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December 04, 2015
House Passes Hensarling's Amendment Including 15 Bipartisan Financial Services Bills
On Thursday the House of Representatives passed a five-year highway bill that includes Chairman Jeb Hensarling's (R-TX) amendment of 15 bipartisan financial services bills. These bills have all previously passed the House as stand-alone measures with strong bipartisan support. Chairman Hensarling remarked on the passage of his amendment, "It is very difficult to come by bipartisan bills, but I am proud to say that the House Financial Services Committee has passed numerous pieces of bipartisan legislation. They are modest because they are bipartisan, but they are important and can make a difference in people’s lives." To view the bills that passed, click here. Subcommittee Discusses Legislation to Promote U.S. Capital Markets and Protect Due Process Rights The Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing on Wednesday to continue the Committee's work on promoting Main Street small businesses. The committee reviewed five legislative proposals to help facilitate capital formation in U.S. markets and to ensure that defendants' rights are protected when dealing with a Securities Exchange Commission (SEC) enforcement case. "Four of these bills would build upon the success of the 2012 JOBS Act by lowering barriers to capital formation for small and growing businesses," said Subcommittee Chairman Scott Garrett (R-NJ) said in his opening statement. "The 5th bill [...] would allow defendants in litigated SEC enforcement cases to have their case removed to a federal district court, thereby availing themselves of the due process protections under Article III of our Constitution and relevant federal law." Chairman Garrett expressed concern that “In recent years, the SEC has transformed itself into a veritable judge, jury and executioner as it has brought more and more enforcement cases before its in-house tribunal, where they are heard by administrative law judges, who are themselves employees of the SEC," Bloomberg reported. MEMBER SPOTLIGHT Rep. Bill Huizenga | Reform bill would make Federal Reserve accountable Today, the Federal Reserve has an unprecedented level of influence and control over the financial system, and despite this unbridled concentration of power the Fed has failed to accurately predict and respond to changing economic conditions. Because of these shortcomings, nearly every generation of hardworking Americans, since the Fed’s creation, has suffered through a financial crisis. No bureaucracy, especially one with as poor a record as the Fed, should be allowed to go unchecked. Weekend Must Reads Washington Examiner | Report: Less than 1 percent of all Obama regs tested for costs The administration frequently says that new rules have positive net benefits, but CEI's vice president for policy, Clyde Wayne Crews Jr., explained that most of the rules are never subjected to a cost analysis, raising concerns that politics is at play. Investor's Business Daily | Obama Regulators Inflate Consumers' Bank Complaints Consumer Financial Protection Bureau documents reveal the out-of-control agency is larding a first-of-its-kind national Consumer Complaint Database with bogus accusations against financial lenders. U.S. News | Take Away the CFPB's Keys In a stunning rebuke to the president who created the CFPB, 88 House Democrats voted in favor of the change and to clip the agency's wings just a bit. The bill is now headed to the Senate where, one hopes, it will pass and go to Obama's desk and be signed into law. If you want to argue discrimination, you should have to prove actual discrimination – not just submit a statistical model that is vulnerable to the "garbage in, garbage out" defect. Hopefully other regulatory agencies will get the message.  On the Horizon
December 8, 2015 10:00 a.m.  In the News
Wall Street Journal | Consumer Watchdog Pushed Discrimination Case on Vulnerable Firm: Report New York Times | Consumer Bureau Faulted on Auto Lending Inquiry American Banker | House GOP Accuses CFPB of Improper Auto Lending Crackdown Washington Examiner | GOP says feds using 'junk science' to attack auto dealers Politico Pro | House Republicans slam CFPB's auto-lending enforcement American Banker | CFPB Critics See Glimmer of Hope in Auto Lending Bill Bloomberg | CFPB Unconstitutional, House Panel Chair Tells Court Bloomberg | Lawmakers, Others Question SEC In-House Court
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November 20, 2015
House Passes Federal Reserve Transparency and Consumer Protection Bills
This week the House of Representatives passed seven bipartisan Financial Services Committee bills, including bills to make the Federal Reserve more transparent and accountable and to protect consumers from the Consumer Financial Protection Bureau's (CFPB) harmful regulatory actions. The Fed Oversight Reform and Modernization (FORM) Act, H.R. 3189 sponsored by Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI), requires the central bank’s monetary policy to be clear and credible, and its regulatory actions to be subject to the rule of law and public scrutiny. H.R. 3189 passed the House on Thursday by a vote of 241-185. "Reform, accountability, and transparency on one hand; and independence and conduct of monetary policy on the other, are not mutually exclusive concepts," Chairman Jeb Hensarling (R-TX) stated on the House floor. “By passing the FORM Act, the House has taken a strong step forward in restoring accountability and transparency at the Federal Reserve,” said Chairman Huizenga. “The FORM Act provides the Fed with the flexibility necessary to conduct monetary policy but holds the Fed accountable by requiring it to communicate its policy to Congress and the American people.” The House on Wednesday passed the Reforming CFPB Indirect Auto Financing Guidance Act, H.R. 1737, sponsored by Rep. Frank Guinta (R-NJ), and the Portfolio Lending and Mortgage Access Act, H.R. 1210, sponsored by Rep. Andy Barr (R-KY). H.R. 1737 passed the House with a veto-proof margin of 332-96. The bill rescinds the CFPB’s flawed guidance relating to indirect auto lending, which was done without public notice and comment and will result in higher costs for consumers buying cars and trucks. H.R. 1210 reforms the CFPB’s Qualified Mortgage rule to help more credit-worthy homebuyers to get a mortgage. The bill allows banks and credit unions to hold mortgages in portfolio – retaining 100 percent of the risk – to satisfy the requirements of the QM rule. The bill passed 255-174. The House also passed four bipartisan bills by voice vote: H.R. 1317 sponsored by Reps. Gwen Moore (D-WI) and Steve Stivers (R-OH); H.R. 3032 sponsored by Reps. Kyrsten Sinema (D-AZ) and Robert Hurt (R-VA); H.R. 1478 sponsored by Reps. Bill Posey (R-FL) and Brad Sherman (D-CA); and the Senate companion bill to H.R. 2243 sponsored by Rep. Ed Royce (R-CA). To view more information about all of the financial services bills that passed the House this week, click here. Subcommittee Examines Impact of Dodd-Frank's Conflict Minerals Reporting On Tuesday, the Monetary Policy and Trade Subcommittee held a hearing to examine the Dodd-Frank Act's impact on conflict minerals reporting in the five years since Dodd-Frank became law. Conflict minerals reporting is under the purview of the Securities Exchange Commission (SEC) and mandates public companies to disclose whether they source “conflict minerals" from the Democratic Republic of Congo (DRC) and its nine neighboring countries. The Wall Street Journal reported Subcommittee Chairman Huizenga's concern that Dodd-Frank's conflict mineral rule is harming the people it intended to help. "As we all know, the SEC has little or no experience in crafting trade sanctions or articulating and enforcing human rights policy, two areas which have not traditionally been within the purview of securities regulation. SEC Chair Mary Jo White has also questioned the SEC’s ability to promulgate rules governing the African minerals trade and whether SEC disclosure powers are best used to meet address societal ills," he said. Evode Imena, the Minister of Mines for the Republic of Rwanda, was quoted by Bloomberg as testifying that The 10 countries covered by the conflict minerals reporting have “divergent interests and different needs” but are “put in the same box under the current enforcement regime,” which is unfair and not good for foreign companies hoping to do business in Rwanda. Committee Examines SEC's Operations and Budget Request The Financial Services Committee held a hearing on Wednesday to review the Securities and Exchange Commission's (SEC) agenda, operations and budget request for fiscal year 2017. Chairman Hensarling remarked in his opening statement, "This Committee is committed to conducting vigorous oversight of the SEC because the SEC’s three-part mission is an important one as Americans continue to struggle through an economy that is under-performing. It is on their behalf that this Committee acts to ensure the SEC protects investors, maintains fair, orderly and efficient markets, and promotes capital formation – key ingredients in growing a healthy economy with more opportunity for all." Rep. Robert Hurt (R-VA) expressed the need for effective use of funding by the agency in fulfilling its mission. "At a time when our national debt is $18 trillion and rising by the second, federal agencies must learn to work smarter and more efficiently, just as hardworking American families have learned to do," said Rep.Hurt. Subcommittee Calls for Due Process and Transparency at FSOC The Oversight and Investigations Subcommittee held a hearing on Thursday calling for due process and transparency in the SIFI designations of non-bank financial companies by the Financial Stability Oversight Council (FSOC). "Dodd-Frank rewarded the very regulators that missed the warning signs leading up to the 2008 financial crisis with additional power and responsibility with the creation of the FSOC. By design, the FSOC was intended to facilitate dialogue amongst federal financial regulators," said Subcommittee Chairman Sean Duffy (R-WI) in his opening statement. "Moreover, the FSOC and its actions are riddled with opacity and unaccountability, despite continued requests for information from Congress." MEMBER SPOTLIGHT Rep. Andy Barr | Barr's Portfolio Lending and Mortgage Access Act passed by the House The House of Representatives Wednesday passed H.R. 1210, the Portfolio Lending and Mortgage Access Act introduced by Congressman Andy Barr (KY-6) in a bipartisan vote of 255 to 174, according to a release. Weekend Must Reads Wall Street Journal | Reining in a Sprawling Federal Reserve Since the 2008 financial crisis, the Federal Reserve has morphed into a government institution whose unconventional activities and vastly expanded powers would scarcely be recognized by drafters of the original legislation that created it. Regrettably, commensurate transparency and accountability have not followed. The Hill | H.R. 1737 will create transparency at the CFPB and maintain affordable auto credit Discrimination is wrong, period. And fair credit is critical for consumers everywhere. But so is their ability to get the most competitive rates out there for their cars and trucks. H.R. 1737 and the automobile compliance program would ensure fair access to credit for everyone, while preserving a consumer’s ability to get discounted interest rates and competitive credit. American Banker | Why That Orwellian Anti-CFPB Ad Worked Enter "Denied," our provocative TV ad about the CFPB. CFPB sounds like alphabet soup to most consumers. Yet the Consumer Financial Protection Bureau is one of the most powerful and unaccountable government agencies in Washington. This is a fact we believe voters deserve to know. Wall Street Journal | Democrats vs. Bureaucrats On Wednesday the House is expected to vote down the Consumer Financial Protection Bureau’s extralegal campaign against the nation’s auto dealers. This is an important moment. Even Democrats are beginning to push back against the regulatory agenda crafted by President Obama and Massachusetts Senator Elizabeth Warren. Let’s hope the dissident donkeys survive the experience. On the Horizon
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Associated Press | House Approves GOP-led Bill to Boost Fed Oversight Bloomberg | SEC Conflict Minerals Rule Unfair, Rwanda Minister Says Reuters | White House threatens veto of rule-based monetary policy bill Politico Pro | Shareholder activism ‘holy war’ arrives on Capitol Hill Morning Consult | SEC Chair Tamps Down Expectations on Investment Advice Rule The Hill | House votes to roll back mortgage rules HousingWire | House votes to revamp Qualified Mortgage rules
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November 06, 2015
Committee Passes Bills to Make Financial Regulators Accountable to Hardworking Taxpayers
On Wednesday, the Financial Services Committee passed oversight bills to bring greater accountability and transparency to the Financial Stability Oversight Council (FSOC) and its research arm, the Office of Financial Research (OFR). Chairman Jeb Hensarling (R-TX) remarked, "Dodd-Frank increases the power and control that largely unaccountable Washington bureaucrats have over our economy. The results have left hardworking taxpayers with fewer choices, higher costs and an anemic economy of shrinking paychecks. The reform bills approved by the committee today will help build a healthier economy for all Americans and put in place needed transparency, accountability and checks and balances on powerful bureaucracies." Members lamented the lethargic economic recovery, calling for more accountability and transparency for government bureaucrats whose decisions have immense impact on our country's economy and financial system. "We're seeing pockets of prosperity in the country. But here's the reality for the rest of America: lowest labor participation rate in 40 years. For the first time since we've been keeping records, there are more small businesses shutting down than there are new business startups," said Rep. Scott Tipton (R-CO). House Approves Bipartisan Financial Services Amendments to Transportation Bill Chairman Jeb Hensarling (R-TX) successfully attached a package of 15 bipartisan financial services bills to the transportation bill approved by the House this week. The 15 bills had previously passed the House with overwhelming bipartisan support. “People are still hurting in this economy. We need to do everything we can to promote economic growth. It is very difficult to come by bipartisan bills, but I am proud to say that in the House Financial Services Committee we have passed numerous pieces of bipartisan legislation. They are modest because they are bipartisan, but they are important and can make a difference in people’s lives,” said Chairman Hensarling. The list of 15 bills included in the amendment can be viewed here. In addition, the House voted for an amendment sponsored by Reps. Randy Neugebauer (R-TX) and Bill Huizenga (R-MI) to draw down the Federal Reserve’s surplus account as an offset for new highway spending. The Neugebauer-Huizenga amendment replaced a controversial funding method approved by the Senate that would reduce the dividend the Fed’s regional reserve banks pay on stock that private-sector banks are required to hold as members of the Federal Reserve system. “Moving forward with the Federal Reserve dividend reduction without studying it could have devastating consequences for the supervision of the financial sector and the stability of the Federal Reserve System,” Rep. Neugebauer said during debate on the amendment. “The costs that banks—especially community banks—could face as a result of the dividend reduction would be passed on to hardworking consumers. At a time when many Americans continue to struggle from the unintended consequences of Dodd-Frank, it would be dangerous and irresponsible to move forward with the Senate version.” The amendment also struck from the Senate-passed bill a proposal to increase the fee that mortgage borrowers must pay on loans guaranteed by Fannie Mae and Freddie Mac. “Allowing Congress to continue to raise the g-fees will make comprehensive housing finance reform impossible,” Rep. Neugebauer said. Committee Calls for Accountability and Transparency from the Federal Reserve The Financial Services Committee held a hearing on Wednesday with Federal Reserve Chair Janet Yellen as a witness in the place of the Federal Reserve’s Vice Chair for Supervision, a position that President Obama has yet to fill. Chairman Jeb Hensarling (R-TX) warned in his opening statement, "Combining the Fed’s lack of transparency with its all-encompassing new regulatory authority under Dodd-Frank is a dangerous mix. It is a threat to economic growth, not to mention the principles of due process, checks and balances, and the rule of law. If we are not careful, our central bankers will soon become our central planners." Members stressed their concern that President Obama has neglected to appoint a Vice Chair for Supervision as required by the Dodd-Frank Act and the consequences of the vacancy in the Federal Reserve's ability to provide balanced supervision and regulation of the financial system. "Over the past five years, banks of all sizes – and particularly our community banks -- have struggled to deal with the extraordinary costs of increased bank supervision by the Federal Reserve. In light of the importance of implementing a balanced and tailored supervision regime that recognizes that one size does not fit all, it is remarkable that the President continues to fail to follow the law he championed and that the President continues to deprive the Congress of participating in the appointment of this important position,” said Rep. Robert Hurt (R-VA). Subcommittee Examines Housing Needs in New Orleans, 10 Years After Katrina On Friday, the Housing and Insurance Subcommittee held a hearing in New Orleans to examine the ongoing response – at the local, state and federal government levels – to the housing needs of residents affected by Hurricane Katrina. "We have representatives on today’s panel who lead groups that were some of the first responders in the post-Katrina housing crisis. In places where the state or federal government was slow to help, they were there, working to physically and emotionally rebuild their communities. That they continue their work 10 years later is both a testament to their strength and an indication of the need to examine the process for delivering housing assistance in the wake of disasters," said Subcommittee Chairman Blaine Luetkemeyer (R-MO) in his opening statement. MEMBER SPOTLIGHT Rep. French Hill | Why Obama must work with the House I recently learned first-hand how difficult dealing with this Administration can be. When I introduced H.R. 3192, the Homebuyers Assistance Act, with the support of original co-sponsor Rep. Brad Sherman, California Democrat, I never imagined a minor technical fix to a complex issue would receive an official veto threat from the White House. But it did. Weekend Must Reads Forbes | Feds Just Can't Allow People To Save And Invest Last week, the U.S. House passed Rep. Ann Wagner’s (R-Mo.) bill to block the DOL’s fiduciary rule. But without similar action in the U.S. Senate, the federal government will impose the DOL’s overly complex regulations, and average citizens will likely end up with fewer investment options. Bloomberg Business | Bond Liquidity Seen Worsening by BofA as Regulations Tighten Dwindling liquidity in bond markets may get worse next year as more regulation hits the financial industry, raising questions as to whether rules are making financial markets safer, Bank of America Merrill Lynch said. Investor's Business Daily | Most transparent administration in history closes more meetings than ever But wait! That would mean the current administration can't possibly be the most transparent administration in history. And that, in turn, means that Barack Obama has been wrong every time he made that claim. We need a Federal Advisory Committee to explain how that could be? On the Horizon
Stay tuned! In the News
Washington Post | Lawmakers grill Fed chair on oversight of financial system during contentious hearing Bloomberg | Yellen Shares Leak Probe Documents After Lawmakers’ Demands Wall Street Journal | Lawmakers Get Extra Chance to Question Yellen at Hearing Wednesday Washington Post | These confidential documents will haunt Janet Yellen’s testimony on the Hill American Banker | Fight Over $50B Asset Cutoff Revived in House Politico Pro | Democrats split on how to help regional banks Politico Pro | Freddie Mac loss raises warnings of another bailout American Banker | Freddie Mac's $500M Loss Puts It on Defensive
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October 30, 2015
House Passes Bill to Protect Low and Middle-Income Savers
The House of Representatives passed H.R. 1090, the Retail Investor Protection Act sponsored by Rep. Ann Wagner (R-MO), on Tuesday by a bipartisan vote of 245-186. This bill was designed to put a stop to the Department of Labor's (DOL) proposed fiduciary rule that would make professional retirement investment advice for low and middle-income Americans inaccessible and unaffordable. There is a strong bipartisan agreement that the DOL's misguided fiduciary rule would make it more difficult for hard-working Americans to save for their retirements and obtain their portion of the American Dream. “The fiduciary rule will take away investment advice from hundreds of thousands, if not millions, of low and moderate income people all around the nation who rely upon this advice to save for retirement,” remarked Chairman Jeb Hensarling (R-TX) on the House floor. Rep. Wagner said, “My constituents are tired of Washington bureaucrats telling them what food their families should eat, where they should turn for health care and, now, how they should save for retirement. I for one refuse to stand by and let this Administration advance another regulation that ultimately takes away our freedoms. The burdensome 1,000 page rule offered by the Department of Labor would do just that, increasing costs for Missouri families and reducing access to sound financial advice. I was proud to lead in this bipartisan fight to protect investors and I am hopeful that the U.S. Senate will join us in our efforts to block this onerous rule.” House Passes State Licensing Efficiency Bill The House of Representatives passed by voice vote H.R. 2643, the State Licensing Efficiency Act of 2015, sponsored by Rep. Roger Williams (R-TX). The bill will expand the ability of states to use a federally accepted registry, the Nationwide Multistate Licensing System, to expedite background checks for licensing purposes. The bill passed the committee by a unanimous vote of 57-0 on July 29. “This bill is part of my larger goal in letting the states pick up where the federal government falls short,” said Rep. Williams when he introduced the bill. “The current background check process is inefficient, but this registry has a proven track record of being effective while also reducing regulatory burden.” MEMBER SPOTLIGHT Rep. Ann Wagner | House passes bill to halt DOL’s fiduciary rule “Unfortunately, this rule-making from the Department of Labor could potentially cut access, limit choice and raise costs for that kind of financial advice, putting the goal of retirement even further out of reach,” Wagner said. Weekend Must Reads Wall Street Journal | Much Ado About the Fed’s Nothing Chair Janet Yellen and other members keep saying that it will soon be time to move, but each time as the date approaches they find another reason not to move. Perhaps they’re afraid of taking responsibility for the consequences of raising rates if the economy turns south. At least if they stay at zero the Fed won’t be blamed for having done nothing. If column inches are a guide, all of this uncertainty is good for journalism, if not for the economy. Forbes | Progressive Economics: The Rise Of Bureaucracy In America Bureaucracy is suffocating America; yet, the bureaucrats themselves are doing quite well. It seems that the more they asphyxiate our economy, the more prosperous the bureaucratic class becomes. Wall Street Journal | The Fed Has Hurt Business Investment For real assets, the benefits of QE are far less obvious—and the results far less impressive. Weak economic data and mixed messages from the Fed in recent months only heighten our concerns about the trajectory of the economy and the sustainability of U.S. financial-asset prices. Bloomberg View | The SEC's Kangaroo Courts Some have likened the SEC's quasi-judicial system to a kangaroo court. Even if it isn't, it has the potential to become one. It should be restrained before it does too much damage. On the Horizon
November 3, 2015 10:00 a.m. In the News
Wall Street Journal | U.S. Government Uses Race Test for $80 Million in Payments Politico Pro | Yellen to testify before Financial Services Committee Nov. 4 Reuters | Fed's Yellen to appear before congressional committee Nov. 4 Bloomberg | House Passes Bill to Halt DOL Fiduciary Rule Proposal Detroit News | Obama Rules Deny Small Investors Advice Bloomberg | Yellen to Testify Nov. 4 on Bank Regulation Before House Panel Bloomberg | House Set to Vote on Fannie-Freddie Executive Pay Cap
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October 23, 2015
HUD at 50
The Financial Services Committee held a hearing Thursday to review the role and impact the Department of Housing and Urban Development (HUD) has had on federal housing policy in the 50 years since its creation. Chairman Jeb Hensarling (R-TX) said, "Our collective goal cannot be limited to helping people tolerate poverty, it must be to help them escape poverty. Whether I’ve met them at the Salvation Army Women’s Shelter, Habitat for Humanity homes or the Jubilee Center in my native Dallas, I know that is the aspiration of our low income brothers and sisters. We must help them find ways for them to provide for their families, to conquer generational cycles of dependency, and to have the opportunity to enjoy the dignity of meaningful work." Republican Members emphasized the value and dignity of work as a path to self-sufficiency and the need for HUD programs to help people escape the cycle of poverty rather than become stuck in it. Housing and Insurance Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, “HUD’s programs and policies are in need of an overhaul and should turn its focus on reducing red tape instead of creating it. I thank Chairman Hensarling for his commitment to exploring this serious subject so that we can improve opportunity for and accessibility of affordable housing across the nation.” Legislative Proposals to Promote Main Street Job Growth The Financial Institutions and Consumer Credit Subcommittee held a hearing on Wednesday to review legislative proposals designed to help Main Street businesses focus their time and resources toward creating jobs and growing their businesses rather than trying to comply to unnecessary and overly burdensome rules. Small businesses and community financial institutions are being buried under Dodd-Frank Act regulations and other bureaucratic mandates. Subcommittee Chairman Randy Neugebauer (R-TX) noted, "Throughout this Congress, we have seen examples and heard testimony about how regulatory impediments prohibit job creation, cause consolidation of community financial institutions, and decrease choices for consumers." The bills that the subcommittee reviewed are:
The Housing and Insurance Subcommittee held a hearing on Wednesday to examine how HUD and the Rural Housing Service can better serve the housing needs of low-income individuals and families. Much of the hearing focused on H.R. 3700, the “Housing Opportunity Through Modernization Act,” introduced by Subcommittee Chairman Blaine Luetkemeyer (R-MO). “This week’s subcommittee hearing provided a great opportunity for both members on the subcommittee and leaders in housing advocacy and industry to express their priorities in housing reform,” he said, noting that witnesses appearing at the hearing all share “the desire to see changes in federal programs so they can more easily serve families in need.” H.R. 3700, the Housing Opportunity Through Modernization Act, modernizes and streamlines HUD and Rural Housing Service programs to more effectively serve individuals in need of housing assistance. Members continuously expressed bipartisan support for this bill and its objective to responsibly provide housing assistance for low-income communities and the homeless. Oversight of the SEC’s Division of Investment Management The Capital Markets and Government Sponsored Enterprises Subcommittee held a Friday oversight hearing of the Securities and Exchange Commission's (SEC) Division of Investment Management. Committee Members called for the SEC to use its time and resources more wisely toward its statutory mission, with a specific emphasis on capital formation so small businesses can access the financing they need. Subcommittee Chairman Scott Garrett (R-NJ) remarked, "As part of our oversight responsibility, this Subcommittee will be closely monitoring the SEC’s actions in this area to ensure that they actually reflect the SEC’s three-fold mission, and are not simply ad hoc responses to threats from other regulatory bodies." MEMBER SPOTLIGHT Rep. Robert Pittenger | Pittenger: 'We're a lion with no teeth' Rep. Robert Pittenger, R-N.C., is vice chairman of the House Financial Services Committee's Task Force on Terrorism Financing, which has been investigating ways of improving U.S. efforts to choke off the flow of money to international terrorist groups. Weekend Must Reads American Action Forum | When Regulatory Costs Trump Benefits Typically, whenever an agency issues a major rule, they tout how the benefits greatly exceed the costs. However, agencies are far more reticent about promoting regulations that actually do more harm to the economy than good. AEI | Is Dodd-Frank’s Orderly Liquidation Authority Necessary to Fix Too Big to Fail? The Dodd-Frank Act (DFA) Orderly Liquidation Authority has many legal issues that could prevent its use. Should there be a next financial crisis, regulators may again be forced to sell a large failing bank to a larger banking institution, creating yet another too-big-to-fail institution. On the Horizon
Stay Tuned! In the News
Wall Street Journal | Lawmakers Raise Alarms Over Tapping Banks to Pay for Highways The Hill | Lawmakers want to keep Fed dividend rate at 6 percent American Banker | The Choking Continues After 'Choke Point' American Banker | House Lawmakers Push Back on Fed Dividend Cut Wall Street Journal | SEC Faces New Attack on In-House Judges CU Insight | House committee looks at CUNA-backed regulatory relief bills today Bloomberg | Bill Would Create Small Business Advocate at SEC
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October 22, 2015
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October 09, 2015
House Passes Bipartisan Consumer Protection and Regulatory Relief Bills
The House passed five bipartisan Financial Services bills this week, including one that provides a formal hold-harmless period for those making a good faith effort to comply with the CFPB’s 1,888-page TRID rule, which became effective on Oct. 3. The bill, H.R. 3192, the Homebuyers Assistance Act sponsored by Rep. French Hill (R-AR), passed overwhelmingly by a vote of 303-121. “I am happy members of both sides of the aisle were able to come together and move legislation that will prevent costly market disruptions and delays for Americans homebuyers,” said Rep. Hill. Four other bipartisan bills that passed the House this week provide needed regulatory relief for Main Street job creators and investors, and help state and local agencies aid families in collecting child support payments. Americans working in the financial sector to have the freedom to use their time and resources toward creating jobs and growing the economy rather than complying by misguided rules. The following are the financial services bills that passed with bipartisan support: • H.R. 1553, the Small Bank Exam Cycle Reform Act, sponsored by Rep. Scott Tipton (R-CO) • H.R. 1839, the Reforming Access for Investments in Startup Enterprises Act (RAISE) Act, sponsored by Rep. Patrick McHenry (R-NC) • H.R. 2091, the Child Support Assistance Act, sponsored by Rep. Bruce Poliquin (R-ME) • H.R. 1525, the Disclosure Modernization and Simplification Act, sponsored by Rep. Scott Garrett (R-NJ) Subcommittee Recommends MDBs Focus on Economic Growth The Monetary Policy and Trade Subcommittee held a hearing on Friday to discuss the future of multilateral development banks (MDBs) and how they can more effectively spur economic growth to alleviate poverty in developing countries. “Congress plays an important role in determining U.S. funding for the MDBs and engaging in oversight of the Administration’s participation in the MDBs," remarked Subcommittee Chairman Bill Huizenga (R-MI). "The MDBs’ goal is to draw on member nations’ contributions to leverage additional private sector financing." MEMBER SPOTLIGHT Rep. French Hill | House OKs Hill's bill to delay bank rebuke Rep. French Hill, R-Ark., who sponsored the bill, said businesses are concerned that the agency won't be lenient, despite a written promise from the bureau's director. An act of Congress, he said, would give the institutions greater confidence. Rep. Scott Tipton| House OKs Tipton’s bank relief bill The House unanimously passed legislation on Tuesday sponsored by Rep. Scott Tipton that would ease regulatory burdens on well-managed community banks. Weekend Must Reads Investor's Business Daily | Sorry, Bernanke, But Fed’s ‘Recovery’ Was Miserable This “recovery” has been by far the worst – even by the Fed’s own data. Put simply, Fed policies since the financial crisis not only haven’t helped the economy rebound, they’ve also held it back. Powerline | Why the Big Banks Love the Democrats Democrats are corporatists who want to favor a few big firms that the government can then control. Dodd-Frank has been a disaster, but not for the nation’s biggest banks and not for the Democratic Party. In the News
Bloomberg | House Passes Bill Easing Exams on Small Banks
American Banker | House Passes Bill to Delay Enforcement of New Mortgage Disclosures HousingWire| House passes bipartisan TRID grace period bill 303-121 The Hill | Dem economists attack Elizabeth Warren over Brookings firing Washington Examiner | Jobs Report: Disappointment Is Routine With This Administration Investor's Business Daily | Jobs Report: Disappointment Is Routine With This Administration
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October 02, 2015
CFPB, Dodd-Frank Harms Consumers As Investor’s Business Daily noted in its coverage of the hearing, “Cordray confessed under grilling by House banking panel chief Jeb Hensarling that the disparate impact methodology that his agency uses…’overestimates’ racial disparities on loan pricing.” “In short, Cordray is trying to restructure the $900 billion auto finance industry based on bad math,” said the newspaper’s editorial. The CFPB’s disparate impact methodology was described as “downright insulting to African-Americans” by Rep. David Scott (D-GA), “for assuming last names such as Johnson, Williams or Robinson belong to black borrowers,” the Wall Street Journal reported in its article about Tuesday’s hearing. The Bureau, a creature of Dodd-Frank, is uniquely unaccountable to hardworking taxpayers because it is not subject to the usual checks and balances that protect Americans from government overreach and abuse. “Instead of the equal protection offered by the impartial rule of law, they are today dictated to by the arbitrary rule of regulators, and Exhibit Number One is the CFPB director,” said Chairman Hensarling (R-TX). “Dodd-Frank and the CFPB are the prime reason the big banks are bigger and the small banks are now fewer. This has eliminated competition, stifled innovation and given consumers fewer choices. Dodd-Frank and the CFPB have raised prices, eliminated free checking for millions, and are cutting off access to mortgages, bank accounts and credit cards. This tragically makes it harder for low income Americans living paycheck to paycheck to improve their lives and achieve financial independence,” Hensarling added. Committee Approves Bipartisan Bills to Empower Consumers and Job Creators One of the bipartisan bills approved by the committee, H.R. 1090, the Retail Investor Protection Act sponsored by Rep. Ann Wagner (R-MO), will protect Americans’ ability to choose and access investment advice. “I'm grateful for my colleagues on the Financial Services Committee who joined me today in protecting the millions of low- and middle-income Americans from the Administration's latest power grab. Preserving access to sound investment advice for hardworking families is something I believe in and will continue to fight for, and I look forward to seeing this bipartisan bill on the House floor soon," said Rep. Wagner. The committee also approved two bipartisan bills that will bring more accountability and transparency to the CFPB. The CFPB is perhaps the most powerful and least accountable federal agency in history – a dangerous defect that stems from how the Bureau was designed in the Dodd-Frank Act. H.R. 957 ensures greater accountability at the CFPB by creating an independent Inspector General for the Bureau. “The CFPB has been given broad authority and must be accountable to the American people. More than 30 other federal departments and agencies have an independent Inspector General. This bill would bring the CFPB in line with these agencies and provide the necessary oversight and transparency,” said bill sponsor Rep. Steve Stivers (R-OH). H.R. 1266, the Financial Product Safety Commission, removes the CFPB from within the Federal Reserve System and re-establishes it as a stand-alone agency that is governed by a five-member, bipartisan commission. All authorities and powers of the CFPB remain unchanged. “After months of productive conversations with my colleagues from both sides of the aisle, I’m pleased the Committee acted in a bipartisan manner to move this CFPB commission bill forward. By changing the leadership structure, we can ensure the Bureau is more accountable, transparent and shielded from the whims of political change and partisan politics,” said bill sponsor Rep. Randy Neugebauer (R-TX). The committee approved the Burdensome Data Collection Relief Act, H.R. 414 sponsored by Rep. Bill Huizenga (R-MI). The bill repeals a burdensome, unneeded and expensive pay ratio requirement of Dodd-Frank. “We are all concerned about creating more jobs in our various congressional districts. And instead of companies being forced to spend millions of dollars trying to comply with a regulatory mandate for which the SEC was unable to quantify any benefits to shareholders, shouldn’t these burdensome costs be used by manufacturers, retailers and other public companies for much-needed investment and job creation and hiring of new employees” said Rep. Huizenga. Legislation requiring the National Credit Union Administration (NCUA) to conduct a study of the appropriate capital requirements for federal and state credit unions also passed the committee on Wednesday. In January the NCUA issued a revised risk-based capital proposed rule for credit unions. The bill’s sponsor, Rep. Stephen Fincher (R-TN), said it “would ensure the cost of this [NCUA] proposal is vetted relative to its impact on lending.” MEMBER SPOTLIGHTRep. Ann Wagner | Wagner financial services bill, opposed by Obama, passes House committee Rep. Ann Wagner's Retail Investor Protection Act passed the House Financial Services Committee Wednesday, setting up a vote in the full House of Representatives on an issue that the Obama administration has taken an opposing position. Weekend Must Reads Wall Street Journal | Elizabeth Warren’s Intellectual Purge President Obama has let Elizabeth Warren veto presidential appointments, and the power rush seems to have gone to her head. Now the Massachusetts Senator has forced the resignation of a Brookings Institution economist because he dared to report that new financial regulations will cost investors. The Hill | CFPB should be bipartisan commission From the very beginning, Sen. Warren (D-Mass.) and other supporters intended to structure what is now the Consumer Financial Protection Bureau as a bipartisan commission. Unfortunately, the dedication to a consumer agency led by a diverse board or commission did not last, and the CFPB that Congress created is headed by a single director. In this regard, the new CFPB is unlike most financial regulators in Washington, including the Federal Reserve Board, Federal Deposit Insurance Corp., Securities and Exchange Commission, and National Credit Union Administration. Wall Street Journal | The Jack Kemp Model for Republicans Jack Kemp never became president, but the country desperately needs a leader like him now. When Kemp died in 2009, two themes dominated tributes to his career as a star quarterback, congressman, cabinet secretary and candidate for vice president and president. Conservatives called him one of the most influential politicians of the 20th century who never made it to the White House. He was “among the most important Congressmen in U.S. history,” as a Wall Street Journal editorial put it. Liberals declared that the Republican Party needed, but didn’t have, a Kemp: a leader who cared about the poor, who wanted to make the GOP attractive to minorities and working-class voters, who never went negative and regularly worked across party lines. Investors Business Daily | CFPB Admits Using Bad Math To Restructure $900 Bil Auto Finance Industry Shakedown: After accusing the ninth-largest bank auto lender of discriminating against minorities, the president's consumer watchdog admits his analysis is less than perfect. Still, according to Monday's federal order, Cincinnati-based Fifth Third Bank will have to make $18 million in restitution for allegedly marking up loans for blacks and Latinos. It will also have to cap the interest rates it charges customers, which Consumer Financial Protection Bureau chief Richard Cordray called "a significant step toward protecting consumers from discrimination." Yet on Tuesday, as the ink was still drying on the settlement, Cordray confessed under grilling by House banking panel chief Jeb Hensarling that the disparate impact methodology that his agency uses to determine lending bias "overestimates" racial disparities in loan pricing. On the Horizon
October 8, 2015 9:00 a.m. In the News
Politico Pro | House panel approves bill to block Labor Department's fiduciary rule Wall Street Journal | Questions About Leak at Federal Reserve Escalate to Insider-Trading Probe American Banker | Some House Democrats Defect in Battle Over CFPB Politico Pro | House to vote next week on bill delaying CFPB enforcement of TRID rule Washington Examiner | GOP seeks to rein in Obama's finance bureau Politico Pro | CFPB's Cordray faces heat over auto lending, consumer data at House hearing Wall Street Journal | CFPB Head Defends Regulator’s Work Before Lawmakers
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September 18, 2015
Dodd-Frank's Impact 5 Years Later: We Are Less Free
As the nation marked Constitution Day on Thursday, the Financial Services Committee heard from witnesses that the Dodd-Frank Act makes Americans less free. By centralizing greater power in the hands of Washington bureaucrats, Dodd-Frank results in a less dynamic economy and a command-and-control system in which regulators dictate credit offerings and individual freedom and choice are sacrificed. "Dodd-Frank erodes the economic freedom and opportunity that empowers low income Americans to rise and generate greater shared prosperity. Dodd-Frank moves us away from the equal protection offered by the impartial rule of law towards the unequal and victimizing rule of political bureaucrats. Of all the harm Dodd-Frank inflicts, this is the most profound and disturbing" Chairman Jeb Hensarling (R-TX) said. Rep. Robert Hurt (R-VA) said he’s heard from his constituents about the impact Dodd-Frank is having on their lives. “Constituents told me that while this law was touted as Washington’s attempt to protect consumers, in reality it has only left consumers with fewer choices and higher costs to access capital,” he said. “In giving even more power to Washington bureaucrats, Dodd-Frank has made us less free and gravely inhibited individual freedom and choice.” George Mason University law professor Todd Zywicki reminded the committee that freedom and an effective financial services system go together. “Freedom to gain access to capital to start and grow a business, freedom to buy a home and provide for your family’s financial security, freedom to choose those whom you entrust with your hard-earned money provide the means for pursuing the American dream.” MPBN News reported Rep. Bruce Poliquin’s (R-ME) comments at the hearing on the harm of Dodd-Frank’s regulatory burden. "But now you have this big net - we do a lot of fishing up in Maine - and this big net is smothering everybody that should be able to swim through the net," he said.Strong U.S. Leadership During Global Economic Turmoil is Essential Members and witnesses at Thursday’s Monetary Policy and Trade Subcommittee hearing said recent global economic turmoil presents an opportunity for the United States to lead international economic policies away from government intervention and toward free markets, free trade and fiscal responsibility. “The combination of debt and misguided policy decisions being implemented by countries across the globe provides the U.S. with an opportunity to reorient international priorities,” remarked Subcommittee Chairman Bill Huizenga (R-MI). “Today’s hearing urged the Obama Administration to advance a ‘back to basics’ approach to economic policy that prioritizes fiscal responsibility and free markets.”Republican Members called the turmoil a clear indication that government intervention in the markets has serious consequences. Members urged the Obama Administration to press China to commit to greater openness and transparency. Members also called on the Administration and the IMF to recognize the consequences of “moral hazard”—that is, the risks to the stability of the financial system that may result from underwriting imprudent bank lending practices and irresponsible fiscal policies by European governments. MEMBER SPOTLIGHT Rep. Bruce Poliquin | Banking Regs Smothering Small Banks and Credit Unions Poliquin told fellow members of the House Financial Services Committee that provisions aimed at big banks are being applied to small banks and credit unions. Weekend Must Reads AEI | New poverty numbers highlight importance of jobs – not wages Some might use the new data to show that more government intervention is needed to increase low wages. But a deeper look at the data shows that a lack of work all together is the bigger culprit. Wall Street Journal | Stuck on ZeroZero rates channel credit to big companies, the well-to-do and government, while punishing savers and doing little for entrepreneurs and small businesses. The Fed’s monetary policy hesitation also feeds uncertainty, which further dampens business investment, which keeps growth low, while inflation never rises, and so the Fed is never confident enough in the economy to raise interest rates. Wall Street Journal | Incomes and Poverty, 2014 The White House didn’t put out an official statement on the Census release, and perhaps commenting was too embarrassing politically. No President has done worse by the middle class in modern times. Absent a change of policy direction—prioritizing growth rather than social justice, measuring success by results instead of federal dollars spent—the unfortunate reality is that the future is unlikely to be better than today. No wonder so many Americans are anxious or angry. Investor's Business Daily | Middle Class Lost In Obama's 'Middle Class Economics' Obama's economy has been particularly harsh on those already at the bottom. Census data show that the bottom fifth of households saw their average income fall by 8% from 2009 to 2014. In the News
Politico | Federal Reserve to Leave its Main Borrowing Rate Near Zero The Hill | Dems not sold on Obama's financial adviser regs Politico Pro | House Democrats request specific fixes to Labor Department fiduciary proposal Washington Examiner | Poverty unchanged in 2014, 46.7 million impoverished Credit Union Times | Duffy Urges CUs to Rat on Regulators: Onsite at NAFCU Caucus Politico Pro | Yellen: Fed is cooperating with House subpoena
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September 11, 2015
Lawmakers Express Bipartisan Concerns Over Labor Dept. Retirement Regulation The Capital Markets and Government Sponsored Enterprises Subcommittee and the Oversight and Investigations Subcommittee held the hearing to examine the Labor Department's proposed "fiduciary rule," which will limit retirement choices and prevent lower and middle income savers from accessing affordable financial advice. "Every day, millions of Americans look to a broker dealer or investment adviser for guidance on what to do with their hard-earned savings and to help them achieve a secure and prosperous retirement. That makes it all the more curious that this same Department of Labor is now marching forward with a regulation that will upend the ability of Americans to receive such guidance and which threatens the retirement security of the most vulnerable within our society," said Capital Markets Subcommittee Chairman Scott Garrett (R-NJ). Rep. Sean Duffy (R-WI), Chairman of the Oversight and Investigations Subcommittee, noted the proposed rulemaking has been described as "Obamacare for your IRA, and is yet another attempt by the Administration to perpetuate a 'government-knows-best' regime. Americans should be able to make the investment choice that is right for them." Expert witnesses at the hearing said the regulation will make the type of financial advice millions of Americans want either unaffordable or unavailable -- particularly for those who need it most. "Under such a model, many will either pay more than they do today or will receive no advice at all," said one witness. "There will be massive market disruption and many middle income savers will suffer without advice," said another witness. Rep. Ann Wagner (R-MO) has introduced H.R. 1090, which would stop the Department of Labor’s misguided rule. "This is good legislation that prevents an overzealous administration from taking away sound advice for low and middle income savers," she told reporters during an interview this week. Following the hearing, Chairman Jeb Hensarling (R-TX) said the Committee will advance Rep. Wagner's bill. "We will stand with lower and middle income savers and prevent government bureaucrats from denying them access to reliable and affordable retirement saving options," he said. Task Force members continued their discussions from previous hearings about the myriad ways terrorist organizations are able to finance their operations and the threat these groups pose to U.S. national security. Concerns were expressed by both Republicans and Democrats on the Task Force that President Obama's nuclear deal with Iran will lead to more terrorism since Iran is the world's largest and most dangerous state sponsor of terrorism. Task Force Vice Chairman Robert Pittenger (R-NC) said, “Iran will soon receive a windfall of over $100 billion, and their 46 banks will be integrated into the world’s financial system. Preventing these dollars from funding terror must be a priority." Witness Scott Modell told the Task Force that the U.S. "will fall further behind" when it comes to combating terrorist financing if the Iranian nuclear agreement is implemented. "If you look at the thousands of individuals and entities that have been designated as a result of Iran's illicit activities over the years that are now going to be exonerated essentially by this deal, of course it's a setback. Those are people who are willingly engaged in criminal activity on behalf of the Iranian regime." MEMBER SPOTLIGHTRep. Sean Duffy | Duffy: Financial reforms have failed us In large part, the 2008 financial crisis was a result of federal financial regulators failing to do their jobs in the first place, coupled with a failure to anticipate the looming issues in the subprime mortgage market. What did Dodd-Frank do? It rewarded regulators’ incompetence with more responsibility, and it built a moat around “too big to fail institutions,” while making it difficult for small banks to stay afloat — to say nothing of the untold damage it has done to our economy. The law of unintended consequences has never been more apparent than when we look at Dodd-Frank. Weekend Must Reads Real Clear Politics | Can We Please Have a Rules-Based Policy? And so much of the confusion stems from the fact that the Fed is still running a seat-of-the-pants policy based on the vagaries of monthly data points and daily stock market moves when it should adhere to a market price rule (commodity indexes including gold, the exchange value of the dollar, and Treasury bond spreads) that might really inform investors and govern Fed activity. Wall Street Journal | At 50, This Housing Policy Needs a Big Renovation As HUD marks its 50-year anniversary on Sept. 9, the challenges it faces are not on city streets or in homeless shelters, but within its own offices. Mission creep, management problems and criminal activity have rendered the agency a feeble instrument for renewing urban America. AEI | No, America Isn’t Moving Left The real defect in the theory that America is moving left is that the polling evidence does not back it up. The public has not turned to the left ideologically—and it remains unhappy with the status quo under Obama. Forbes | Addressing the SEC's Administrative "Home Court" Advantage in Enforcement Proceedings To date, the SEC has been silent on the central issue of the fairness of administrative proceedings and the objectivity of the ALJs, despite the fact that courts have noted it would be a relatively “easy fix” for the SEC to change the way it appoints judges. On the Horizon
September 17, 2015 10:00 a.m. In the News
Politico Pro | Iran the focus of terror finance task force hearing Bloomberg | Lawmakers Seek Magic Number for Deal on SIFI Label Level Reuters | U.S. outlines new policy for investigating corporate executives St. Louis Post-Dispatch | Wagner Bill Heats Up Financial Services Fight Washington Examiner | House Panel Will Move to Stop Labor Rule New York Times | Companies Struggle With Rules on Conflict Minerals Austin American-Statesman | Williams: Why I Will Oppose the Iran Deal MPBN News | Bruce Poliquin Critical of Investment Advisor Regulations Think Advisor | Rep. Wagner Wants Bill to Halt DOL Fiduciary Rule Marked Up by Month-End Plan Adviser | Legislators Hear Arguments About Fiduciary Reform Kuwait News Agency | Kuwait’s Cooperation on Detecting Terrorism Financing “Impressive” |