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House Financial Services Markup

House Committee on Financial Services

Markup

Tuesday, February 28, 2023

Topline

  • Democrats offered multiple amendments to the Data Privacy Act of 2023, but all of them were rejected, and the legislation passed on partisan lines. Ranking Member Waters’ amendment striking the federal preemption and Rep. Williams’ amendment imposing a private right of action were both rejected.
  • Committee marked up and approved 12 bills.

Witnesses

Opening Statements

Chairman Patrick McHenry (R-N.C.)

McHenry said that to outcompete China on the global stage the U.S. cannot become the Chinese Communist Party (CCP). He highlighted his Data Privacy Act, which he said will put consumers back in control of their financial data. He explained that the legislation is not an overhaul of current financial data privacy laws but a modernization of the law passed in 1999.

Ranking Member Maxine Waters (D-Calif.)

Waters said that Democrats have a strong record of standing up to the Chinese government, so she is pleased that Republicans are building on achievements such as the Inflation Reduction Act , the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act. Waters also highlighted her support for eleven of the bills being marked up, including the Public Health Emergency Medical Supplies Enhancement Act, China Financial Threat Mitigation Act, and her Aligning SEC Regulations for the World Bank’s International Development Association Act. Finally, the Ranking Member said that Democrats have major concerns about the data privacy legislation, as it will undermine existing protections.

Legislation

H.R. 1165, the “Data Privacy Act of 2023.”

McHenry offered an ANS and explained his bill. He said that H.R. 1165 simply brings privacy guardrails in the 21st century, and balances fostering innovation with protecting consumers. McHenry highlighted a few specific aspects of the legislation:

  • It modernizes protections using a technology agnostic approach.
  • It gives more control to the consumer on how personal information will be used downstream., including the right to terminate collection of their data or request that it be deleted at any time.
  • It will protect against the misuse or overuse of a consumer’s non-public personal information.
  • Privacy terms and conditions must be transparent and easily understandable.
  • There should be consistency across the country through a national standard.

Waters expressed her opposition to the legislation but noted that strengthening data privacy is a bipartisan issue. She also thanked McHenry for removing provisions that would have stripped CFPB of its rulemaking authority under the GLBA and repealed Section 1033 of Dodd Frank. She also highlighted that the bill would make modest changes to expand GLBA’s privacy disclosures and give consumers the right to delete their information in certain circumstances, which are positive steps. Finally, Waters explained what she considered to be the legislation’s flaws, including a broad preemption of state laws, a weakened federal standard for federal institutions than what other industries are subjected to, and a burden on consumers to limit the use and distribution of their data.

Waters then introduced an amendment to the ANS that would strike the bill’s broad preemption of state law. She highlighted that experts have raised concerns that the preemption provision would likely preempt state data breach notification requirements and related private rights of action given that those laws relate to the disclosure of personal information and warned that it may also preempt a slew of state capital reporting laws that are not currently preempted by the Fair Credit Reporting Act (FCRA). Rep. Stephen Lynch (D-Mass.) supported the amendment, and Rep. Bill Foster (D-Ill.) suggested another option to allow group of states representing a certain population of the U.S. to come together and establish a new standard.

McHenry said that the bill takes things from different standards and provides a right to know, a right to opt out, a right to delete, and a right to terminate information sharing. He reemphasized that it provides a national standard that raises the bar for all Americans. The Waters Amendment was not agreed to (20 Ayes – 26 Nays).

Lynch offered another amendment to the ANS to address the increasing use of biometric data in the financial services industry. He said the amendment builds on the work of Illinois in the Biometric Information Privacy Act, which ensures that companies that use this information are only able to collect, use, and share it after obtaining explicit permission. His amendment would break out the biometric data. Rep. Andy Barr (R-Ky.) said the legislation would capture the information that Lynch mentioned, while also being technology neutral to capture future innovation. The Lynch Amendment was not agreed to (21 Ayes – 26 Nays).

Rep. Joyce Beatty (D-Ohio) offered an amendment to the ANS that to address concerns about companies owned or controlled by foreign governments. The amendment would require consumers to give their written permission before a financial institution obtains from them or shares their sensitive consumer data with third party companies own or controlled by a foreign government. McHenry explained that the bill prohibits financial institutions from sharing this information with foreign governments unless it meets the law enforcement exception. He added that there is downstream control over data for all entities, not just foreign, and it is in the hands of the individual to stop that. The Beatty Amendment was not agreed to (21 Ayes – 26 Nays).

Rep. Steven Horsford (D-Nev.) offered an amendment to require financial institutions to obtain a consumer’s permission before they can collect or use that consumer’s social media information. It would also require the financial institution to get the consumer’s approval before sharing their information with any social media platform. Finally, Horsford’s amendment would require a company that initially received a consumer’s consent to share their information with a social media platform must obtain that same consumer’s consent at least once a year. The Horsford Amendment was not agreed to (21 Ayes – 26 Nays).

Rep. Rashida Tlaib (D-Mich.) offered an amendment to double any fines and penalties for companies that violate the GLBA. McHenry opposed the amendment, saying that it is premature and enforcement pieces are not in this bill. The Tlaib Amendment was not agreed to (20 Ayes – 26 Nays).

Rep. Sylvia Garcia (D-Texas) offered an amendment to require financial institutions to obtain a consumer’s written permission before sharing transactions or financial data related to health care activity.

McHenry said that health information is already protected by Health Insurance Portability and Accountability Act (HIPAA), so the amendment is does not seem pertinent to the committee’s jurisdiction. Garcia replied that HIPAA does not cover financial institutions. The Garcia Amendment was not agreed to (20 Ayes – 26 Nays).

Rep. Nikema Williams (D-Ga.) offered an amendment to establish a federal private right of action under the GLBA privacy provisions. Barr said that the financial services industry is already heavily regulated on data privacy, which comes as a heavy compliance burden for financial institutions. He argued that imposing a private right of action could expose these institutions to frivolous litigation that could result in bank and credit union closures or fintech companies exiting the market. The Williams Amendment was not agreed to (20 Ayes – 26 Nays).

The Amendment in the Nature of a Substitute was agreed to by voice vote, and H.R. 1165, as amended, was reported favorably to the House (26 Ayes – 21 Nays).

H.R. 554, the “Taiwan Conflict Deterrence Act of 2023.”  

Rep. French Hill (R-Ark.) offered an amendment in the nature of a substitute (ANS) and explained the bill. He said that under the legislation, once the President notifies Congress that China has threatened Taiwan’s security, the procedure laid out in the Taiwan Relations Act that the Treasury Secretary disclose the estimated funds of top officials in Beijing begins. As a result, U.S. institutions would be prohibited from dealing with these officials and any immediate family members who benefit from these assets. Hill said that the bill lets the CCP know that endangering Taiwan will not only expose them to the Chinese public, potentially destabilizing their grip over the country, but also result in harsh financial sanctions for the leadership and their families.

The ANS was agreed to by voice vote, and H.R. 554, as amended, was reported favorably to the House (40 Ayes – 0 Nays).

H.R. 1076, the “Preventing the Financing of Illegal Synthetic Drugs Act.”  

Rep. Monica De La Cruz (R-Texas) offered an ANS and explained the bill. She said that it directs the Comptroller General of the US to study the illicit financing associated with synthetic drug trafficking.

Waters offered but then withdrew an amendment to the ANS focused on reinforcing lessons learned about injustices of past epidemics. Rep. Juan Vargas (D-Calif.) asked if the study would look at cryptocurrency. McHenry said that it is his intention to talk about crypto at a future date, including in relation to illicit finance.

The ANS was agreed to by voice vote, and H.R. 1076, as amended, was reported favorably to the House by voice vote.

 H.R. 1156, the “China Financial Threat Mitigation Act of 2023.”

Rep. Joyce Beatty (D-Ohio) offered an ANS and explained the bill, which will require the Treasury Department to study and issue a report that analyzes risks to U.S. financial stability and the global economy stemming from China.

The ANS was agreed to by voice vote, and H.R. 1156, as amended, was reported favorably to the House (40 Ayes – 0 Nays).

H.R. 1109, the “Bank Service Company Examination Coordination Act of 2023.”

Rep. Roger Williams (R-Texas) offered an ANS and explained the bill. He said that it is a commonsense piece of legislation that enables state and federal regulators to coordinate their examination activities of bank service companies to avoid duplicate actions. Williams argued that this will help harmonize the oversight process without additional risk to the financial system.

The ANS was agreed to by voice vote), and H.R. 1109, as amended, was reported favorably to the House (39 Ayes – 0 Nays).

H.R. 540, the “Taiwan Non-Discrimination Act of 2023.” 

Rep. Young Kim (R-Calif.) offered an ANS and explained the bill, which would require the Treasury Department to implement the Taiwan policy at the IMF. She noted that Taiwan is not required to be a member state in the U.N. to gain access to the IMF, so if Taiwan seeks membership Treasury should carry out U.S. policy by supporting its application.

The ANS was agreed to by voice vote, and H.R. 540, as amended, was reported favorably to the House (38 Ayes – 0 Nays).

H.R. 510, the “Chinese Currency Accountability Act of 2023.”  

Rep. Warren Davidson (R-Ohio) offered an ANS and explained the bill, which requires the Treasury Secretary to oppose any future increase in the RMB’s weight in the IMF’s special drawing rights currency basket unless China undertakes profound economic reforms.

The ANS was agreed to by voice vote, and H.R. 510, as amended, was reported favorably to the House (40 Ayes – 0 Nays).

H.R. 839, the “China Exchange Rate Transparency Act of 2023.”

Rep. Dan Meuser (R-Pa.) offered an ANS and explained the bill. He said that it is a necessary measure that will bolster Treasury’s efforts to hold China accountable for its opaque exchange rate policies.

The ANS was agreed to by voice vote, and H.R. 839, as amended, was reported favorably to the House (36 Ayes – 0 Nays).

H.R. 803, the “Pressure Regulatory Organizations To End Chinese Threats to (PROTECT) Taiwan Act.”

Rep. Frank Lucas (R-Okla.) offered an ANS. He explained that this bipartisan legislation sends a clear message to China that if they plan to engage in conflict against Taiwan, then they should understand the consequences.

The ANS was agreed to by voice vote and H.R. 839, as amended, was reported favorably to the House (37 Ayes – 0 Nays).

H.R. 555, the “Securing America’s Vaccines for Emergencies (SAVE) Act of 2023.”

Rep. French Hill (R-Ark.) offered an ANS and explained the bill. He said that when COVID hit, the U.S. was unprepared as it relates to medical supplies, pharmaceuticals, pharmaceutical agreements, PPE, and medical devices.

Rep. Ralph Norman (R-S.C.) objected to the bill due to the “track record of non-judgement of this administration.”

The ANS was agreed to by voice vote, and H.R. 555, as amended, was reported favorably to the House (33 Ayes – 1 Nays).

H.R. 1166, the “Public Health Emergency Medical Supplies Enhancement Act of 2023.” 

Vargas offered an ANS and explained that the bill bolsters future pandemic response efforts by amending the DPA to allow the HHS and DHS Secretaries to determine what medical equipment supplies and critical materials are critical to the national defense. He said that it harmonizes inter-governmental efforts to prioritize purchasing, production, and distribution of critical medical equipment and supplies to protect the health of the American people, and it ensures accountability by directing the President to submit a report to the pertinent congressional committees on the use of DPA authorities.

The ANS was agreed to by voice vote, and H.R. 1116, as amended, was reported favorably to the House (30 Ayes – 2 Nays).

H.R. 1161, the “Aligning SEC Regulations for the World Bank’s International Development Association Act.” 

Waters offered an ANS and explained that the bill would extend exemption from SEC regulation to the International Development Association (IDA). She argued that bringing IDA into the same exemption framework as its sister agencies at the World Bank would level the playing field and allow greater number of investors to support Ida and invest in ways congruent to their values.

The ANS was agreed to by voice vote, and H.R. 1161, as amended, was reported favorably to the House (38 Ayes – 0 Nays).

For more information on this hearing, please click here.

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