The House and Senate are Recess this week.
Next week the House Financial Services Committee has two hearings on the schedule and a rumored mark-up.
Last Week in the House
On Monday, the House passed the following four bills out of the Financial Services Committee:
The Housing Choice Voucher Mobility Demonstration Act (HR 1122) passed by a vote of 387-22. Sponsored by Reps. Emanuel Cleaver (D-MO) and Sean Duffy (R-WI), the bill would establish a mobility demonstration program exploring the use of rental-assistance vouchers to help families move to lower-poverty areas.
The Federal Reserve Supervision Testimony Clarification Act (HR 974) passed by a voice vote. Sponsored by Reps. Josh Gottheimer (D-NJ) and Frank Lucas (R-OK), the bill specifies that the the Federal Reserve Vice Chair for Supervision, or a designee if that position is vacant, must provide verbal and written testimony to Congress on the Fed's supervisory activities.
The FinCEN Improvement Act (HR 1414) passed by a voice vote. Sponsored by Reps. Jennifer Wexton (D-VA) and Denver Riggleman (R-VA), the legislation amends the Financial Crimes Enforcement Network's FinCEN's authorizing statute to allow it to work with tribal law enforcement agencies, protect against all types of terrorism, and expand its focus on emerging trends in illicit finance such as cryptocurrencies.
The Cooperate with Law Enforcement Agencies and Watch Act (HR 758) passed by a vote of 404-7. Sponsored by Reps. French Hill (R-AR) and Bill Foster (D-IL), the legislation limits a financial institutions' liability for maintaining a customer relationship in compliance with a "keep open" letter from law enforcement authorities.
Additionally, on Wednesday, the House passed a resolution (H.Res. 206) "acknowledging that the lack of sunlight and transparency in financial transactions poses a threat to our national security and our economy's security and supporting efforts to close related loopholes." Sponsored by Financial Services Committee Chairwoman Maxine Waters, the resolution passed by a voice vote.
Hearings and Markups
Wells Fargo (3/12): On Tuesday, Wells Fargo CEO Tim Sloan appeared before the the Financial Services Committee to discuss numerous allegations of misconduct against his bank. Throughout the hearing, Committee Members on both sides of the aisle criticized Wells Fargo for the unauthorized opening of millions of accounts, charging illegal fees, and charging customers for auto insurance they do not need, among other misdeeds. With Committee Democrats particularly harsh in their criticism, Chairwoman Maxine Waters (D-CA) called Wells Fargo a "recidivist financial institution" and expressed the belief that the bank—which holds $1.9 trillion in assets—is "too big to manage."
Financial Crime (3/12): On Tuesday, Under Secretary of the Treasury for Terrorism and Financial Intelligence Sigal Mandelker appeared before the House Appropriations Subcommittee on Financial Services and General Government. Thanking the Subcommittee for increasing support for the Office of Terrorism and Financial Intelligence in each of the past two years, Under Secretary Mandelker reviewed an active year for TFI, including the re-imposition of nuclear sanctions on Iran, escalating sanctions on Russian oligarchs, "unprecedented action to hold human rights abusers' accountable, and a variety of guidance intended to enhance TFI's cooperation with the private sector.
Temporary Tax Policy (3/12): On Tuesday, the House Ways and Means Tax Subcommittee held a hearing on "temporary tax policy" where Members discussed the 29 currently expired tax provisions, as well as the 80 set to expire between now and 2027. Witnesses and Members on both sides of the aisle recognized the lack of certainty that temporary tax writing provides taxpayers and promoted specific provisions for individuals, business investment, and energy efficiency. However, the Subcommittee did not move towards any consensus on the long-term future or retroactive renewal of expired tax provisions.
Flood Insurance (3/13): On Wednesday, the Financial Services Committee discussed proposals to reform and reauthorize the National Flood Insurance Program (NFIP)—currently set to expire on May 31. Amid broad bipartisan support for long term NFIP reauthorization, Members recognized the importance of improving flood maps and flood mitigation. On the Republican side of the dais in particular, Members questioned NFIP's persistent insolvency and emphasized the importance of private flood insurance markets and reinsurance. Other issues receiving attention included special rates for grandfathered policies, rebuilding restrictions on repetitive loss properties, and means-tested premium assistance. Many of these topics are addressed in discussion draft reauthorization legislation recently circulated by Rep. Velazquez.
Corporate Transparency (3/13): On Wednesday, the Financial Services Subcommittee on National Security held a hearing where members discussed legislative proposals to detect and deter financial crime. Specifically, the Subcommittee considered three pieces of proposed legislation: (1) a discussion draft (text) that would broadly reform Bank Secrecy Act/anti-money laundering (BSA/AML) regulations through strengthening the Treasury Department, improving oversight, and modernizing BSA; (2) Rep. Carolyn Maloney's (D-NY) Corporate Transparency Act (text) that would require corporations to disclose beneficial ownership information; and (3) the bipartisan Kleptocracy Asset Recovery Rewards Act (HR 389) that would establish a rewards program for information on assets held in US financial institutions linked to foreign bribes.
President's Budget (3/14): On Thursday, Treasury Secretary Steven Mnuchin appeared before the Ways and Means Committee to discuss the President's FY20 budget. While much of the hearing was dedicated to continuing partisan debates on tax reform, the President's tax returns, and entitlement cuts, a number of exchanges focused on topics relevant to the financial services industry, including: (1) transparency for Opportunity Zone participants and the timeline for further rulemaking; (2) multiple employer pension fund solvency; and (3) clarity of international tax regulations promulgated in the wake of tax reform.
Best Interest Rule (3/14): On Thursday, the Financial Services Subcommittee on Investor Protection held a hearing on the SEC's proposed best interest rule. During the hearing, which was poorly attended due to the fact it was a "fly-out day", several of the Committee Democrats criticized the SEC's proposal, with Subcommittee Chairwoman Carolyn Maloney (D-NY) arguing that the rule does not subject broker dealers to full fiduciary standards, fails to define "best interest," and too heavily relies on disclosures rather than resolving conflicts of interest. Committee Republicans, in contrast, spoke more favorably of the rule, which Ranking Member Bill Huizenga (R-MI) said would increase transparency and flexibility for investors. Interestingly, Rep. Sherman questioned the witness panel to ascertain whether they thought the status quo was better than the SEC's rule, with all of the Democratic witnesses indicating that was a better outcome.
HR 1756 (Tlaib): Prohibits insurance companies from using consumer credit data to set auto insurance rates.
HR 1731 (Himes, Heck, and Meeks): Requires publicly traded companies to have a cybersecurity expert on their board of directors or explain why they do not. The bill is companion legislation to an existing Senate bill led by Sen. Jack Reed (D-RI).
Carried Interest Fairness Act (Pascrell): Closes the carried interest loophole by taxing carried interest as ordinary income rather than at the 23.8% capital gains tax rate. Companion legislation in the Senate was introduced by Sen. Tammy Baldwin (D-WI).
HR 1666 (Castor and Luetkemeyer): Clarifies that private flood insurance fulfills National Flood Insurance Program (NFIP) continuous coverage requirements, allowing policyholders to return to NFIP after switching to private flood insurance.
No Tax Breaks for Outsourcing Act (Doggett): Taxes income of overseas subsidiaries at the same rate as domestic income, maintains US tax treatment of inverted companies that retain majority US ownership, and prevents multinational companies from saddling US subsidiaries with debt to reduce their tax burden. Sen. Sheldon White House (D-RI) introduced companion legislation in the Senate.
Stop Tax Haven Abuse Act (Doggett): Prohibits companies managed and controlled in the US from being treated as foreign, accelerates the repatriation of foreign earnings, and creates new beneficial ownership requirements. Companion legislation in the Senate is led by Sen. Sheldon Whitehouse (D-RI)
Lighthizer Hits Hill on USMCA: On Wednesday, United States Trade Representative Robert Lighthizer met with the House Democratic Caucus as the Administration attempts to drum up Democratic for the United States-Mexico-Canada Agreement (USMCA). With the enforceability of labor provisions a key sticking point, Ambassador Lighthizer stressed that Mexico would pass legislation implementing labor concessions and that enforceability provisions would be added through implementing legislation. Democrats gave the suggestion a lukewarm response. Ahead of the meeting, Congressional Progressive Caucus (CPC) co-chair Mark Pocan (D-WI) said that CPC would oppose the agreement as currently written.
Waters Calls for Tim Sloan Removal: On Thursday, following HFSC's hearing on Wells Fargo and on the heels of reports that CEO Tim Sloan received $2 million in performance-based compensation last year, Financial Services Committee Chairwoman Maxine Waters called on the Office of the Comptroller of the Currency (OCC) to remove Mr. Sloan from his position. In a press release, Chairwoman Waters commented: "Mr. Sloan shouldn't be getting a bonus, he should be shown the door"
Waters to Target For-Profit Colleges: On Thursday, Financial Services Committee Chairwoman Maxine Waters (D-CA) said at a Member day before the Education and Labor Committee that she intends to introduce legislation toughening for-profit college revenue rules. The forthcoming legislation would lower the maximum percentage of for-profit college revenue that can come from student aid from 90 to 85, as well as require that veteran education benefits are counted as federal student aid for the purposes of the rule.
Last Week in the Senate