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Democrats Again Forego Bipartisanship, Push Through Harmful Financial Services Funding Bill

Washington, Jul 31 -

Today, the House Democrats passed their second package of Fiscal Year 2021 appropriations bills, including financial services funding. The partisan package will negatively impact investors, prop-up unfounded postal banking, and support the Chinese Communist Party.

The Garcia/Waters amendment, a Special Drawing Rights allocation at the International Monetary Fund (IMF), would provide billions of dollars in no-strings-attached liquidity to China, Russia, and the world’s foremost state sponsor of terrorism, Iran. This amendment would also send billions to the richest countries on Earth, a slap in the face to the developing world as it seeks to fight COVID-19. Specifically, the Democrats’ IMF provision would require the U.S. to support:

• More than $170 billion for the Chinese Communist Party
• $20 billion to Iran, the world’s foremost state sponsor of terrorism
• $17 billion for Bashar Al-Assad in Syria
• $75 billion to the Russian government
• $20 billion for the Maduro regime in Venezuela
• Democrats rejected amendments offered by Congressmen French Hill (AR-2) and Bill Huizenga (MI-2) to restrict Iran’s access to financing.

The Pascrell/Kaptur amendment would increase funding to the United States Postal Service to carry out a pilot program for postal banking. This would be detrimental to customers and harm community financial institutions already struggling to comply with the regulatory burdens imposed by Dodd-Frank. Several government entities have warned against this, including:

• A 2018 Treasury Task Force, which stated: “given the USPS’s narrow expertise and capital limitations, USPS should not pursue expanding into new sectors, such as postal banking, the USPS does not have a demonstrated competency or comparative advantage, or where balance sheet risk would be added.”
• The Post Office has made clear its core mission “is delivery, not banking.”
• In March, the GAO released a report finding that new, non-postal services like postal banking may have limited viability. Based on interviews the GAO conducted with the USPS officials, postmasters, postal employees, and consumer groups, GAO cautioned that postal banking may “generate minimal revenue and [the] USPS may face factors limiting the viability of these offerings.”

The Waters/Sherman amendment would defund the Securities and Exchange Commission’s (SEC) recently approved rulemaking on proxy advice. This rulemaking represents a years-long effort to ensure advice that investors use relating to proxy voting is accurate and transparent. Republicans offered amendments to block Democrats’ attempts to negate other positive moves made by the SEC, including:

• Congressman Bill Huizenga’s (MI-2) amendment to strike section 540 of the FSGG appropriations bill. Section 540 would block funding for the SEC to finalize its regulation to simplify and improve the exempt offering framework—a rulemaking that would make it easier for small businesses and entrepreneurs to access capital.
• Congressman Bryan Steil’s (WI-1) amendment to strike section 541 of the FSGG appropriations bill. Section 541 would negate the SEC’s proposal to protect investors and improve the public company model by ensuring companies are not subjected to annual politicized campaigns that unnecessarily increase costs for companies and shareholders.
• Democrats rejected both Republican amendments.