Insights

Financial Services Report

November 2, 2015

​Looking Ahead

Near Term
On Tuesday the Financial Services Committee Meets to mark-up the following bills

  • H.R. 1309, the “Systemic Risk Designation Improvement Act of 2015”
  • H.R. 1478, the “Policyholder Protection Act of 2015”
  • An Amendment in the Nature of a Substitute expected to be offered by Mr. Posey is being distributed with this notice.  Members wishing to offer amendments are counseled to do so with reference to this text.
  • H.R. 1550, the “Financial Stability Oversight Council Improvement Act of 2015”
  • H.R. 1660, the “Federal Savings Association Charter Flexibility Act of 2015”
  • H.R. 2209, to require the appropriate Federal banking agencies to treat certain municipal obligations as level 2A liquid assets, and for other purposes
  • H.R. 3340, the “Financial Stability Oversight Council Reform Act”
  • H.R. 3557, the ‘FSOC Transparency and Accountability Act”
  • H.R. 3738, the “Office of Financial Research Accountability Act of 2015”
  • H.R. ____, the “Small Business Credit Availability Act”
  • H.R. 3857, To require the Board of Governors of the Federal Reserve System and the Financial Stability Oversight Council to carry out certain requirements under the Financial Stability Act of 2010 before making any new determination under section 113 of such Act, and for other purposes.

On Wednesday, Federal Reserve Chair Janet Yellen will come back before the Committee, this time to speak on Regulatory Policy. 

The House is scheduled to take up its version of the transportation bill, though numerous, non-transportation related amendments were filed, including one that would put a one year delay on the use of the reducing the Fed dividend as a pay-for in the Highway Bill. 

The Senate is scheduled to try to proceed to a bill (S. 1140) that would rewrite Clean Water Act jurisdiction over waters and wetlands, thought it unclear whether there are the votes necessary to get over the procedural hurdles those opposed plan to utilize. 

The FSOC will meet on Monday, where among other things it will continue its work on the asset management industry as well as receive an update related to cyber security.

Further Out

  • Transportation Authorization Expires on November 20th
  • Federal Funding Runs out December 11th
  • FSOC Hearing in House Financial Services in early December

The Past Week

Legislative Branch

House
House Passes Ex-Im
Following a 246-177 vote on Monday, where 62 Republicans joined with a unified Democratic caucus to finalize the use of an arcane procedural method known as a discharge petition, the House then voted 313-118 to pass legislation to revive the charter of the Ex-Im Bank.   While similar legislation is on the Rule 14 calendar in the Senate, Leader McConnell has made it clear that he will not allow the measure to come up independently, although it was also attached to the long-term Highway bill the Senate passed over the summer.  It is expected that the Ex-Im bank will be part of the conference report on the highway bill, as the House is expected to pass its own version of the Highway bill this week. 
 
House Passes Investor Choice Act – Senate Action Unlikely
On Tuesday, the House passed H.R. 1090, the  Retail Investor Protection Act, which would have delayed the Department of Labor from moving forward with its pending rulemaking on a fiduciary standard for investment advice on retiree savings until the SEC issued its own fiduciary standard for broker-dealers.  The measure passed on a near party line vote of 245-186, with only Brad Ashford, David Scott and Henry Cuellar as the only Democrats voting “aye.”   Two Republicans, Walter Jones and Kenny Marchant, voted “no” though Mr. Marchant later qualified that he intended to vote yes.   The final vote was 45 members short of sustaining a veto override, and a slight decrease from last year when an identical measure (H.R. 2374) passed by a vote of 254-166.
 
Ryan Elected Speaker
On Thursday, the House elected Paul D. Ryan as Speaker, replacing John Boehner who was ousted by a silent coup of House Conservatives.  Mr. Ryan, became one of the youngest Speakers in over a century and brought fresh hopes that the former Chairman of the Budget and also the Ways and Means Committees could bring a policy-oriented fiscal conservative could give the party a fresh start after years of strife.
 
Democrats Call on Perez for One More Public Comment Period for Fiduciary Rule
On Friday, nearly fifty House Democrats, led by Reps. Jared Polis and Ann Kuster, signed onto a letter asking Secretary Perez to open the Departments Fiduciary Rule to a short, supplemental comment period of 15-30 days prior to the finalization of the rule.  According to the letter, this would allow the Department to receive further comment, and the opportunity to make tweaks before the finalization of the rule. 
 
Senate
Budget Deal Reached – Debt Ceiling Off the Table until 2017 – Rider Policy for Spending Bills Next Controversial Item
Early Friday morning, the Senate passed a 2-year bipartisan budget deal—on a 64-35 vote of approval—that would raise the debt limit and set the top-level funding levels for the government for the next two years.  The bill will now go to the President’s desk, as it passed the House earlier this week by a vote of 266-167, with 79 Republicans voting “aye”. 
 
The package was a final legislative victory for outgoing House Speaker John Boehner (R-OH), who officially submitted his resignation on Thursday, and who had made clear his intention to “clear the barn” for new Speaker Paul Ryan (R-WI).   Lawmakers now must turn their attention to passing the spending bills, though it is unclear how Republicans and Democrats will find agreement in disposing of many of the various rider provisions that Minority Leader Harry Reid (D-NN) noted could “mess up” the appropriations process, during a floor speech last week. 
 
 
Warren Releases Report Critical of Annuity Industry
On Tuesday, Senator Elizabeth Warren released a report criticizing the annuities industry for what she called poor disclosures and pervasive kickbacks that incentives the sales force to sell “second-rate investment products to unsuspecting customers.”  In press following the release of the report, Senator Warren went on to add that the antidote for these incentives is the fiduciary standard currently pending at the Department of Labor. 
 
Senate Passes Cyber Security Sharing Legislation
On Tuesday, by a vote of 74-21, the Senate passed its version of the Cybersecurity Information Sharing Act, that would provide legal protection to companies that voluntarily share data with the government and other companies. The bill also would direct the federal government to share classified and unclassified information with the private sector.  Proponents of CISA now need to reconcile the Senate passed version with what the House passed earlier this year.  Among the key differences to work out are whether companies should need to share the information about cyber threats with multiple agencies (the House version) or through one portal at the Department of Homeland Security (the Senate method, and the White House’s preference).  Despite continued objections from privacy advocates, supporters remain confident that they can get something to the President’s desk before Obama leaves office.
 
Banking Dems Write to SEC Nominees on Political Spending Disclosure Rule
On Wednesday, eight Democratic members of the Senate Banking Committee sent a letter to Lisa Fairfax and Hester Pierce, both nominees to become SEC Commissioners, urging the nominees to announce their support for a political spending rule currently pending at the Commission.  Signers included: Ranking Member Sherrod Brown, as well as Charles Schumer, Robert Menendez, Jack Reed, Jon Tester, Mark Warner, Jeff Merkley, and Elizabeth Warren.  It follows a similar letter lead by Rep. Patrick Murphy and Michael Capuano and 58 other House Democrats that was sent last week.  
 
Democrats Urge SEC to Enforce Climate Disclosures
On Thursday, a group of thirty-five congressional Democrats wrote a letter to the SEC urging the Commission to “robustly and effectively enforce” its 2010 guidance calling for publicly traded companies to disclose risks to their operations posed by climate change.  The letter, signed by 16 Senators and 19 House Members, said it isn't clear how diligent the Commission has been in enforcing its 2010 guidance, which indicated that because the “significant physical effects” of rising global temperatures, including rising sea levels and increasingly severe weather events, could affect “operations and results,” they should be disclosed  in a company’s annual filings. 
 
Brown and Menendez Press DoD on Credit Reporting on Active Duty Military
On Thursday, Senators Brown  (D-OH) and Menendez (D-NJ) sent a letter to Defense Secretary Ashton B. Carter, the Senators requested information on steps the agency is taking to help ensure all service members have the tools they need to safeguard their financial security, including whether service members can put credit freezes on their accounts and what services the Department offers service members who encounter negative credit events.
 
 
Select Highlights from the Administration
Treasury
Treasury Appoints Twelve to Federal Advisory Committee on Insurance
On Wednesday, the Treasury announced it had appointed twelve people to serve as members of the Federal Advisory Committee on Insurance (FACI) where they will offer advice and recommendations directly to the Federal Insurance Office (FIO) on a periodic basis. Members of the FACI will serve terms of up to 3 years and include a broad cross section of industry, regulators and academics.
 
Consumer Financial Protection Bureau (CFPB)
SBREFA Panel on Arbitration Rulemaking Held
On Wednesday, the CFPB convened its Small Business Reform Enforcement Act (SBREFA), a step required by Dodd-Frank as the Bureau moves forward with it rulemaking on the use of arbitration clauses in consumer financial products.  Perhaps it was mere coincidence that later in the week the New York Times ran not one, but two stories attacking the use of arbitration provisions in a whole host of contracts.
 
Federal Deposit Insurance Corporation (FDIC)
FDIC Holds Advisory Committee Meeting on Mobile Payments and Underbanked
On Friday, the Federal Deposit Insurance Corporation’s (FDIC) Advisory Committee on Economic Inclusion (ComE-IN), Committee members discussed the rise of mobile technology in the banking sector and the use of the FDIC’s “MoneySmart” online tool to help entrepreneurs.   Among the highlights was a long discussion on the impact of mobile financial services (MFS) for those underserved by traditional banking practices.
 
Next Week’s Schedule
On Tuesday, November 3, at 10:00am in 2128 Rayburn, the Financial Services Committee will meet to mark-up various bills.
 
On Tuesday, November 3rd at 2:30pm in 538 Dirksen, the Banking Committee will meet in Executive Session to consider the nomination of Adam J. Szubin to be  to be Under Secretary for Terrorism and Financial Crimes,.
 
On Tuesday, November 3, at 2:30pm in 226 Dirksen the Judiciary Subcommittee on Privacy, Technology and the Law will hold a hearing entitled, “Data Brokers – Is Consumers’ Information Secure?”
 
On Wednesday, November 4, at 10:00am in 2128 Rayburn the Financial Services Committee will hold a hearing entitled, “Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System.”
 
On Wednesday, November 4, at 10:00am the Commerce Committee will hold a hearing entitled, “Zero Stars: How Gagging Honest Reviews Harms Consumers and the Economy.”
 
On Friday, November 6th at 12:00pm in New Orleans, the Housing and Insurance Subcommittee will hold a hearing entitled, “New Orleans: Ten Years After the Storm.”