Welcome to the The Bottom Line, a new blog about financial regulation, financial services issues and housing policy from the House Financial Services Committee. It’s where Members of the Committee and Committee staff will help educate policy makers, market observers and constituents about the financial markets and legislative proposals before the Financial Services Committee. We hope this blog will inform its readers about the ongoing debates surrounding financial services issues. We hope this blog will make people think. And finally, we hope this blog will make people want to read it. After ... Read More »
The legislation, introduced by Rep. Steve Pearce, requires the Treasury Department to approve any new debt issuance by the GSEs. If Treasury approves a debt issuance, it must explain and justify its decision to Congress and the FHFA within seven days. The legislation limits the amount of GSE risk taking. On April 8, the Capital Markets and Government Sponsored Enterprises approved the legislation on a vote of 18-0-1. Read More »
A provision added to the Dodd-Frank Act without any debate requires publicly traded companies to disclose their median annual total compensation of all employees. Two months after the Dodd-Frank Act was signed into law, the Financial Services Committee received testimony about the enormous burden and complexity this provision poses to publicly traded companies, with very little, if any, corresponding benefit to investors. The Burdensome Data Collection Relief Act would repeal this provision of the Dodd-Frank Act. The legislation is sponsored by Representative Nan Hayworth. Read More »
The Dodd-Frank Act included a liability provision for credit rating agencies if their ratings were determined to be inaccurate. Within days of the Dodd-Frank Act becoming law, this liability provision temporarily shut down the asset-backed securities market, forcing the Securities and Exchange Commission (SEC) to step in and issue a temporary no-action letter on July 22, 2010. On November 23, 2010, the SEC issued a permanent no-action letter. The Asset-Backed Market Stabilization Act provides certainty to the issuers of asset-backed securities by repealing the liability provision. The legislat... Read More »
The Financial Services Committee has received testimony regarding the role private equity firms play in preserving existing jobs and creating new ones by providing capital to struggling and growing companies. The Dodd-Frank Act requires most advisers to private investment funds to register with the SEC, including advisers to private equity funds. The Small Business Capital Access and Job Preservation Act, H.R. 1082, exempts advisers to private equity funds from the registration requirements. The legislation is sponsored by Representative Robert Hurt. Read More »
The Dodd-Frank Act requires derivatives transactions to be cleared through a registered clearing house, and exempts swaps and security based swaps from this clearing requirement if one of the counterparties is not a financial entity. The Business Risk Mitigation and Price Stabilization Act exempts true derivatives end-users from having to post margin as required under Dodd-Frank. True end-users are firms and companies that use derivatives to manage their risks, not to speculate. The legislation is sponsored by Rep. Michael Grimm. Read More »
Representatives Spencer Bachus (R-AL), Frank Lucas (R-OK), K. Michael Conaway (R-TX), and Scott Garrett (R-NJ) introduced H.R. 1573, which would extend the deadline by 18 months for implementing Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill gives the regulatory agencies more time to effectively meet the objectives of the derivatives title, to prioritize deliberation over speed, to consider the costs and benefits, and to understand the cumulative impact of the rules that will be applied to the marketplace. Additionally, the bill realigns the U.S. with the ... Read More »
The Responsible Consumer Financial Protection Regulations Act establishes a bipartisan commission of five members at the Consumer Financial Protection Bureau (CFPB). H.R. 1121, introduced by Chairman Spencer Bachus facilitates robust consumer financial protection by empanelling a five-member Commission to carry out all of the duties that would otherwise fall to the Director of the CFPB. This proposed structure of the CFPB is the same structure that has worked well for nearly every other regulatory body in this country, including the FTC, FDIC and SEC. H.R. 1121 is identical to the bipartisan a... Read More »
The expansive powers given to the CFPB to write rules will have far-reaching implications. Yet, the Dodd-Frank Act makes the CFPB’s judgments essentially unreviewable. The Dodd-Frank Act did include a review process, but the process is essentially meaningless . The Act allows the Financial Stability Over-sight Council to review rulemaking by the CFPB, but it must meet virtually impossible prerequisites in order to overturn any CFPB rulemaking. Among the extreme standards the FSOC must meet to overturn a rule are: Two-thirds of FSOC members must approve; The FSOC must find the rule endangers t... Read More »
H.R. 1182 ends the taxpayer-funded bailouts of Fannie Mae and Freddie Mac and put these two companies on a path towards privatization. The failures of the two government-sponsored enterprises (GSEs) have directly cost taxpayers more than $150 billion. H.R. 1182 is sponsored by Rep. Jeb Hensarling. Read More »
