Contact
Insights

Financial Services Report

December 14, 2015

Looking Ahead

Near Term

  • Congress has till Wednesday to resolve differences over the remaining issues — ranging from Syrian refugees to oil exports — that continue to be the impediment to passing a bill to fund the government for the remainder of FY16.
  • Debate and discussions also continue around the tax “extenders” package, including whether to make permanent several dozen expiring tax breaks, as well as to include delays on the implementation of the Affordable Care Act’s (ACA) “Cadillac” and medical device taxes.
  • The House Financial Services Committee will hold a hearing on the CFPB and how it is collecting and using data.
  • On Thursday, the FSOC will meet in a closed session via telephone to discuss the annual re-evaluation of the designation of a nonbank financial company.

Further Out

  • After a year driven by legislatively imposed deadlines, we are down to are last one (hopefully) – December 16th which is when the current extension of funding for the government is set to run out.
  • January 5th – Start of the Second Session of the 114th Congress in the House
  • January 11th – Start of the Second Session of the 114th Congress in the Senate
  • January 12th State of the Union

The Past Week

Legislative Branch

House
Financial Stability Oversight Council – Minus Two – Testify before HFSC
On Tuesday, the entire FSOC (minus Fed Chair Yellen and Treasury Secretary Lew) appeared before the House Financial Services Committee for a marathon hearing.   While many Republican Members focused their questions on the designation of systemically important financial institutions (SIFI) and SIFI de-designation process, others took issue with the FSOC’s lack of transparency and oversight or its actions in international regulation, particularly in dealing with insurance. While Democrats took a less harsh tone to the regulators than their Republican counterparts, and in some instances defended the FSOC’s work, it was clear that they were also questioning certain elements and policies of the FSOC.
 
House Passes Customs Bill
On Friday, by a vote of 256-158 the House passed H.R. 644, the Customs Enforcement and Modernization bill.  The measure now goes to the Senate where the absence of provisions related to currency manipulation and climate change as well as the inclusion of language making permanent an existing moratorium on states and localities from taxing internet access may make for a bumpy road to passage. 
 
Financial Services Committee Considers Several Bills
On Wednesday, following the marathon FSOC hearing the Committee transitioned to a mark-up and approved the following measures:

  • H.R. 2205 – the Data Security Act of 2015 was approved by a vote of 46-9;
  • H.R. 2187, the Fair Investment Opportunities for Professional Experts Act was approved by a vote of 54-2;
  • H.R. 2287, the National Credit Union Administration Budget Transparency Act, was approved by a vote of 40-16;
  • H.R. 3700, the Housing Opportunity Through Modernization Act of 2015 was approved by a vote of 44-10;
  • H.R. 3784, the SEC Small Business Advocate Act of 2015, was approved unanimously;
  • H.R. 3791 allows more small banks and savings and loans to access capital that can be used to make loans and offer new loan products, was approved by a vote of 33-21;
  • H.R. 4168, the Small Business Capital Formation Enhancement Act was approved by a vote of 55-1; and
  • The Committee unanimously approved another six month term for the Task Force to investigate Terrorism financing, that will start in January 2016.

Rep. Higgins Questions Bank Merger
On Monday, Representative Brian Higgins (D-NY) sent a letter outlining his concerns that the pending merger of Key Bank and First Niagara Bank should be blocked due to the anti-trust concerns.  Alternatively, the Congressman suggested that Department of Justice and the Federal Trade Commission could allow the merger to go through after requiring the spin-off of the upstate First Niagara Branch Bank Network. 
 
Hensarling Outlines Agenda for Next Year
On Thursday, Chairman Hensarling shared with reporters his agenda for the Financial Services Committee in 2016.  Among the areas he intends to continue working on are: Housing Reform, Terrorist financing; repealing the Financial Stability Oversight Council’s “SIFI” designation process; as well as continued efforts on Federal Reserve reform.
 
Senate
Scope of Extenders and Omnibus Bill in Flux
While initially there had been hope to have the text of the omnibus prepared for release by last Wednesday, so that the House and Senate would have been able to vote on it over this past weekend it was ultimately not to be.  On Thursday and Friday the Senate and House respectively extended the December 11th deadline by five days so that funding now runs out on the 16th.   It now appears that appropriators are hoping to release a text on Monday the 14th and hopefully wrap up votes by the end of the week.  As of the end of last week, public reports were saying that Democrats had beaten back all attempts to include any financial services riders that “weakened Dodd Frank,” a description that may perhaps include the controversial DOL fiduciary rule, even though that rule was not, itself, part of the Dodd-Frank negotiations.
 
Also, as of Friday, negotiations were still going over Republican efforts to include policy provisions such as lifting a 40-year-old ban on the export of most U.S. crude oil, blocking Syrian refugee resettlement in this country, and repealing the Environmental Protection Agency’s Waters of the U.S. rule. House Democrats, meanwhile, want to use the spending bill to remove an almost two-decade-old ban on research about gun violence by the Centers for Disease Control and Prevention (CDC). 
 
Senators Introduce Bill to Expand Data Points for Credit Reporting Agencies
On Thursday, Senator Mark Kirk (R-IL) and Senator Joe Manchin (D-WV) introduced S. 2355, the Credit Access and Inclusion Act, which would allow gas, electric and telecommunications companies to report positive payment histories to credit agencies.  Expanding these payments as reportable by the credit agencies would be helpful towards helping “credit invivisble” consumers establish their credit worthiness.  A companion measure was introduced in the House by Reps. Ellison (D-MN) and Fitzpatrick (R-PA). 
 
Senators Introduce Legislation to Address Puerto Rico Debt Crisis
On Wednesday, Senators Hatch, Grassley and Murkowski introduced the Puerto Rico Assistance Act of 2015.  The legislation would provide 50% tax cut to employee side of the payroll tax for five years, reducing the employee share of the rate to 3.1%.  In addition, the bill would establish an Assistance Authority to assist Puerto Rico attain sustainable budgets, budget plans, and a sustainable debt trajectory, while respecting the autonomy of the government of Puerto Rico, as well as commission various studies, and provide up to $3 billion for “transition assistance.”
 
Select Highlights from the Administration
 
Consumer Financial Protection Bureau (CFPB)
CFPB Releases Financial Well Being Guide
On Thursday, the CFPB released its Financial Well-Being Guide, a tool for consumers, advocates and financial professionals that allows individuals to measure how their (or others) consumer financial well-being compares with the definition that the CFPB released in January 2015. 
 
Securities Exchange Commission (SEC)
SEC Takes Another Stab at Rule on Requiring Extraction Payment Disclose
On Friday, by a vote of 3-1 the SEC voted to once again require energy companies to disclose the payments they make to governments for the rights to extract oil, gas, and minerals.  The vote came nearly two years after a federal judge overturned an earlier effort by the Commission.  The Commission’s proposal refrained from including a blanket exemption for companies operating in the countries that forbid the disclosure of such payments, which had been sought by industry.  However, if implemented the rule would allow companies to request permission, on a case-by-case basis, to keep private certain payment data.  However, how that would work in practice has yet to be fleshed out by the Commission.  In addition, absent SEC permission to keep some of the data private, companies will have to disclose their payments for each project rather than an aggregated summary they had sought.  The vote was a straight party line vote, with Commissioner Piwowar, the lone Republican on the panel, casting the only dissenting vote.
 
Next Week’s Schedule
 
On Wednesday, December 16th at 10:30am in 2128 Rayburn the Financial Services Oversight and Investigations Subcommittee will hold a hearing entitled, “Examining the Consumer Financial Protection Bureau’s Mass Data Collection Program.”