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HFSC Full Committee Mark Up July 27th, 2023

House Committee on Financial Services

Full Committee Markup

Thursday, July 27, 2023

Topline

  • The committee marked up and reported seven pieces of legislation favorably to the House.
  • The most contentious bill was H.R. 4766, the Clarity for Payment Stablecoins Act of 2023, which received some Democratic support.
  • The other five bills and resolution were reported favorably with all Republican votes.

Legislation

  • H.J. Res. 66, a joint resolution disapproving the rule submitted by the Consumer Financial Protection Bureau relating to “Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)

 

Opening Statements

Chairman Patrick McHenry (R-N.C.)

In his opening statement, McHenry discussed how disappointed he was with the White House’s unwillingness to compromise on a bipartisan stablecoin bill. He said that he had hoped to announce an agreement with Ranking Member Waters and that the two had been closer than ever in a deal. He closed by reiterating that the bills being considered are about restoring free markets.

 

Ranking Member Maxine Waters (D-Calif.)

In her opening statement, Waters said the Committee was forced by Republican extremists to consider the bills at hand. Waters said H.R. 4763 in its current form is deeply problematic and bad for America. She noted that under this bill, each state would not have control over the coins they issue that are used in other states. She closed by asking Republicans to pull the bill from the markup and to stop undermining America.

 

Consideration of Legislation

H.R. 4766, the Clarity for Payment Stablecoins Act of 2023

McHenry offered an ANS and explained the bill. He said Congress has three pathways for stablecoins: a pathway for depository institutions and credit unions, a non-bank path administered by the Federal Reserve and the OCC, and a state path to allow successful state regimes to continue the work they have already done. He closed by noting that the bill is modeled after New York’s groundbreaking stablecoin regime.

Rep. Tom Emmer (R-Minn.), Rep. Ralph Norman (R-S.C.), Rep. Pete Sessions (R-Texas), Rep. Warren Davidson (R-Ohio), and Rep. French Hill (R-Ark.) criticized the current lack of guidance to regulate stablecoins and voiced their support for the bill.

Waters (D-Calif.) said the bill was rushed and is not a product of bipartisan work that was in progress for months. Waters criticized the bill and said the bill should not be voted on.

Rep. Sylvia Garcia (D-Tex.) also criticized the bill and said the bill is unacceptable and overall bad public policy. She also noted that the Fed and the Treasury publicly disapprove of this bill.

Rep. Nydia Velazquez (D-N.Y.), Rep. Bill Foster (D-Ill.), and Rep. Juan Vargas (D-Calif.) joined Democrats by expressing their disapproval.

Foster offered an amendment to strike Sections E & F of Section 8 to remove the prohibition on any regulation of anonymous and untraceable self-hosted wallets. Hill said that the section language has already been removed and that this amendment was unnecessary. The amendment was not agreed to.

Velazquez offered an amendment to highlight a fundamental flaw in the bill that allows every state and US territory to develop their own coin regulatory regime with little to no federal oversight. She withdrew the amendment.

Sherman offered an amendment to clarify SEC jurisdiction. Hill said that the Committee does not have the jurisdiction to propose such thing. The amendment was not agreed to.

Beatty offered an amendment to include language regarding financial inclusion. She noted that until that morning, DEI language was included but was removed from the final version. Waters showed support for the amendment. The amendment was not agreed to.

Rep. Sean Casten (D-Ill.) offered an amendment to help stop crypto fraud from occurring. He noted that nothing in the bill inherently stops crypto fraud from happening. Hill asked Casten to withdraw his amendment and that he will work directly with Casten to include this language.

The ANS was agreed to by a recorded vote, and H.R. 4766, as amended, was reported favorably to the House by a vote of 34-16.

 

H.R. 4841, the Keep Your Coins Act of 2023

Davidson offered an ANS and explained the bill. He noted his bill would protect the rights of individuals to keep their coins and tokens, as they are their property. He also said that the bill focuses on privatization of property.

Sherman opposed the bill and said it will allow people to evade financial laws and not pay taxes. Foster and Waters agreed with Sherman.

Rep. John Rose (R-Tenn.) showed support for the bill and said that without the bill the US financial system will continue to overstep their authority.

The ANS was agreed to by a recorded vote, and H.R. 4841, as amended, was reported favorably to the House by a vote of 29-21.

 

H.R. 4790, the Guiding Uniform and Responsible Disclosure Requirements and Information (GUARDRAIL) Act of 2023

Rep. Bill Huizenga (R-Mich.) offered an ANS and explained the bill. He noted that the SEC’s climate rule is a prime example of overreach with wide-ranging impact on hardworking Americans’ lives. He said the bill will increase transparency and accountability at the SEC.

Waters opposed the bill and called it socialist. Sherman, Casten, and Vargas also opposed the bill.Barr and McHenry expressed support for the bill.

Beatty introduced an amendment to ensure that investors receive the proper information needed to make decisions and that investors receive information on companies, particularly in regard to DEI.

Waters, Rep. Gregory Meeks (D-N.Y.), and Vargas all supported this amendment. The amendment was not agreed to.

Meeks introduced an amendment addressing the importance of acknowledging DEI. Beatty and Waters showed support for the amendment. The amendment was not agreed to.

Vargas introduced an amendment that ensures that the bill cannot limit the SEC’s ability to conduct rulemaking pertaining to standardizing climate-related disclosures.

Waters, Beatty, and Casten agreed with the amendment. The amendment was not agreed to.

Casten introduced an amendment to ensure increased transparency in US markets regarding climate change.

Waters and Vargas supported this amendment. Barr voiced his opposition to the amendment. The amendment was not agreed to.

Garcia introduced an amendment that ensure that American businesses account for climate change. Rep. Al Green (D-Texas) agreed with the amendment and noted that climate change is a real and material risk. The amendment was not agreed to.

Rep. Rashida Tlaib (D-Mich.) introduced an amendment to address the use of the word “woke” and noting that when it is used by Republicans, they are specifically referring to initiatives designed to address climate risk, bolster diversity and inclusion, strengthen corporate accountability, and invest in employee development. The amendment was not agreed to.

The ANS was agreed to by a recorded vote, and H.R. 4790, as amended, was reported favorably to the House by a vote of 29-21.

 

H.R. 4767, the Protecting Americans’ Retirement Savings from Politics Act

Steil offered an ANS and explained the bill. He said the SEC has given a green light to activists to inject politics into the boardroom exclusion process. He noted that proxy advisory firms don’t bear any cost and have no accountability for misguided recommendations. He concluded that the bill reforms the proxy process to reduce the number of duplicative, repetitive, or politically motivated shareholder proposals.

Huizenga, Hill, Rose, Barr, and Rep. Scott Fitzgerald (R-Wisc.) voiced their support for the bill.

Green said that this bill would stifle a shareholder’s ability to submit proposals and discourage the use of proxy advisory firms to help shareholders have access to independent research that informs their votes. He opposed the bill.

Vargas offered an amendment that would direct the SEC to conduct an economic analysis on all the bills discussed in the markup.

Steil, Hill, and Huizenga strongly opposed the amendment and said the SEC had no reason to construct the law. Casten and Green supposed the amendment. The amendment was not agreed to.

Casten offered an amendment to prohibit this bill from going into effect unless the SEC has first determined that no provisions in this bill, or the amendments made by this bill would duplicate those mistakes.

Vargas supported the amendment and said he supports capitalism. The amendment was not agreed to.

Sherman offered an amendment that was introduced by Casten. The amendment would allow investors to have the freedom, if they choose, to encourage the companies that they invest in to implement ESG-related initiatives without fear.

Green supported the amendment. Barr opposed the amendment. The amendment was not agreed to.

The ANS was agreed to by a recorded vote, and H.R. 4767, as amended, was reported favorably to the House by a vote of 29-21.

 

H.R. 4823, the American Financial Institution Regulator Sovereignty and Transparency Act

Loudermilk offered an ANS and explained the bill, which he said is due to a disturbing lack of transparency and accountability among federal regulators about their climate efforts. He concluded that federal regulators don’t even know who funds their resources, and that this is unacceptable.

Rep. Mike Flood (Nebr.), Rep. Andy Ogles (R-Tenn.), and Barr all voiced support of the amendment.

Green opposed the bill and noted that the bill would make it extremely hard for US regulators to take common sense steps to address the very real financial risk posed by climate change or to take steps to promote DEI.

Beatty offered an amendment to include DEI initiatives in the financial services sector.

Vargas and Green expressed support and emphasized the need for diversity. Barr and Loudermilk opposed the amendment and said that the amendment was irrelevant to the bill. The amendment wasn’t agreed to.

Garcia offered an amendment to ensure that Americans acknowledge the impacts of climate change on the financial sector.Loudermilk said that the bill doesn’t stop agencies from acknowledging or addressing climate change. The amendment wasn’t agreed to.

The ANS was agreed to by recorded vote and H.R. 4823, as amended, was reported favorably to the House by a vote of 29-21.

 

H.R. 4655, the Businesses Over Activists Act

Norman offered an ANS and explained the bill, which reaffirms the proper goal of the SEC and ensures that it cannot exceed its authority by compelling companies to include certain shareholder proposals against their will.

The ANS was agreed to by a recorded vote, and H.R. 4655, as amended, was reported favorably to the House by a vote of 29-21.

 

H.J. Res. 66, a joint resolution disapproving the rule submitted by the Consumer Financial Protection Bureau relating to “Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)

Rep. Roger Williams (R-Texas) offered an ANS and explained the resolution, which he concluded will protect small businesses and forces bank employees to protect privacy.

Velazquez, Waters, and Casten all voiced their opposition to the resolution.Ogles said that without the resolution, there would be a broad, burdensome information collection process.

The ANS was agreed to by a recorded vote, and H.J. Res. 66, as amended, was reported favorably to the House by a vote of 29-21.

 

 

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.