HFSC Markup
House Financial Services Committee
Markup
Tuesday, December 8, 2015
Key Topics & Takeaways
- The Committee approved seven bills and a resolution to renew its Task Force to Investigate Terrorism Financing for six months.
- H.R. 4168: the “Small Business Capital Formation Enhancement Act,” which requires the SEC to respond to recommendations made by its Government-Business Forum on Small Business Capital Formation, was approved in a 55-1 vote.
- H.R. 2187: the “Fair Investment Opportunities for Professional Experts Act,” which amends the definition of “accredited investor,” was approved in a 54-2 vote.
- H.R. 3784: The “SEC Small Business Advocate Act of 2015,” which creates an Office for Small Business Capital Formation and a Small Business Advisory Committee, was approved in a 56-0 vote.
Bills Considered
- Task Force to Investigate Terrorism Financing Resolution of 2016
- H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015”
- H.R. 3791, To raise the consolidated assets threshold under the small bank holding company policy statement, and for other purposes.
- H.R. 2287, the “National Credit Union Administration Budget Transparency Act”
- H.R. 2205, the “Data Security Act of 2015”
- H.R. 4168, the “Small Business Capital Formation Enhancement Act”
- H.R. 2187, the “Fair Investment Opportunities for Professional Experts Act”
- H.R. 3784, the “SEC Small Business Advocate Act of 2015”
Task Force to Investigate Terrorism Financing Resolution of 2016
Rep. Michael Fitzpatrick (R-Pa.) explained that with the U.S. facing many terror threats, the Task Force to Investigate Terrorism Financing should be allowed to continue its work for another six months. He lauded the task force’s initial six-month iteration and said a new session would take a closer look at trade-based money laundering, developing the capabilities of foreign partners, and attacking the financing of terrorist networks.
Rep. Stephen Lynch (D-Mass.) agreed on the importance of the task force, saying an additional six months would help it to continue working with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and to work on any necessary legislation. He suggested that the task force focus next on beneficial ownership laws and cross-border information sharing.
Final Vote
The resolution was approved by the Committee in a voice vote.
H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015″
Rep. Blaine Luetkemeyer (R-Mo.) immediately offered an amendment in the nature of a substitute to his bill. He explained that his bill would promote greater efficiency in housing assistance programs by modernizing rules and regulations to provide enhanced opportunities for their beneficiaries and the organizations that serve them.
Reps. Emanuel Cleaver (D-Mo.) and Keith Rothfus (R-Pa.) spoke in support of the bill. Chairman Jeb Hensarling (R-Texas) said there are aspects of the bill he does not agree with, but that it represents a good bipartisan compromise.
The amendment in the nature of a substitute was adopted in a voice vote.
Waters Amendment
Ranking Member Maxine Waters offered an amendment that would eliminate provisions whose deductions she said would increase rent levels for vulnerable families.
The Waters amendment was rejected in a 21-32 vote.
Final Vote
H.R. 3700 was approved by the Committee in a 44-10 vote.
H.R. 3791, To raise the consolidated assets threshold under the small bank holding company policy statement, and for other purposes.
Rep. Mia Love (R-Utah) said her bill was a simple proposal to help small banks by exempting them from certain regulatory and capital guidelines, making it easier for them to lend money. She explained that it would require the Federal Reserve to apply its Small Bank Holding Company Policy Statement to bank holding companies and loan holding companies with consolidated assets less than $5 billion.
Waters noted that a similar bill, passed last year, doubled the threshold to $1 billion, and said the current proposal is a Republican effort to go beyond the bipartisan effort of the last Congress. She said setting the higher threshold would allow institutions to take greater risks because of lower capital standards, putting communities and the deposit insurance fund in danger. She questioned whether Republicans would then return next year with a bill raising the threshold even more, saying “give me a break.”
Reps. Luetkemeyer, French Hill (R-Ark.) and Hensarling discussed the challenges of community banks in facing high compliance costs and urged their colleagues to support the legislation. Hensarling noted that Senate Banking Committee Chairman Richard Shelby (R-Ala.) is supporting a companion bill in the Senate.
Final Vote
H.R. 3791 was approved by the Committee in a 33-21 vote.
H.R. 2287, the “National Credit Union Administration Budget Transparency Act”
Rep. Mick Mulvaney (R-S.C.) explained that his bill would require accountability and transparency with the setting of the National Credit Union Administration’s (NCUA) budget.
Waters urged her Committee to oppose the proposal, insisting that it would give credit unions influence over the NCUA’s budget as no other regulator’s budget does for its regulated entities. She warned that the bill would allow special interests to control the budget of their regulators.
Rep. Sean Duffy (R-Wis.) disagreed with Waters, saying regulatory independence has nothing to do with budgetary transparency. Hensarling commented that only Waters believes that it is at attack on regulator independence to require that an agency publish its budget in the Federal Register for public comment.
Royce Amendment
Rep. Ed Royce (R-Texas) offered and then withdrew an amendment he said would provide regulatory relief to credit unions that would “unleash $11 billion in capital” for small businesses.
Final Vote
H.R. 2287 was approved by the Committee in a 40-16 vote.
H.R. 2205, the “Data Security Act of 2015″
Rep. Randy Neugebauer (R-Texas) offered an amendment in the nature of a substitute he said reflects changes based on negotiations with Waters. He noted the frequency of cyber incidents and stressed the importance of protecting consumer data. He explained that his bill would create a data security standard that is scalable based on the size of businesses and the type of financial data they hold, as well as implement requirements for consumer and law enforcement breach notification. Neugebauer stressed that the bill does not include technology mandates or bank-centric standards, and that it does not weaken consumer protections.
Waters said she could not support the bill because of concerns over preemption of state laws, saying the changing cybersecurity landscape requires occasional changes based on the needs of states.
A number of Republican and Democratic lawmakers expressed some concern with various parts of the bill, but offered their support with the hope that their input would be accepted into a final bill.
The amendment in the nature of a substitute was adopted in a voice vote.
Waters Amendment
Waters offered an amendment that would strike preemption measures and clarify that the bill would not exempt companies from compliance with any state laws.
Neugebauer said Waters amendment is precisely what the original bill seeks to avoid – widely differing standards across the states that could impact commerce across states. He urged that the Committee reject the amendment.
Waters’ amendment was rejected in a 20-36 vote.
Final Vote
H.R. 2205 was approved by the Committee in a 46-9 vote.
H.R. 4168, the “Small Business Capital Formation Enhancement Act”
Rep. Bruce Poliquin (R-Maine) discussed his bill, which would require that the Securities and Exchange Commission (SEC) respond to any recommendations that emerge from its annual Government-Business Forum on Small Business Capital Formation. Poliquin called this forum “very useful” and said his bill would only ask that the SEC “take seriously” the recommendations it produces and issue public statements in response to them.
Waters and Rep. Tom Emmer (R-Minn.) spoke in support of the bill.
Final Vote
H.R. 4168 was approved by the Committee in a 55-1 vote.
H.R. 2187, the “Fair Investment Opportunities for Professional Experts Act”
Rep. David Schweikert (R-Ariz.) offered an amendment in the nature of a substitute and said his bill would expand the definition of “accredited investor” to allow more people to participate in the startup economy. He noted that this issue was supposed to be studied under Dodd-Frank, but that the SEC has not yet addressed the issue.
Hill offered his support of the bill, saying it solves one of the big questions in making Regulation D offerings and private placements more effective. Hensarling agreed that a change to the definition has been needed for some time, and argued that a test of financial knowledge would be better than the existing requirements based on net assets, calling it “offensive to basic fairness.”
The amendment in a nature of a substitute was approved in a voice vote.
Waters Amendment
Waters offered an amendment that would change the income and net worth thresholds to adjust for inflation every five years.
Hensarling agreed with Waters and encouraged the adoption of the amendment
The amendment was adopted in a voice vote.
Final Vote
H.R. 2187 was approved by the Committee in a 54-2 vote.
H.R. 3784, the “SEC Small Business Advocate Act of 2015″
Rep. John Carney (D-Del.) said small businesses are often underrepresented in the formulation of government decisions affecting them. He said his bill would give the SEC more tools to understand the needs of small businesses, such as through the creation of an Office for Small Business Capital Formation as well as a Small Business Advisory Committee.
Reps. Stephen Fincher (R-Tenn.) Duffy, Emmer, and Poliquin spoke in support of the bill, highlighting the importance of supporting small businesses and urging passage.
Ellison Amendment #1
Rep. Keith Ellison (D-Minn.) offered an amendment he said would improve the bill by adding the interests of franchisees to the portfolio of the Office for Small Business Capital Formation. Ellison said franchisees have unique concerns that are not shared by other small businesses.
Duffy argued that the amendment is unnecessary because franchisees would already fit under the small business definition within the bill.
The amendment was rejected in a 18-38 vote.
Ellison Amendment #2
Ellison offered a second amendment that would require the Small Business Advocate and Small Business Advisory Committee consider the interests of investor protection. Among its provisions, he said that no less than one third of the Advisory Committee would have to comprise investors.
Duffy argued that the amendment is unnecessary because the SEC already has an Investor Advocate position, as well as an Investor Advisory Committee.
The amendment was rejected in a 21-35 vote.
Waters Amendment
Waters offered an amendment that would require the Small Business Advocate to consider the issues facing minority and women-owned small businesses, with the SEC’s Office of Minority and Women Inclusion providing input for the composition of the Small Business Advisory Committee. She said this would help the SEC meet its requirements under Section 342 of the Dodd-Frank Act.
Duffy said he agrees that the issues facing minority and women-owned businesses are important to consider, and he said the amendment adds value by specifically spelling out this responsibility for the Small Business Advocate. He urged support of the amendment.
The amendment was approved in a voice vote.
Final Vote
H.R. 3784 was approved by the Committee in a 56-0 vote.
For more information on this markup, please click here.
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House Financial Services Committee
Markup
Tuesday, December 8, 2015
Key Topics & Takeaways
- The Committee approved seven bills and a resolution to renew its Task Force to Investigate Terrorism Financing for six months.
- H.R. 4168: the “Small Business Capital Formation Enhancement Act,” which requires the SEC to respond to recommendations made by its Government-Business Forum on Small Business Capital Formation, was approved in a 55-1 vote.
- H.R. 2187: the “Fair Investment Opportunities for Professional Experts Act,” which amends the definition of “accredited investor,” was approved in a 54-2 vote.
- H.R. 3784: The “SEC Small Business Advocate Act of 2015,” which creates an Office for Small Business Capital Formation and a Small Business Advisory Committee, was approved in a 56-0 vote.
Bills Considered
- Task Force to Investigate Terrorism Financing Resolution of 2016
- H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015”
- H.R. 3791, To raise the consolidated assets threshold under the small bank holding company policy statement, and for other purposes.
- H.R. 2287, the “National Credit Union Administration Budget Transparency Act”
- H.R. 2205, the “Data Security Act of 2015”
- H.R. 4168, the “Small Business Capital Formation Enhancement Act”
- H.R. 2187, the “Fair Investment Opportunities for Professional Experts Act”
- H.R. 3784, the “SEC Small Business Advocate Act of 2015”
Task Force to Investigate Terrorism Financing Resolution of 2016
Rep. Michael Fitzpatrick (R-Pa.) explained that with the U.S. facing many terror threats, the Task Force to Investigate Terrorism Financing should be allowed to continue its work for another six months. He lauded the task force’s initial six-month iteration and said a new session would take a closer look at trade-based money laundering, developing the capabilities of foreign partners, and attacking the financing of terrorist networks.
Rep. Stephen Lynch (D-Mass.) agreed on the importance of the task force, saying an additional six months would help it to continue working with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and to work on any necessary legislation. He suggested that the task force focus next on beneficial ownership laws and cross-border information sharing.
Final Vote
The resolution was approved by the Committee in a voice vote.
H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015″
Rep. Blaine Luetkemeyer (R-Mo.) immediately offered an amendment in the nature of a substitute to his bill. He explained that his bill would promote greater efficiency in housing assistance programs by modernizing rules and regulations to provide enhanced opportunities for their beneficiaries and the organizations that serve them.
Reps. Emanuel Cleaver (D-Mo.) and Keith Rothfus (R-Pa.) spoke in support of the bill. Chairman Jeb Hensarling (R-Texas) said there are aspects of the bill he does not agree with, but that it represents a good bipartisan compromise.
The amendment in the nature of a substitute was adopted in a voice vote.
Waters Amendment
Ranking Member Maxine Waters offered an amendment that would eliminate provisions whose deductions she said would increase rent levels for vulnerable families.
The Waters amendment was rejected in a 21-32 vote.
Final Vote
H.R. 3700 was approved by the Committee in a 44-10 vote.
H.R. 3791, To raise the consolidated assets threshold under the small bank holding company policy statement, and for other purposes.
Rep. Mia Love (R-Utah) said her bill was a simple proposal to help small banks by exempting them from certain regulatory and capital guidelines, making it easier for them to lend money. She explained that it would require the Federal Reserve to apply its Small Bank Holding Company Policy Statement to bank holding companies and loan holding companies with consolidated assets less than $5 billion.
Waters noted that a similar bill, passed last year, doubled the threshold to $1 billion, and said the current proposal is a Republican effort to go beyond the bipartisan effort of the last Congress. She said setting the higher threshold would allow institutions to take greater risks because of lower capital standards, putting communities and the deposit insurance fund in danger. She questioned whether Republicans would then return next year with a bill raising the threshold even more, saying “give me a break.”
Reps. Luetkemeyer, French Hill (R-Ark.) and Hensarling discussed the challenges of community banks in facing high compliance costs and urged their colleagues to support the legislation. Hensarling noted that Senate Banking Committee Chairman Richard Shelby (R-Ala.) is supporting a companion bill in the Senate.
Final Vote
H.R. 3791 was approved by the Committee in a 33-21 vote.
H.R. 2287, the “National Credit Union Administration Budget Transparency Act”
Rep. Mick Mulvaney (R-S.C.) explained that his bill would require accountability and transparency with the setting of the National Credit Union Administration’s (NCUA) budget.
Waters urged her Committee to oppose the proposal, insisting that it would give credit unions influence over the NCUA’s budget as no other regulator’s budget does for its regulated entities. She warned that the bill would allow special interests to control the budget of their regulators.
Rep. Sean Duffy (R-Wis.) disagreed with Waters, saying regulatory independence has nothing to do with budgetary transparency. Hensarling commented that only Waters believes that it is at attack on regulator independence to require that an agency publish its budget in the Federal Register for public comment.
Royce Amendment
Rep. Ed Royce (R-Texas) offered and then withdrew an amendment he said would provide regulatory relief to credit unions that would “unleash $11 billion in capital” for small businesses.
Final Vote
H.R. 2287 was approved by the Committee in a 40-16 vote.
H.R. 2205, the “Data Security Act of 2015″
Rep. Randy Neugebauer (R-Texas) offered an amendment in the nature of a substitute he said reflects changes based on negotiations with Waters. He noted the frequency of cyber incidents and stressed the importance of protecting consumer data. He explained that his bill would create a data security standard that is scalable based on the size of businesses and the type of financial data they hold, as well as implement requirements for consumer and law enforcement breach notification. Neugebauer stressed that the bill does not include technology mandates or bank-centric standards, and that it does not weaken consumer protections.
Waters said she could not support the bill because of concerns over preemption of state laws, saying the changing cybersecurity landscape requires occasional changes based on the needs of states.
A number of Republican and Democratic lawmakers expressed some concern with various parts of the bill, but offered their support with the hope that their input would be accepted into a final bill.
The amendment in the nature of a substitute was adopted in a voice vote.
Waters Amendment
Waters offered an amendment that would strike preemption measures and clarify that the bill would not exempt companies from compliance with any state laws.
Neugebauer said Waters amendment is precisely what the original bill seeks to avoid – widely differing standards across the states that could impact commerce across states. He urged that the Committee reject the amendment.
Waters’ amendment was rejected in a 20-36 vote.
Final Vote
H.R. 2205 was approved by the Committee in a 46-9 vote.
H.R. 4168, the “Small Business Capital Formation Enhancement Act”
Rep. Bruce Poliquin (R-Maine) discussed his bill, which would require that the Securities and Exchange Commission (SEC) respond to any recommendations that emerge from its annual Government-Business Forum on Small Business Capital Formation. Poliquin called this forum “very useful” and said his bill would only ask that the SEC “take seriously” the recommendations it produces and issue public statements in response to them.
Waters and Rep. Tom Emmer (R-Minn.) spoke in support of the bill.
Final Vote
H.R. 4168 was approved by the Committee in a 55-1 vote.
H.R. 2187, the “Fair Investment Opportunities for Professional Experts Act”
Rep. David Schweikert (R-Ariz.) offered an amendment in the nature of a substitute and said his bill would expand the definition of “accredited investor” to allow more people to participate in the startup economy. He noted that this issue was supposed to be studied under Dodd-Frank, but that the SEC has not yet addressed the issue.
Hill offered his support of the bill, saying it solves one of the big questions in making Regulation D offerings and private placements more effective. Hensarling agreed that a change to the definition has been needed for some time, and argued that a test of financial knowledge would be better than the existing requirements based on net assets, calling it “offensive to basic fairness.”
The amendment in a nature of a substitute was approved in a voice vote.
Waters Amendment
Waters offered an amendment that would change the income and net worth thresholds to adjust for inflation every five years.
Hensarling agreed with Waters and encouraged the adoption of the amendment
The amendment was adopted in a voice vote.
Final Vote
H.R. 2187 was approved by the Committee in a 54-2 vote.
H.R. 3784, the “SEC Small Business Advocate Act of 2015″
Rep. John Carney (D-Del.) said small businesses are often underrepresented in the formulation of government decisions affecting them. He said his bill would give the SEC more tools to understand the needs of small businesses, such as through the creation of an Office for Small Business Capital Formation as well as a Small Business Advisory Committee.
Reps. Stephen Fincher (R-Tenn.) Duffy, Emmer, and Poliquin spoke in support of the bill, highlighting the importance of supporting small businesses and urging passage.
Ellison Amendment #1
Rep. Keith Ellison (D-Minn.) offered an amendment he said would improve the bill by adding the interests of franchisees to the portfolio of the Office for Small Business Capital Formation. Ellison said franchisees have unique concerns that are not shared by other small businesses.
Duffy argued that the amendment is unnecessary because franchisees would already fit under the small business definition within the bill.
The amendment was rejected in a 18-38 vote.
Ellison Amendment #2
Ellison offered a second amendment that would require the Small Business Advocate and Small Business Advisory Committee consider the interests of investor protection. Among its provisions, he said that no less than one third of the Advisory Committee would have to comprise investors.
Duffy argued that the amendment is unnecessary because the SEC already has an Investor Advocate position, as well as an Investor Advisory Committee.
The amendment was rejected in a 21-35 vote.
Waters Amendment
Waters offered an amendment that would require the Small Business Advocate to consider the issues facing minority and women-owned small businesses, with the SEC’s Office of Minority and Women Inclusion providing input for the composition of the Small Business Advisory Committee. She said this would help the SEC meet its requirements under Section 342 of the Dodd-Frank Act.
Duffy said he agrees that the issues facing minority and women-owned businesses are important to consider, and he said the amendment adds value by specifically spelling out this responsibility for the Small Business Advocate. He urged support of the amendment.
The amendment was approved in a voice vote.
Final Vote
H.R. 3784 was approved by the Committee in a 56-0 vote.
For more information on this markup, please click here.