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Ronald Woessner Provides Summary of Pro-Growth S.2155

S. 2155, “The Economic Growth, Regulatory Relief, and Consumer Protection Act,” Public Law No: 115-174 (May 2018), represents the most significant pro-growth financial regulatory reform package since the passage of Gramm-Leach-Bliley nearly a generation ago. It amends provisions of the Dodd-Frank Act, including the Volcker Rule.

[Editor’s Note:  although the legislation carries an “S” designation, which denotes that the final bill was a Senate legislative vehicle, many provisions of the legislation originated in the Financial Services Committee of the House of Representatives, chaired by Congressman Jeb Hensarling, as illuminated in a previous article here. ]

TITLE I–IMPROVING CONSUMER ACCESS TO MORTGAGE CREDIT

(Sec. 101) This bill amends the Truth in Lending Act (TILA) to allow a depository institution or credit union with assets below a specified threshold to forgo certain ability-to-pay requirements regarding residential mortgage loans. Specifically, those requirements are waived if a loan: (1) is originated by and retained by the institution, (2) complies with requirements regarding prepayment penalties and points and fees, and (3) does not have negative amortization or interest-only terms. Furthermore, for such requirements to be waived, the institution must consider and verify the debt, income, and financial resources of the consumer.

The bill also provides for circumstances in which such requirements shall be waived with respect to a loan that is transferred: (1) by reason of bankruptcy or failure of the originating institution, (2) to a similar institution, (3) in the event of a merger, or (4) to a wholly owned subsidiary of the institution.

(Sec. 102) Mortgage appraisal services donated by a fee appraiser to an organization eligible to receive tax-deductible charitable contributions are deemed to be customary and reasonable under TILA.

(Sec. 103) The bill amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to exempt from appraisal requirements certain federally related, rural real-estate transactions valued below a specified limit if no certified appraiser is available.

(Sec. 104) The bill amends the Home Mortgage Disclosure Act of 1975 to exempt from specified public disclosure requirements depository institutions and credit unions that originate fewer than a specified number of closed-end mortgages or open-end lines of credit.

The Government Accountability Office (GAO) must report on these changes.

(Sec. 105) The bill amends the Federal Credit Union Act to allow a credit union to extend a member business loan with respect to a one- to four-family dwelling, regardless of whether the dwelling is the member’s primary residence. Under current law, a member business loan may be extended with respect to such a dwelling only if it is the member’s primary residence.

(Sec. 106) The bill amends the S.A.F.E. Mortgage Licensing Act of 2008 to revise the Act’s civil liability immunity provisions and to temporarily allow loan originators that meet specified requirements to continue to originate loans after moving: (1) from one state to another, or (2) from a depository institution to a non-depository institution.

(Sec. 107) The bill amends TILA to specify that a retailer of manufactured housing that meets certain requirements is generally not a “mortgage originator” subject to requirements under that Act.

(Sec. 108) The bill exempts from certain escrow requirements a residential mortgage loan held by a depository institution or credit union that: (1) has assets of $10 billion or less, (2) originated 1,000 or fewer mortgages in the preceding year, and (3) meets other specified requirements.

(Sec. 109) The required mortgage disclosure waiting period is eliminated with respect to a second offer of credit if the creditor offers a consumer a lower annual percentage rate in the second offer.

TITLE II–REGULATORY RELIEF AND PROTECTING CONSUMER ACCESS TO CREDIT

(Sec. 201) Federal banking agencies must develop a specified Community Bank Leverage Ratio (the ratio of a bank’s equity capital to its consolidated assets) for banks with assets of less than $10 billion. Such banks that exceed this ratio shall be deemed to be in compliance with all other capital and leverage requirements. Federal banking agencies may consider a company’s risk profile when evaluating whether it qualifies as a community bank for purposes of the ratio requirement.

(Sec. 202) The bill amends the Federal Deposit Insurance Act to exclude reciprocal deposits of an insured depository institution from certain limitations on prohibited broker deposits if the total reciprocal deposits of the institution do not exceed the lesser of $5 billion or 20% of its total liabilities. Reciprocal deposits are deposits that banks make with each other in equal amounts. (Generally, an insured depository institution that is not well capitalized may not accept funds obtained by or through any deposit broker for deposit.)

(Sec. 203) The bill amends the Bank Holding Company Act of 1956 to exempt from the “Volcker Rule” banks with: (1) total assets valued at less than $10 billion, and (2) trading assets and liabilities comprising not more than 5% of total assets. (The Volcker Rule prohibits banking agencies from engaging in proprietary trading or entering into certain relationships with hedge funds and private-equity funds.)

(Sec. 204) Volcker Rule restrictions on entity name sharing are eased in specified circumstances.

(Sec. 205) The bill amends the Federal Deposit Insurance Act to require federal banking agencies to issue regulations allowing certain small depository institutions to satisfy reporting requirements with a reduced Report of Condition and Income (i.e., call report).

(Sec. 206) The bill amends the Home Owners’ Loan Act to permit certain federal savings associations to elect to operate, subject to supervision by the Office of the Comptroller of the Currency, with the same rights and duties as national banks (including operating without certain lending restrictions).

(Sec. 207) The Federal Reserve Board (FRB) must increase, from $1 billion to $3 billion, the consolidated asset threshold (i.e., permissible debt level) for a bank holding company or savings and loan holding company that: (1) is not engaged in significant nonbanking activities; (2) does not conduct significant off-balance-sheet activities; and (3) does not have a material amount of debt or equity securities, other than trust-preferred securities, outstanding. If warranted for supervisory purposes, the FRB may exclude a company from this threshold increase.

(Sec. 208) The bill amends the Expedited Funds Availability Act to apply the Act, which governs bank deposit holds, to American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam. The Act’s one-day extension for certain deposits in noncontiguous states or territories shall also apply to these territories.

(Sec. 209) The bill amends the United States Housing Act of 1937 to reduce inspection requirements and environmental-review requirements for certain smaller, rural public-housing agencies.

(Sec. 210) The bill amends the Federal Deposit Insurance Act to increase the asset limit below which certain depository institutions are eligible for an 18-month, instead of a 12-month, examination cycle.

(Sec. 211) The bill creates the Insurance Policy Advisory Committee on International Capital Standards and Other Insurance Issues at the FRB. The FRB and the Department of the Treasury must report on: (1) their efforts regarding global insurance regulatory or supervisory forums, and (2) any final international insurance capital standards prior to adoption of such standards.

(Sec. 212) The bill amends the Federal Credit Union Act to require the National Credit Union Administration to hold public hearings on its draft annual budget.

(Sec. 213) A financial institution is authorized to record personal information from a scan, copy, or image of an individual’s driver’s license or personal identification card and store the information electronically when an individual initiates an online request to open an account or obtain a financial product. The financial institution may use the information for the purpose of verifying the authenticity of the driver’s license or identification card, verifying the identity of the individual, or complying with legal requirements. The financial institution must delete any copy or image of an individual’s driver’s license or personal identification card after use.

(Sec. 214) The bill amends the Federal Deposit Insurance Act to specify that a federal banking agency may not subject a depository institution to higher capital standards with respect to a high-volatility commercial real-estate (HVCRE) exposure unless the exposure is an HVCRE acquisition, development, or construction (ADC) loan.

An HVCRE ADC loan : (1) is secured by land or improved real property; (2) has the purpose of providing financing to acquire, develop, or improve the real property such that the property becomes income-producing; and (3) is dependent upon future income or sales proceeds from, or refinancing of, the real property for the repayment of the loan.

(Sec. 215) The Social Security Administration (SSA) is directed to develop a database to facilitate the verification of consumer information upon request by a certified financial institution. Such verification shall be provided only with the consumer’s consent and in connection with a credit transaction. Users of the database shall pay system costs as determined by the SSA.

(Sec. 216) The bill directs Treasury to report on the risks of cyber threats to financial institutions and capital markets.

(Sec. 217) The bill amends the Federal Reserve Act to lower the maximum allowable amount of surplus funds of the Federal Reserve banks.

TITLE III–PROTECTIONS FOR VETERANS, CONSUMERS, AND HOMEOWNERS

(Sec. 301) The bill amends the Fair Credit Reporting Act to increase the length of time a consumer reporting agency must include a fraud alert in a consumer’s file. It also: (1) requires a consumer reporting agency to provide a consumer with free credit freezes and to notify a consumer of their availability, (2) establishes provisions related to the placement and removal of these freezes, (3) creates requirements related to the protection of the credit records of minors.

(Sec. 302) The bill limits, and establishes a dispute process and verification procedures with respect to, the inclusion of a veteran’s medical debt in a consumer credit report.

(Sec. 303) The bill extends immunity from liability to certain individuals employed at financial institutions who, in good faith and with reasonable care, disclose the suspected exploitation of a senior citizen to a regulatory or law-enforcement agency. Similarly, the employing financial institution shall not be liable with respect to disclosures made by such employees.

The bill allows financial institutions and third-party entities to offer training related to the suspected financial exploitation of a senior citizen to specified employees. The bill provides guidance regarding the content, timing, and record-maintenance requirements of such training.

(Sec. 304) The sunset provision of the Protecting Tenants at Foreclosure Act is repealed, restoring notification requirements and other protections related to the eviction of renters in foreclosed properties. (The Act expired on December 31, 2014.)

(Sec. 305) Treasury may use loan guarantees and credit enhancements to remediate lead and asbestos hazards in residential properties.

(Sec. 306) The bill amends the United States Housing Act of 1937 to revise the Family-Self-Sufficiency (FSS) program, an employment and savings incentive program for families that reside in public housing or have housing vouchers. Specifically, the bill:

  • combines existing, separately operated FSS programs into a single program;
  • extends program eligibility to tenants of certain privately owned properties subsidized with project-based rental assistance;
  • revises program requirements related to eligibility, supportive services, and escrow deposits; and
  • otherwise modifies the FSS program.

(Sec. 307) The Consumer Financial Protection Bureau is directed to promulgate ability-to-repay regulations regarding property assessed clean energy financing.

(Sec. 308) The bill directs the GAO to report on the accuracy and security of consumer reporting agencies and consumer reports.

(Sec. 309) A refinanced home loan may not be guaranteed by the Department of Veterans Affairs (VA), unless: (1) a specified minimum time period has passed between the original loan and the refinancing; and (2) the lender complies with provisions related to fee recoupment, mortgage interest rates, and net tangible benefit tests.

The Department of Housing and Urban Development (HUD) and the Government National Mortgage Association (Ginnie Mae) must report on the liquidity of the VA Housing Loan Program.

The VA must report annually on refinanced home loans to veterans.

(Sec. 310) The bill amends the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act to allow the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), when determining whether to purchase a residential mortgage, to consider a borrower’s credit score only if certain procedural requirements are met with respect to the validation and approval of credit-scoring models.

The Federal Housing Finance Agency must, by regulation, establish standards and criteria for processes used by Fannie Mae and Freddie Mac to validate and approve credit-scoring models in accordance with the bill.

(Sec. 311) The GAO is directed to report on foreclosures, homeownership, and mortgage defaults in Puerto Rico before and after Hurricane Maria.

(Sec. 312) HUD must report on and provide recommendations for lead-based paint hazard prevention and abatement, with an emphasis on preventing exposure in children.

(Sec. 313) The bill amends the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 to make permanent the one-year grace period during which a servicemember is protected from foreclosure after leaving military service.

TITLE IV–TAILORING REGULATIONS FOR CERTAIN BANK HOLDING COMPANIES

(Sec. 401) The bill amends the Financial Stability Act of 2010, with respect to nonbank financial companies supervised by the FRB and certain bank holding companies, to:

  • increase the asset threshold at which certain enhanced prudential standards shall apply, from $50 billion to $250 billion, while allowing the FRB discretion in determining whether a financial institution with assets equal or greater than $100 billion must be subject to such standards;
  • increase the asset threshold at which company-run stress tests are required, from $10 billion to $250 billion; and
  • increase the asset threshold for mandatory risk committees, from $10 billion to $50 billion.

(Sec. 402) The bill requires the appropriate federal banking agencies to exclude, for purposes of calculating a custodial bank’s supplementary leverage ratio, funds of a custodial bank that are deposited with a central bank. (“Supplementary leverage ratio” is a capital adequacy measure that refers to the ratio of a banking organization’s tier-one capital to its leverage exposure.) The amount of such funds may not exceed the total value of deposits of the custodial bank linked to fiduciary or custodial and safekeeping accounts.

(Sec. 403) This bill amends the Federal Deposit Insurance Act to require certain municipal obligations to be treated as level 2B liquid assets if they are investment grade, liquid, and readily marketable. Under current law, corporate debt securities and publicly traded common-equity shares, but not municipal obligations, may be treated as level 2B liquid assets (which are considered to be high-quality assets).

TITLE V–ENCOURAGING CAPITAL FORMATION

(Sec. 501) The bill amends the Securities Act of 1933 to exempt from state registration securities qualified for national trading by the Securities and Exchange Commission (SEC) and authorized to be listed on a national securities exchange. Currently, securities listed on exchanges specified by statute or SEC rule are exempt.

(Sec. 502) The bill directs the SEC to report on the risks and benefits of algorithmic trading in capital markets.

(Sec. 504) The bill amends the Investment Company Act of 1940 to exempt from the definition of an “investment company,” for purposes of specified limitations applicable to such a company under the Act, a qualifying venture capital fund that has no more than 250 investors. Specifically, the bill applies to a venture capital fund that has less than $10 million in aggregate capital contributions and uncalled committed capital. Under current law, a venture capital fund is considered to be an investment company if it has more than 100 investors.

(Sec. 505) The bill requires the SEC to offset future fees and assessments due from a national securities exchange or association that: (1) has previously overpaid such fees and assessments, and (2) informs the SEC of the overpayment within 10 years.

(Sec. 506) The bill amends the Investment Company Act of 1940 to apply the Act to investment companies created under the laws of Puerto Rico, the U.S. Virgin Islands, or any other U.S. possession.

(Sec. 507) The bill requires the SEC to increase, from $5 million to $10 million, the 12-month sales threshold beyond which an issuer is required to provide investors with additional disclosures related to compensatory benefit plans.

(Sec. 508) The bill expands the applicability to issuers of “Regulation A+” (which exempts certain smaller offerings from securities registration requirements).

(Sec. 509) The bill directs the SEC to revise registration rules to allow a closed-end company to use offering and proxy rules currently available to other issuers of securities, thereby reducing filing requirements and restrictions on communications with investors in certain circumstances. (A closed-end company is a publicly traded investment management company that sells a limited number of shares to investors in an initial public offering.)

TITLE VI–PROTECTIONS FOR STUDENT BORROWERS

(Sec. 601) The bill amends TILA to prospectively revise provisions relating to cosigners of private student loans. Specifically, the bill: (1) prohibits a creditor from declaring a default or accelerating the debt of a private student loan on the sole basis of the death or bankruptcy of a cosigner to such a loan, and (2) directs loan holders to release cosigners from any obligation upon the death of the student borrower.

(Sec. 602) The bill amends the Fair Credit Reporting Act to allow a person to request the removal of a previously reported default regarding a private education loan from a consumer report if: (1) the lender chooses to offer a loan-rehabilitation program that requires a number of consecutive on-time monthly payments demonstrating renewed ability and willingness to repay the loan, and (2) the consumer meets those requirements. A consumer may obtain such rehabilitation benefits only once per loan. The GAO shall report on the implementation of these provisions.

(Sec. 603) The bill amends the Financial Literacy and Education Improvement Act to direct the Financial Literacy and Education Commission to establish best practices for teaching financial literacy skills at institutions of higher education.

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S. 2155, Most Significant Pro-Growth Financial Regulatory Reform in a Generation

 

This article discusses the “Economic Growth, Regulatory Relief and Consumer Protection Act” became Public Law No: 115-174, which is the most significant pro-growth financial regulatory reform package since the passage of Gramm-Leach-Bliley nearly a generation ago.  For a discussion of the most significant pro-growth capital formation legislation currently pending in Congress, see the articles Business JOBS Act 3.0 Legislation Pending in House and JOBS 3.0 Capital Formation Legislation Pending in US Senate! and JOBS 3.0 Capital Formation Legislation Pending in US Senate (2nd).

Although the bill was designated as S,2155, where the “S” signifies that the final bill was a Senate legislative vehicle, much of the bill is comprised of legislative work of the House of Representatives.  It was reported that approximately half of the bill – including ¾ of the regulatory relief provisions and nearly 90% of the capital formation provisions – originated in the House of Representatives. A number of the following House-originated provisions were included in S. 2155:

  • H.R. 2226, the “Portfolio Lending and Mortgage Access Act,” sponsored by Representative Andy Barr (R-KY).
  • H.R. 2255, the “Housing Opportunities Made Easier (HOME) Act,” sponsored by Representative David Trott (R-MI).
  • H.R. 2954, the “Home Mortgage Disclosure Adjustment Act,” sponsored by Representative Tom Emmer (R-MN).
  • H.R. 389, the “Credit Union Residential Loan Parity Act,” sponsored by Representative Ed Royce (R-CA).
  • H.R. 2948, the “S.A.F.E. Mortgage Licensing Act,” sponsored by Representative Steve Stivers (R-OH).
  • H.R. 1699, the “Preserving Access to Manufactured Housing Act of 2017,” sponsored by Representative Andy Barr (R-KY).
  • H.R. 3971, the “Community Institution Mortgage Relief Act of 2017,” sponsored by Representative Claudia Tenney (R-NY).
  • H.R. 2403, the “Keeping Capital for Local Underserved Communities Act of 2017,” sponsored by Representative Gwen Moore (D-WI).
  • H.R. 3093, the “Investor Clarity and Bank Parity Act,” sponsored by Representative Michael Capuano (D-MA).
  • H.R. 4725, the “Community Bank Reporting Relief Act,” sponsored by Representative Randy Hultgren (R-IL).
  • H.R. 1426, the “Federal Savings Association Charter Flexibility Act of 2017,” sponsored by Representative Keith Rothfus (R-PA).
  • H.R. 4771, the “Small Bank Holding Company Relief Act of 2018,” sponsored by Representative Mia Love (R-UT).
  • H.R. 5076, the “Small Bank Exam Cycle Improvement Act of 2018,” sponsored by Representative Claudia Tenney (R-NY).
  • H.R. 1457, the “MOBILE Act of 2017,” sponsored by Representative Scott Tipton (R-CO).
  • H.R. 2148, the “Clarifying Commercial Real Estate Loans Act,” sponsored by Representative Robert Pittenger (R-NC).
  • H.R. 2683, the “Protecting Veterans Credit Act of 2017,” sponsored by Representative John Delaney (D-MD).
  • H.R. 3758, the “Senior Safe Act of 2017,” sponsored by Representative Kyrsten Sinema (D-AZ).
  • H.R. 4258, the “Family Self Sufficiency Act,” sponsored by Representative Sean Duffy (R-WI).
  • H.R. 898, the “Credit Score Competition Act of 2017,” sponsored by Representative Ed Royce (R-CA).
  • H.R. 2121, the “Pension, Endowment, and Mutual Fund Access to Banking Act,” sponsored by Representative Keith Rothfus (R-PA).
  • H.R. 1624, the “Municipal Finance Support Act of 2017,” sponsored by Representative Luke Messer (R-IN).
  • H.R. 4546, the “National Securities Exchange Regulatory Parity Act,” sponsored by Representative Ed Royce (R-CA).
  • H.R. 1312, the “Small Business Capital Formation Enhancement Act,” sponsored by Representative Bruce Poliquin (R-ME).
  • H.R. 1219, the “Supporting America’s Innovators Act of 2017,” sponsored by Representative Patrick McHenry (R-NC).
  • H.R. 1257, the “Securities and Exchange Commission Overpayment Credit Act,” sponsored by Representative Gregory Meeks (D-NY).
  • H.R. 1366, the “U.S. Territories Investor Protection Act of 2017,” sponsored by Representative Nydia Velazquez (D-NY).
  • H.R. 1343, the “Encouraging Employee Ownership Act of 2017,” sponsored by Representative Randy Hultgren (R-IL).
  • H.R. 2864, the “Improving Access to Capital Act,” sponsored by Representative Kyrsten Sinema (D-AZ).
  • H.R. 4279, the “Expanding Investment Opportunities Act,” sponsored by Representative Trey Hollingsworth (R-IN).
  • H.R. 3221, the “Securing Access to Affordable Mortgages Act,” sponsored by Representative David Kustoff (R-TN).
  • H.R. 4790, the “Volcker Rule Regulatory Harmonization Act,” sponsored by Representative French Hill (R-AR).
  • H.R. 4028, the “PROTECT Act of 2017,” sponsored by Representative Patrick McHenry (R-NC).
  • H.R. 385, a bill to amend the Expedited Funds Availability Act to clarify the application of that Act to American Samoa and the Northern Mariana Islands, sponsored by Representative Aumua Amata Coleman Radewagen (R-AS).

Mr. Woessner’s bio appears here.

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House Majority Leader McCarthy on the Trump Administration’s New Rules to Protect Religious Freedom

November 8, 2018, Washington, D.C. – House Majority Leader Kevin McCarthy (CA-23) released the following statement on the Trump Administration’s announcement of new rules to protect religious freedom and ensure federal taxpayer dollars do not fund abortions:

“The three announcements by the Department of Health and Human Services today are clear victories in the fight for life and religious freedom.

“The rules affirm and strengthen the long-standing ban on federal funding for abortion, which is supported by a clear majority of Americans.

“HHS also announced it is finalizing the religious exemption to Obamacare’s contraceptive mandate. This rule will ensure religious believers and other moral objectors cannot be forced by the government to violate their most deeply held beliefs.

“These regulations add to the pro-life achievements of the Republican-led House, which has worked for years to secure religious freedom and the right to life.

“Republicans will continue to fight for a country where everyone has the rights and legal protection they deserve. Today’s announcements are a big step forward.”

Visit the HHS website for more information on these announcements.

Mr. Woessner’s bio appears here.

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Politico Pro Q&A with Rep. Blaine Luetkemeyer

Missouri Republican Rep. Blaine Luetkemeyer, a senior and well-respected member of the House Financial Services Committe, was recently interviewed by Politico Pro magazine. Portions of the interview appear below, as edited for length and clarity by the magazine.

“If Republicans keep control of Congress, what do you think will get done in the financial services space?

There will be a different makeup of the Congress, both on our side of the building and the other side of the building. It’s going to be a different dynamic to the entire place. We’ll have to wait and see what’s doable.

I have some ideas of things that I’d like to work on — some of the things we’re working on now. Data security and BSA/AML. The CECL rule is something that is front and center on a lot of banks’ minds right now. They’re very concerned about that.

GSE reform is something that’s high on the agenda of the administration next term.

If you’re chairing the committee, would you run it any differently than Chairman Hensarling?

You’re going to have to run it differently because I think the margins are going to be slimmer if we hold the House. We’re going to have fewer members to work with when it comes to votes. So it’s going to have to be run a little differently from that standpoint right off the bat.

When you have slim margins, you can’t afford to have a person or two that does not support the issue and not be able to get it out of the committee. You’re going to have to work with everybody to take their concerns and assuage those concerns so they would be willing to support the issue, or fix the issue in a way that will get their support. You can’t be quite as willing to push things through as we’ve been able to do in the past with some nice margins.

You have to be more pragmatic and willing to compromise?

That’s what has to happen. With margins slimmer, everybody’s going to have to be a little more pragmatic. Everybody’s going to have to be willing to compromise more. We’re not going to have the numbers to ram things through. It’s going to be very difficult.

As you know, we have a very, very wide philosophical and ideological group on the committee. We have moderates and the Freedom Caucus guys, which is fine. It gives us a good range of folks to really vet all these issues.

But when it comes time to vote, we’re going to have to have issues both groups of these folks can support. You can’t give up a vote here and there anymore. You’re going to have to have everybody on the same page. You’re going to have to be more pragmatic. Everybody on the committee’s going to have to be like that. You cannot be an ideologue and be on the committee and expect to get things done. There are just not the votes there to drive things through anymore.

What is your relationship like with Maxine Waters? How productive and collaborative would the two of you be at the top of the committee? What if she’s chairwoman?

That’s yet to be seen. It depends on what kind of agenda she tries to put out there. If she’s going to just do impeachment hearings every week it’s not going to be very productive. If she’s willing to look at regulatory issues and issues in the financial services world that are affecting consumers and our financial services industry folks harmfully I think there’s room there for us to work on different issues. We’ll see where she wants to take the committee.

There is more of a willingness on her part to work with our side of the aisle, which is welcome and we’ll see if that will continue.

Do you want to further investigate Wells Fargo?

We’ve had some hearings on Wells Fargo’s activities. If we need to continue that, we will. If there are any other banks or credit agencies or HUD or insurance companies or SEC folks we need to be taking a look at, why, yeah, absolutely, we will continue to investigate and do our job of providing oversight over those entities.

That’s part of our job. Any entity out there or group that is doing something they shouldn’t be doing, they need to be investigated by us and that’s part of our job.

Is there anything that’s top of mind with Wells Fargo that you would want to look into?

There are some investigations going on right now. There are so many things going on at Wells Fargo now it’s hard to say which one you want to pick. We need to wait until we get the election behind us and sit down and start looking at an agenda for what we need to be investigating here.

We have some data breaches here we may need to take a look at. Google and Facebook and those folks. I know [CFPB Acting Director Mick] Mulvaney has got a couple folks on the hot stove right now for some activities.

What about the Export-Import Bank, the Terrorism Risk Insurance Program and the National Flood Insurance Program? Do you see any need to shut down those programs or tinker with them much? Are these big battles you want to have?

I personally don’t. We’ll let the will of the committee decide how they want to work and what leadership wants to do with those.

The terrorism insurance program has been a success. I think the rates have actually come down. More companies want to be become engaged.

Export-Import is still a controversial situation, with the Senate having a few folks over there who don’t want to allow it to continue to exist and holding up appointments to the board. We need to work with the administration and see what direction they want to go and work with Senate colleagues to see if they can fix it and make it work.

As you saw in the last battle, there’s a lot of support for the Export-Import Bank in our conference. Enough that we got a discharge petition to put on the floor and pass reauthorization against the will of our leadership. You will see there will be a lot of support for continuing to do that.

You personally support Ex-Im?

I personally do, yes.

What’s left to do in the banking space after S. 2155 (115)?

We’ll see what is doable. There’s a whole lot of stuff left to do. You saw the [Financial] CHOICE Act. If you want, take that as a template for things we need to get done. There’s a lot of that that didn’t get passed.

How much of it is doable?

That’s the trick. We just have to work with our Senate colleagues to see what kind of bar we need to set when we pass a bill. Working with our Senate colleagues and the administration is going to be key to getting things done, especially with margins more narrow in the House.

Banks are lobbying to loosen rules for cannabis banking now that more states are legalizing marijuana. The Comptroller of the Currency recently said a legislative fix is necessary. Are you going to be supportive?

This is an example of the cart before the horse. Until the drug marijuana — a Schedule 1 drug — is rescheduled so it’s not an illegal drug, we can talk about all of the bills we want to do to make it legal but you can’t make the activity legal until you make the drug legal.

I have a daughter that lives in Denver. I’m very well aware of this problem out there. I visit them regularly. I understand there are more and more states wanting to go to medical marijuana, which is fine. I don’t have a problem with that personally. I do have a problem with the fact we’ve got to make the drug legal before you can make the activity of selling it legal. That’s how we have to fix this.

There’s a legislative fix to deschedule the drug but nobody’s willing to do that.

So you wouldn’t be comfortable doing a piecemeal cannabis banking bill?

I don’t know how you can.”

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Mr. Woessner’s bio appears here.

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Business JOBS Act 3.0 Legislation Pending in House

The Financial Services Committee of the US House of Representatives earlier this year approved and sent to the US House for vote a package of bipartisan capital markets legislation to help America’s small business and entrepreneurs and to protect investors and the US capital markets. The legislative package, if approved by the House during this Congress, could be included in the “JOBS and Investor Confidence Act of 2018,” also known as “JOBS Act 3.0,” which was approved by the US House of Representatives and sent to the US Senate with broad bipartisan support this past Summer of 2018.

This is the third article on the topic of JOBS Act 3.0 and follows article one and article 2 published yesterday regarding JOBS Act 3.0.  Also, see the article here regarding the most significant pro-growth financial regulatory reform in nearly a generation.

H.R. 1645, Fostering Innovation Act – Sponsored by Rep. Kyrsten Sinema (D-AZ) and cosponsored by Rep. Trey Hollingsworth (R-IN), the “Fostering Innovation Act of 2017” amends Section 404(b) of the Sarbanes-Oxley Act (SOX) to extend the exemption to comply with the law for certain low-revenue emerging growth companies (EGCs) that would otherwise lose their exempt status at the end of the five-year period that applies under current law.

The bill passed the Financial Services Committee with a bipartisan vote of 48-12 on October 12, 2017.

H.R. 6177, Developing and Empowering our Aspiring Leaders (DEAL) Act – Sponsored by Rep. Trey Hollingsworth (R-IN), the “DEAL Act” requires the SEC to revise the definition of a qualifying investment to include equity securities acquired in a secondary transaction.

The bill passed the Financial Services Committee on July 11, 2018 on voice vote.

H.R. 6319, Expanding Investment in Small Businesses Act – Sponsored by Rep. Randy Hultgren (R-IL), the “Expanding Investment in Small Businesses Act” requires the SEC to study whether the current diversified fund limit threshold for mutual funds constrains their ability to take meaningful positions in small-cap companies.

The Financial Services Committee passed the bill by voice vote on July 11, 2018.

H.R. 6320, Promoting Transparent Standards for Corporate Insiders Act – Sponsored by Rep. Maxine Waters (D-CA), the “Promoting Transparent Standards for Corporate Insiders Act” requires the SEC to consider certain types of amendments to Rule 10b5-1 to ensure that corporate insiders are not able to indirectly engage in illegal insider trading through changes to their trading plans.

The bill passed the Financial Services Committee on July 11, 2018 by voice vote. 

H.R. 6321, Investment Adviser Regulatory Flexibility Improvement Act – Sponsored by Rep.

Gwen Moore (D-WI) and cosponsored by Rep. Bill Huizenga (R-MI), the “Investment Adviser Regulatory Flexibility Improvement Act” directs the SEC to consider alternative methods for a business or an organization to qualify as a “small business” or “small organization” for the purposes of assessing the regulatory impact on investment advisers.

H.R. 6321 passed the Financial Services Committee by voice vote on July 11, 2018.

H.R. 6322, Enhancing Multi-Class Share Disclosures Act — Sponsored by Rep. Gregory Meeks (D-NY), the “Enhancing Multi-Class Share Disclosures Act” requires issuers with a multi-class share structure to make certain disclosures in any proxy or consent solicitation material that provide enhanced transparency regarding certain shareholders’ voting power.

It passed the Financial Services Committee by voice vote on July 11, 2018.

H.R. 6323, National Senior Investor Initiative Act of 2018 – Sponsored by Rep. Josh Gottheimer (D-NJ) and cosponsored by Rep. Trey Hollingsworth (R-IN), the “National Senior Investor Initiative Act of 2018” or the “Senior Security Act of 2018” creates an interdivisional task force at the SEC, to examine and identify challenges facing senior investors and requires the Government Accountability Office to study the economic costs of the exploitation of senior citizens.

The Financial Services Committee passed the bill by voice vote on July 11, 2018.

H.R. 6324, Middle Market IPO Underwriting Cost Act – Sponsored by Rep. Jim Himes (D-CT), the “Middle Market IPO Underwriting Cost Act” requires the SEC, in consultation with the Financial Industry Regulatory Authority, to study the direct and indirect costs associated with small and medium-sized companies to undertake initial public offerings.

The bill passed the Financial Services Committee on July 11, 2018 by voice vote.

H.R. 3555, Exchange Regulatory Improvement Act – Sponsored by Rep. Barry Loudermilk (R-GA) and cosponsored by Reps. Lee Zeldin (R-NY), Gregory Meeks,  (D-NY) and David Scott (D-GA), the “Exchange Regulatory Improvement Act,” as amended, requires the SEC to set forth the facts and circumstances it considers in determining what is a “facility” of an exchange.

The bill passed the Financial Services Committee on July 11, 2018 by voice vote.

H.R. 4281, Expanding Access to Capital for Job Creators Act – Sponsored by Rep. Ruben Kihuen (D-NV) and cosponsored by Rep. Alex Mooney (R-WV), the “Expanding Access to Capital for Rural Job Creators Act” amends the Securities Exchange Act of 1934 to have the SEC’s Advocate for Small Business Capital Formation identify any unique challenges to rural area small businesses when identifying problems that small businesses have with securing access to capital. H.R. 4281 also requires that the annual report made by the SEC’s Small Business Advocate include a summary of any unique issues encountered by rural area small businesses.

The bill passed the Financial Services Committee with unanimous bipartisan support, 60-0, on November 15, 2017.

Mr. Woessner’s bio appears here.

 

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Business JOBS 3.0 Legislation Pending in Senate (2nd article)

 

This article, the second of three articles, summarizes more of the individual pieces of strong, bipartisan capital-formation business legislation comprising JOBS Act 3.0 to help America’s small business owners and entrepreneurs and to protect investors.  JOBS Act 3.0 is pending in the US Senate.

The US House of Representatives approved and sent to the US Senate earlier this year legislative package known as the “JOBS and Investor Confidence Act of 2018,” or “JOBS Act 3” comprised of scores of individual pieces of business legislation approved by the House of Representatives with broad bipartisan support.

An earlier article summarized 11 individual bills included in the JOBS Act 3.0 legislative package.  See the article here for other pieces of pro-growth capital formation legislation pending in the House, and the article here for the most comprehensive pro-growth, financial regulatory relief legislation to become law in nearly a generation.

This article summarizes 11 more of the individual bills included in the JOBS Act 3.0 legislative package pending in the US Senate.

H.R. 4537, International Insurance Standards Act – Sponsored by Rep. Sean Duffy (R-WI) and cosponsored by Rep. Denny Heck (D-WA), the bill ensures that international insurance standards and agreements are consistent with our domestic insurance system and provides greater Congressional oversight and transparency on international insurance standard negotiations.

The bill passed the House by voice vote on July 10, 2018.

H.R. 4566, Alleviating Stress Test Burdens to Help Investors Act (Secs. 2 and 3) – Sponsored by

Rep. Bruce Poliquin (R-ME), the section of this legislation to be included in JOBS Act 3.0 amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to exempt non-bank financial institutions not  primarily regulated by either a federal banking agency or the Federal Housing Finance Agency from the Dodd-Frank Act’s mandatory company-run stress-testing requirements. Additionally, the bill clarifies that the SEC and the Commodity Futures Trading Commission retain their authority to issue regulations to require non-bank financial companies to conduct periodic analysis of the financial condition of such companies under adverse economic conditions.

The bill passed the House on March 20, 2018 by strong bi-partisan support vote of 395-19.

H.R. 4768, National Strategy for Combating the Financing of Transnational Criminal

Organizations Act – Sponsored by Rep. David Kustoff (R-TN) and cosponsored by Rep. Kyrsten Sinema (D-AZ), H.R. 4768 requires the President, through the Secretary of the Treasury, to develop a national strategy to combat the financial networks of transnational criminal organizations (TCOs) not later than one year after the enactment of this Act and every two years thereafter. In particular, the strategy will assess the most significant TCO threats and the individuals, entities, and networks that provide financial support or facilitation to those TCOs.  It also reviews current goals, priorities, and actions against TCOs’ financial support networks and will recommend new ways to deter and prosecute those who financially enable TCOs.

H.R. 4768 passed the House by voice vote on March 6, 2018.

H.R. 5288, Common Sense Credit Union Capital Relief Act – Sponsored by Rep. Bill Posey (R-FL) and cosponsored by Rep. Denny Heck (D-WA), the bill delays the effective date of the rule used by the National Credit Union Administration titled “Risk-Based Capital” from 2019 to 2021. Included in HR 5841.

H.R. 5749, Options Markets Stability Act – Sponsored by Rep. Randy Hultgren (R-IL) and cosponsored by Rep. Bill Foster (D-IL), the legislation requires the prudential regulators to implement a risk-adjusted approach to value centrally-cleared exchange-listed derivatives as it relates to capital rules to better and more accurately reflect exposure and to promote  market-making activity.

On July 10, 2018, the bill passed the House with a unanimous vote of 385-0.

H.R. 5783, Cooperate with Law Enforcement Agencies and Watch Act of 2018 – Sponsored by Rep. French Hill (R-AR) and cosponsored by Rep. Bill Foster (D-IL), the “Cooperate with Law Enforcement Agencies and Watch Act of 2018” provides a safe harbor for financial institutions that maintain a customer account at the request of a Federal, State, tribal or local law enforcement agency.

The bill passed the House with overwhelming bipartisan support, 379-4, on June 25, 2018.

H.R. 5877, Main Street Growth Act – Sponsored by Rep. Tom Emmer (R-MN), the “Main Street Growth Act” amends the Securities Exchange Act of 1934 to allow for the registration of venture exchanges with the SEC to provide a venue that is tailored to the needs of small and emerging companies and offers qualifying companies one venue in which their securities can trade.

It passed the House by voice vote on July 10, 2018.

H.R. 5953, Building Up Independent Lives and Dreams (BUILD) Act – Sponsored by Rep. Barry Loudermilk (R-GA) and Rep. Brad Sherman (D-CA), H.R. 5953 allows certain non-profits that are conducting charitable mortgage loan transactions to use either the truth in lending (TIL), good faith estimate (GFE), and HUD-1 forms, or those required under the TILA-RESPA Integrated Disclosure (TRID) rule.

H.R. 5953 passed the House by voice vote on July 10, 2018.

H.R. 5970, Modernizing Disclosures for Investors Act – Sponsored by Rep. Ann Wagner (R-MO), the “Modernizing Disclosures for Investors Act” requires the SEC to provide a report to Congress with a cost-benefit analysis of emerging growth company (EGC) businesses use of SEC Form 10-Q, including the costs and benefits to investors and other market participants of the current requirements for reporting on Form 10-Q, as well as the expected impact of the use of alternative formats of quarterly reporting for EGCs. The bill also directs the SEC to report to Congress with recommendations for decreasing costs, increasing transparency, and increasing efficiency of quarterly financial reporting by EGCs.

The House passed H.R. 5970 by voice vote on July 10, 2018.

H.R. 6069, Fight Illicit Networks and Detect (FIND) Trafficking Act – Sponsored by Rep. Juan Vargas (D-CA) and cosponsored by Rep. Keith Rothfus (R-PA), the “FIND Trafficking Act” requires the Comptroller General of the United States to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.

The bill passed the House on June 25, 2018 by voice vote.

H.R. 6139, Improving Investment Research for Small and Emerging Issuers Act – Sponsored by Rep. Bill Huizenga (R-MI) and cosponsored by Rep. Maxine Waters (D-CA), the bill requires the SEC to carry out a study to evaluate the issues affecting the provision of and reliance upon investment research into small issuers and pre-IPO companies, including EGCs and other small issuers.

It passed the House by voice vote on July 10, 2018.

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Mr. Woessner’s bio appears here.

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JOBS 3.0 Capital Formation Legislation Pending in US Senate!

The US House of Representatives approved and sent to the US Senate earlier this year a package of strong, bipartisan capital-formation legislation to help America’s small businesses and entrepreneurs raise capital and to protect investors.

The legislative package, known as the “JOBS and Investor Confidence Act of 2018,” is comprised of scores of individual pieces of legislation approved by the House of Representatives or the House Financial Services Committee with broad bipartisan support.

This so-called “JOBS Act 3.0” follows two earlier capital formation legislative packages, the “Jump Start our Business Startups Act of 2012”  (“JOBS Act 1.0″ ), and “JOBS Act 2.0,” incorporated in  the “Fixing America’s Surface Transportation Act of 2015” (the “FAST Act”).

In commenting on the legislation, Congressman Jeb Hensarling (R-TX), Chairman of the House Financial Services Committee, wherein the bills originated, stated:

“Over the last several months, our Committee has been working hard to put forth a number of capital formation bills that are designed to breathe new life in markets that are suffocating under aging regulations,” said Hensarling. “Thanks to the efforts of the Ranking Member and Members of the Committee on both sides of the aisle, we have a strong bipartisan package that will play an important role in sustaining long-term economic growth and global competitiveness.”

This article, the first of three articles, summarizes 11 of the individual pieces of legislation JOBS Act 3.0 — all of 11 of which are pending in the Senate.  See the article here for the other pieces of legislation included in this JOBS Act 3.0 package pending in the Senate, the article here for other pieces of pro-growth capital formation legislation pending in the House, and the article here for the most comprehensive pro-growth, regulatory relief legislation to become law in nearly a generation.

H.R. 79, Helping Angels Lead Our Startups (HALOS) Act – Sponsored by Rep. Steve Chabot (R-OH) and cosponsored by Rep. Kyrsten Sinema (D-AZ), this bill defines an “angel investor group” and clarifies a regulation issued by the Securities and Exchange Commission (SEC) to ensure that startups have the opportunity to make a presentation to interested parties without running afoul of the securities laws.

It passed the House on January 10, 2017 with strong bipartisan support, 344-73.

H.R. 435, The Credit Access and Inclusion Act of 2017 – Sponsored by Rep. Keith Ellison (D-MN) and cosponsored by Rep. Robert Pittenger (R-NC), the bill amends the Fair Credit Reporting Act (FCRA) to authorize an entity, including the Department of Housing and Urban Development (HUD) to furnish data to consumer reporting agencies regarding an individual’s history of on-time payments with respect to a lease, or contracts for utilities and telecommunications services.

The bill passed the House by voice vote on June 25, 2018.

H.R. 477, Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act of 2017 – Sponsored by Rep. Bill Huizenga (R-MI) and cosponsored by Rep. Brian Higgins (D-NY), the bill alleviates costs to small business owners by simplifying the securities registration system for mergers and acquisition brokers who help transfer the ownership of small, privately held companies.  It also disqualifies “bad actors” from utilizing the simplified process and does not allow transactions involving shell companies.

H.R. 477 passed the House with unanimous bipartisan support, 426-0, on December 7, 2017.

H.R. 1585, Fair Investment Opportunities for Professional Experts Act – Sponsored by Reps. David Schweikert (R-AZ) and cosponsored by Reps. French Hill (R-AR), Carolyn Maloney (D-NY) and Kyrsten Sinema (D-AZ), H.R. 1585 modernizes the definition of accredited investor so those who do not have a high income or high net worth but do have the education and job experience to evaluate investment risks and merits can participate in the growth of promising companies.  This change will provide more Americans with greater investment opportunities and enable the businesses they invest in to create more jobs.

It passed the House by voice vote on November 1, 2017.

H.R. 1645, Fostering Innovation Act – Sponsored by Rep. Kyrsten Sinema (D-AZ) and cosponsored by Rep. Trey Hollingsworth (R-IN), the “Fostering Innovation Act of 2017” amends Section 404(b) of the Sarbanes-Oxley Act (SOX) to extend the exemption to comply with the law for certain low-revenue emerging growth companies (EGCs) that would otherwise lose their exempt status at the end of the five-year period that applies under current law. Included in HR 3978.

H.R. 2219, End Banking for Human Traffickers Act of 2018 – Sponsored by Rep. Ed Royce (RCA) and cosponsored by Rep. Carolyn Maloney (D-NY), H.R. 2219 amends the Victims of Trafficking and Violence Protection Act of 2000 to add the Treasury Secretary to the President’s Interagency Task Force to Monitor and Combat Trafficking, requires the task force to submit to Congress an analysis of anti-money laundering (AML) efforts of the U.S. government and financial institutions relating to severe forms of trafficking in persons, and requires the Treasury Secretary to designate an office within the Office of Terrorism and Financial Intelligence to coordinate efforts to combat the illicit financing of human trafficking.

It passed the House with overwhelming bipartisan support, 408-2, on April 10, 2018.

H.R. 2364, Investing in Main Street Act – Sponsored by Rep. Judy Chu (D-CA) and cosponsored by Rep. Stephen Knight (R-CA), the bill amends the Small Business Investment Act by increasing the percentage a financial institution or federal savings association can invest in a small business investment company (SBIC) to 15 percent and require the financial institution or the federal savings association to be approved by their federal regulator prior to investing more than five percent.

H.R. 2364 passed the House by voice vote on July 24, 2017.

H.R. 3903, Encouraging Public Offerings Act of 2017 – Sponsored by Rep. Ted Budd (R-NC) and cosponsored by Rep. Gregory Meeks (D-NY), the “Encouraging Public Offerings Act of 2017” amends the Securities Act of 1933 to expand to all public companies certain provisions of Title I of the Jumpstart Our Business Startups (JOBS) Act, which previously applied only to an EGC. Specifically, the legislation allows issuers to submit to the SEC for confidential review, before publicly filing, draft registration statements for Initial Public Offerings (IPOs) and for follow-on offerings within one year of an IPO. Additionally, this bill allows all companies to “test-the-waters” before filing an IPO, which means they may meet with qualified institutional buyers and other institutional accredited investors to gauge those investors’ interest in the offering.

It passed the House with unanimous bipartisan support, 419-0, on November 1, 2017.

H.R. 3972, Family Office Technical Correction Act – Sponsored by Rep. Carolyn Maloney (D-NY), H.R. 3972 clarifies that family offices and family clients, as defined in section 275.202(a)(11)(G)-1 of title 17, Code of Federal Regulations, are accredited investors under Regulation D of the SEC.

H.R. 3972 passed the House by voice vote on October 24, 2017.

H.R. 4292, Financial Institution Living Will Improvement Act of 2017 – Sponsored by Rep. Lee Zeldin (R-NY) and cosponsored by Rep. Carolyn Maloney (D-NY), the bill amends the “Dodd-Frank Wall Street Reform and Consumer Protection Act” to reform the resolution plan submission “living will” process by requiring bank holding companies to submit to the Federal Reserve Board (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) resolution plans every two years. This bill requires the Federal Reserve and FDIC to provide feedback regarding a resolution plan within six months after a bank holding company submission. This bill also requires the Federal Reserve and FDIC to publicly disclose the assessment framework used to review the adequacy of resolution plans.

It passed the House on January 30, 2018 with unanimous support, 414-0.

H.R. 4294, Prevention of Private Information Dissemination Act of 2017 – Sponsored by Rep. David Kustoff (R-TN), the “Prevention of Private Information Dissemination Act of 2017” establishes criminal penalties for the unauthorized disclosure of living will and stress test determinations and other individually identifiable information by federal officials, consistent with existing penalties for other unauthorized disclosure of confidential records by federal officials.

It passed the House on June 26, 2018 with overwhelming bipartisan support, 392-2.

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Mr. Woessner’s bio appears here.