an appropriate set of reforms before authorizing the capital increase. Hill asked whether the authorization could be completed before the end of this Congress, which Waters said she was committed to. Hill withdrew the amendment.

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

Luetkemeyer introduced his amendment, which would restate the views and concerns of the Committee that were expressed during previous hearings that the current expected credit loss (CECL) standard will have negative effects on consumer access to credit, particularly in low- and moderate-income and minority communities. He added that it will have a negative effect on the economy in a downturn, which “could have massive budget implications.” Waters expressed her opposition to the amendment, saying that while the Committee is fully committed to understanding the potential ramifications of CECL, it should monitor the situation in a more balanced way than the amendment suggests. Luetkemeyer and Waters agreed to modifications to the amendment to achieve bipartisan support. The amendment was agreed to by a voice vote.

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

Luetkemeyer introduced his amendment, which would state that it is the view of the Committee that federal agencies should explore risk-transfer options and if practical, employ that risk-transfer, saying this will help with economic downturns and natural catastrophes, specifically referencing the National Flood Insurance Program. Waters expressed support for the amendment, though noted that such risk-transfer mechanisms are untested in a recession environment. The amendment was agreed to by a voice vote.

Amendment Offered by Rep. Steve Stivers (R-Ohio)

Stivers introduced his amendment, which would recognize the need to do more to address youth homelessness without specifying a single solution. Waters spoke in support of the amendment, saying every American has a right to safe, decent and affordable housing. Rep. Lance Gooden (R-Texas) also spoke in support of the amendment. The amendment was agreed to by a voice vote.

Amendment Offered by Rep. Patrick McHenry (R-N.C.)

McHenry introduced his amendment, which would state that the Committee opposes any proposal that would negatively impact the capital markets. McHenry continued that the financial transaction tax (FTT) proposal is a tax on American retirement savings, adding that it is a tax on anyone with any savings, not just the one percent. He said an FTT would also negatively affect the markets and that FTTs inevitably failed to raise the revenue projected when attempted in other countries. Huizenga spoke in support of the amendment. Waters said all discussion of an FTT has pointed out that it could be a modest tax. She added that high-frequency trading is the fastest growing and least productive form of trading and it bears no relationship to business profits or other indicators of economic health and that it also creates risk in the financial system. Waters said that half of American households would be completely unaffected by an FTT, and many consumers would save money because the mutual funds they invest in would see reduced overhead costs. The amendment was not agreed to by a vote of 27-30.

Amendment Offered by Rep. Andy Barr (R-Ky.)

Barr introduced his amendment, which would correct a misinterpretation of the Consumer Financial Protection Bureau’s (CFPB) supervision authority for compliance with the Military Lending Act. Barr said the Views and Estimates suggest that the CFPB is somehow shirking its responsibility, but the Bureau does not have the statutory authority to supervise financial institutions for compliance, only to enforce violations. Barr’s amendment would address this by replacing language such that it would read “furthermore, the Consumer Bureau has continued its policy to not supervise institutions for compliance with the Military Lending Act because the Consumer Bureau lacks the statutory authority to do so, as repeatedly stated by the Director in testimony before the Committee. The Committee should therefore provide the Bureau with its requested authority by passing H.R. 2904, the Financial Protection for Military Families Act, to give servicemembers the reliable financial services they deserve.” McHenry spoke in support of the amendment. Heck spoke against the amendment, calling it unnecessary, harmful and ill-advised. Waters also spoke against the amendment. The amendment was not agreed to by a vote of 25-32.

Amendment Offered by Rep. Andy Barr (R-Ky.)

Barr introduced his amendment, which would strike the environmental, social and governance (ESG) section of the Views and Estimates. Davidson spoke in support of the amendment. Waters spoke against the amendment. The amendment was not agreed to by a vote of 24-32.

Amendment Offered by Rep. Patrick McHenry (R-N.C.)

McHenry introduced his amendment, which would address U.S. sanctions policy and the Committee on Foreign Investment in the United States (CFIUS) process, as well as prohibitions on outbound American investment in other countries, particularly China. McHenry said an investment ban ignores the fact that the U.S. government already has specialized authorities to aggressively pursue Chinese entities. Waters and McHenry negotiated changes to the language, and Waters then spoke in support of the amendment. The amendment was agreed to by a voice vote.

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

Hill introduced his amendment, which would express the Committee’s support for the multilateral agreement to increase the capital to the IFC, with the appropriate reforms. The addition of reform language was in response to previous discussion with the Chairwoman earlier in the markup. Waters spoke in support of the amendment. The amendment was agreed to by a voice vote.

Amendment Offered by Rep. Patrick McHenry (R-N.C.)

McHenry introduced his substitute amendment, which outlines top priorities for Republicans on the Committee including economic growth, protecting consumers, fostering innovation, protecting student borrowers, ensuring accountability at the CFPB and strengthening national security. The amendment highlights that the Committee believes the CECL accounting standards will have an adverse effect on the cost and availability of credit. The amendment was not agreed to by a vote of 25-32.

The amended measure was reported favorably to the House by a vote of 32-25.

Resolution for Rep. Van Taylor’s Subcommittee Assignments

Rep. Van Taylor (R-Texas) was assigned to the Subcommittee on National Security, International Development, and Monetary Policy, the Subcommittee on Oversight and Investigations, and the Task Force on Artificial Intelligence. Additionally, Reps. Bryan Steil (R-Wis.) and Anthony Gonzalez (R-Ohio) were assigned to the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets and Rep. Bill Posey (R-Fla.) was assigned to the Subcommittee on Housing, Community Development, and Insurance.

For more information on this markup, please click here.