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House Financial Services Committee Markup

House Financial Services Committee

Markup

Tuesday, December 10 – Wednesday, December 11, 2019

 

Bills Considered

Opening Statements

Chairwoman Maxine Waters (D-Calif.)

In her opening statement, Waters expressed that the committee has prioritized advancing legislation to protect consumers and prevent bad practices in the industry. She continued that the proposals under consideration would promote Minority Depository Institutions (MDIs), protect student loan borrowers, strengthen cybersecurity practices and protect consumers from breaches. Waters added that there are also resolutions under consideration to elect Rep. Brad Sherman (D-Calif.) as the new Chair of the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee and re-establish the Task Forces on Artificial Intelligence (AI) and Financial Technology (FinTech). Waters emphasized the number of bills the Committee has passed, totaling 61 “common sense” bills for American workers.

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

In his opening statement, McHenry stated that the Committee should focus on the quality, not the quantity, of bills. He continued that the proposals addressing student loans are not focused on matters under the jurisdiction of the Financial Services Committee and should instead be considered by the Committees on Education and Labor or Ways and Means. McHenry expressed support for the private loan market, highlighting the default rate of the private market at three percent compared to 18 percent for the federal loan program.

H.R. 1731, the “Cybersecurity Disclosure Act of 2019”

Rep. Jim Himes (D-Conn.) introduced his bill and his Amendment in the Nature of a Substitute, which would give investors information about the cybersecurity posture of the public companies they invest in by requiring the Securities and Exchange Commission (SEC) to issue rules to require companies in their annual reports to the SEC or in their annual proxy statements to disclose whether any member of their board of directors, or similar governing body, has expertise or experience in cybersecurity and the nature of such expertise or experience. He continued that if there are no members of a company’s governing body that have experience or expertise in cybersecurity, the bill would require the company to describe what other cybersecurity aspects were taken into account by persons responsible for identifying and evaluating nominees for the company’s governing body. Himes said this emphasizes the importance of having cybersecurity expertise at the highest levels of publicly traded companies. Waters and Dean spoke in favor of the legislation.

Luetkemeyer spoke against the bill, calling it yet another bill that does not have any basis in the way a business is run. He asserted that it does not require the disclosure of efforts to improve cybersecurity or actual breaches, only the experience of people who have “little to no role” in the business’s day-to-day cybersecurity efforts. McHenry spoke against the bill, calling it another reporting burden on public companies. Rep. Bill Huizenga (R-Mich.) also spoke against 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 32-24.

H.R. 4545, the “Private Loan Disability Discharge Act of 2019”

Rep. Madeleine Dean (D-Pa.) introduced her bill and her Amendment in the Nature of a Substitute, which would create parity between private and federal student loan markets by amending the Truth in Lending Act specific to discharge provisions. The legislation would establish permanence to discharge provisions, created under the Tax Cuts and Jobs Act, for those with disabilities alongside their co-signers. Dean said discharge language currently applies only to those who are deceased. Reps. Alma Adams (D-N.C.), Al Green (D-Texas), and Ed Perlmutter (D-Colo.) spoke in favor of the bill.

McHenry spoke in opposition to the legislation, stating that private lenders already follow these practices. He stated that the student debt crisis is one he is concerned about and has had adverse consequences on the younger generation’s life decisions. McHenry expressed concerns specific to the targeted approach of the legislation, provisions that are retroactive, overly prescriptive language, and House Financial Services being the wrong committee of jurisdiction.

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

Wagner introduced her amendment, which would allow for the discharge of student debt for deceased and disabled individuals upon written approval from lenders. She said that her amendment would codify current practices of private loan markets. McHenry spoke in favor of the amendment. Dean stated that the amendment would only satisfy the status quo and would not discharge co-signers. The amendment was not agreed to by a vote of 25-32.

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 32-25.

H.R. 5287, the “Fair Student Loan Debt Collection Practices Act”

Rep. Al Lawson (D-Fla.) introduced his bill and his Amendment in the Nature of a Substitute, which would prohibit third-party debt collectors from collecting repayment based on an individual’s income level. The bill would also provide consumers with protections from unfair collection practices. Reps. Sylvia Garcia (D-Texas.) and Green spoke in favor of the bill.

Rep. John Rose (R-Tenn.) spoke in opposition to the bill, calling it another example of oversimplifying a complex issue under the guise of consumer protection. He added that this bill and other student loan reforms should be discussed in the House Education and Labor Committee.

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

Zeldin introduced his amendment, which would establish repayment plans based on a flexible approach. He explained that his amendment would establish timetables for repayment plans based on the financial needs of an individual. Zeldin added that the underlying bill would remove the debt collector’s ability to work with the borrower. He said this stifles borrowers’ ability regarding loan consolidation, rehabilitation, or repayment programs. The amendment was not agreed to by a vote of 26-32.

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 32-24.

H.R. 5294, the “Student Borrowers Protections Act”

Adams introduced her bill and her Amendment in the Nature of a Substitute, which would codify minimum standards of protections regarding student loan servicers for consumers to seek better access to counseling and loan assistance. Adams added that the legislation would hold servicers more accountable to act with borrowers’ interests in mind. Reps.  Joyce Beatty (D-Ohio), Dean, Perlmutter, and Green spoke in favor of this bill.

McHenry spoke in opposition to this bill, echoing many of the same points he did in opposition to the Private Loan Disability Discharge Act. He emphasized the jurisdictional considerations, as well as concerns about the default rates in public loan markets compared to private markets. McHenry suggested holding hearings to review the successes of the private loan markets compared to public markets. Rep. Blaine Luetkemeyer (R-Mo.) added that more information should be provided to borrowers to address the student debt crisis.

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

Luetkemeyer, on behalf of Barr, introduced the amendment, which would hold the federal government more accountable and hold universities to high transparency standards for borrowers to consider costs associated with education. Barr also encouraged the committee to consider how the student debt crisis affects small business creation and to collaborate with the committee of appropriate jurisdiction. Zeldin spoke in favor of the amendment. Adams spoke in opposition to the amendment, stating that it would strike student borrower rights and would not protect student borrowers. She said that her underlying legislation would not crowd out the private market. The amendment was not agreed to by a vote of 26-32.

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 32-26.

H.R. 5332, the “Protecting Your Credit Score Act of 2019”

Rep. Josh Gottheimer (D-N.J.) introduced his bill and his Amendment in the Nature of a Substitute, which would direct the nationwide consumer reporting agencies (CRAs) to create a single online portal landing page for consumers to access free credit reports, credit scores, dispute errors and place or lift security freezes. This landing page would also contain information on consumer rights and clearly written language as to handle report disputes. The bill also codifies the Consumer Financial Protection Bureau’s (CFPB) supervision of the nationwide CRAs and clarifies that the CFPB has authority, under Gramm-Leach-Bliley Act, to prescribe and enforce data security safeguards for the nationwide CRAs. The bill provides for injunctive relief to allow a court to compel a CRA to fix an error or remove inaccurate information from a consumer report. The bill also creates an Ombudsman at the Consumer Bureau tasked with resolving persistent errors on reports that are not addressed in a timely fashion and allowing the Ombudsman to make referrals to the Offices of Supervision and Enforcement for corrective action in response to violations of applicable law by a CRA. Finally, the bill requires the Government Accountability Office (GAO) to conduct a study on the feasibility and means the CRAs can replace the use of Social Security numbers as identifiers. Luetkemeyer spoke against the bill, saying it lacks practicality and will ultimately harm consumers. Reps. Bill Foster (D-Ill.), Beatty and Waters spoke in support of the bill.

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

McHenry introduced his amendment, which would replace the underlying bill with language that would subject the credit reporting agencies to enhanced cybersecurity supervision by the CFPB, noting the importance of protecting personally identifiable information from bad actors. Gottheimer noted the amendment does not include a portal or give consumers free and unlimited access to their credit reports as his underlying bill does. Reps. Green, Waters and Beatty spoke against the amendment. Rep. French Hill (R-Ark.) spoke in favor of the amendment. The amendment was not agreed to by a vote of 24-31.

Amendment Offered by Rep. Rashida Tlaib (D-Mich.)

Tlaib introduced her amendment, which would prevent the use of credit scores for the determination of auto insurance rates. Reps. Warren Davidson (R-Ohio), Roger Williams (R-Texas), Bryan Steil (R-Wis.) and Rose spoke against the amendment. Rep. Michael San Nicolas (D-Guam) spoke in support of the amendment. Tlaib withdrew her amendment.

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 31-24.

H.R. 5330, the “Consumer Protections for Medical Debt Collections Act”

Tlaib introduced her bill and her Amendment in the Nature of a Substitute, which would bar entities from collecting medical debt or reporting it to a consumer reporting agency without giving a consumer notice about their rights under Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) related to that debt, including a minimum one-year delay before adverse information is reported to a consumer reporting agency. The legislation also outright bans the reporting of medical debt arising from medically necessary procedures. Reps. Juan Vargas (D-Calif.), Ayanna Pressley (D-Mass.), San Nicolas and Waters spoke in support of the bill. Luetkemeyer spoke against the bill, saying it “misses the mark” and makes no attempt at “real reforms” to medical debt reporting. McHenry also spoke against the bill.

Amendment Offered by Rep. Barry Loudermilk (R-Mo.)

Loudermilk introduced his amendment, which would replace the existing language of the bill to place a prohibition on paid, non-elective medically necessary debt paid more than a year ago from being on a credit report and reduce the amount of time paid medically-necessary debt is on a credit report from seven years to one year. He said this would give the committee the opportunity to look at the impact the bill would have and determine who pays the cost of implementation of the bill. Tlaib spoke against the amendment, saying it only applies to medical debt that has been paid rather than all medical debt. Waters also spoke against the amendment. The amendment was not agreed to by a vote of 24-32.

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 31-24.

H.R. 5322, the “Ensuring Diversity in Community Banking Act of 2019”

Rep. Greg Meeks (D-N.Y.) introduced his bill, his Amendment in the Nature of a Substitute and a manager’s amendment, which would assist minority depository institutions (MDIs) that are struggling to raise capital to better serve low-income communities. Meeks expressed that there is a need to expand the Treasury Department’s Custodial Deposits Program and increase opportunities for MDIs. He added that the bill would allow MDIs a three-year timeline to address concerns of meeting capital requirements. Meeks said that the bill also establishes advisory councils for MDIs. Reps. Hill, Barr, Green, McHenry and Waters spoke in favor of the bill. McHenry, Barr and Hill emphasized the need to consider the overall decline of banks since 2008, especially community banks and MDIs, to strengthen competition and investor opportunities.

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 52-0.

H.R. 5315, the “Expanding Opportunities for Minority Depository Institutions (MDIs) Act”

Beatty introduced her bill and her Amendment in the Nature of a Substitute, which would codify the Treasury Department’s mentorship program. She said that the program’s partnership between minority-owned institutions and larger institutions is helpful, and Treasury Secretary Mnuchin’s feedback has shown the success of the program. Beatty said that minority-owned banks originate a large share of mortgages and small business 7-a loans relative to non-minority banks, which makes this program important. Beatty highlighted that minority-owned banks outperform the revenue of non-minority banks, but are offset with high associated costs, making survival difficult. Reps. Wagner, McHenry, Waters, Green and Luetkemeyer spoke in favor of the bill, emphasizing the importance of minority-owned bank partnerships with large, established institutions.

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 57-0.

Resolution Electing Majority Member to the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets

Waters introduced the resolution, congratulating Sherman for his election to serve as chair of the subcommittee, calling him a strong advocate for investor protection and consumer rights. McHenry and Huizenga echoed Waters’ congratulatory statements. Sherman said that he looks forward to the work the subcommittee will undertake and expressed a desire for the subcommittee to take a closer look at accounting issues.

The resolution was agreed to by a voice vote.

Resolution to establish the Task Force on Artificial Intelligence

Waters introduced this resolution, which would reauthorize the committee’s Task Force on Artificial Intelligence for the coming year. McHenry noted the importance of the task force and announced that Loudermilk will assume the role of Ranking Member.

The resolution was agreed to by a voice vote.

Resolution to establish the Task Force on Financial Technology

Waters introduced this resolution, which would reauthorize the committee’s Task Force on Financial Technology for the coming year. McHenry noted the importance of the task force and announced that Rep. Tom Emmer (R-Minn.) will assume the role of Ranking Member.

The resolution was agreed to by a voice vote.

For more information about this markup, click here.

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