Top 10 measures for financial institution regulation to be considered by FinSvcs Cmte

While it will be considering nearly two dozen pieces of separate legislation during its markup Wednesday, at least 10 of the measures that the House Financial Services Committee will debate have a direct impact on federal financial institution regulation.

The hearing gets underway at 10 a.m. in the committee’s hearing room in House Rayburn Office Building Room 2128.

Here’s a quick rundown of the top 10 items in the Wednesday markup that have the potential for major impact on financial institution regulation, based on the committee memo distributed Oct. 5:

H.R. 1116, TAILOR Act of 2017 

Directs the federal financial institutions regulatory agencies to tailor their rulemakings in consideration of the risk profiles and business models of institutions that are subject to such rules. The bill also directs such agencies to annually report to Congress and testify regarding the specific actions taken to tailor their regulatory actions.

H.R. 2706, Financial Institution Customer Protection Act of 2017 

Prohibits a federal banking agency from directing a depository institution to terminate an account, absent a material reason. The bill requires a federal banking agency to provide a depository institution written justification of any request to terminate or restrict a customer account, except in instances of national security. The bill also requires the federal banking agencies to issue an annual report to Congress that describes the number of customer accounts the agency requested or caused to be closed and the legal authority on which the agency relied.

H.R. 3072, Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017 

Amends the Consumer Financial Protection Act of 2010 to raise the examination threshold that brings an insured depository institution or insured credit union under supervision by the Consumer Financial Protection Bureau’s (CFPB) from assets of $10 billion or more to assets of $50 billion or more. The bill also increases from $10 billion to $50 billion the threshold at which an insured depository institution or insured credit union is subject to CFPB reporting requirements.

H.R. 2148, Clarifying Commercial Real Estate Loans 

Provides clarity to capital requirements for certain acquisition, development, or construction loans by permitting the appraised value of real property to count toward a 15% equity threshold to be exempted from a High Volatility Commercial Real Estate (HVCRE) designation as otherwise required under Basel III.

The bill also provides an off-ramp from HVCRE designation when a loan matures and qualifies for underwriting standards for permanent financing. The bill also exempts loans made prior to January 1, 2015, when the Basel III rule took effect.

H.R. 2396, Privacy Notification Technical Clarification Act 

Amends the Gramm-Leach-Bliley Act to reduce confusion among consumers that can occur when they receive annual privacy notices, by clarifying that financial institutions are not required to provide an annual privacy notice disclosure so long as the institution makes its current policy available to consumers online or at the consumer’s request, and the institution conspicuously notifies consumers of the available policy.

H.R. 2954, Home Mortgage Disclosure Adjustment Act 

Amends the Home Mortgage Disclosure Act of 1975 to exempt from maintenance of mortgage loan records and disclosure requirements depository institutions that have originated in each of the two preceding calendar years, fewer than 500 closed-end mortgage loans, and fewer than 500 open-end lines of credit.

H.R. 3299, Protecting Consumers Access to Credit Act of 2017 (repeals “Madden” decision)

Overturns the “Midland Funding, LLC v. Madden” decision on “valid when made” contracts and clarifies that bank loans that are valid as to their maximum rate of interest in accordance with federal law when made shall remain valid with respect to that rate regardless of whether a bank has subsequently sold or assigned the loan to a third party.

H.R. 3312, Systemic Risk Designation Improvement Act of 2017 

Remove the arbitrary $50 billion asset threshold used to designate firms as “systemically important financial institutions” and subject them to enhanced regulatory standards. The bill also authorizes the Financial Stability Oversight Council (FSOC) to subject a bank holding company to enhanced supervision and prudential standards by the Federal Reserve if an institution has been identified as global systemically important bank (G-SIB) under the indicator-based measurement approach established under federal rules. The measurement is based on an institution’s “systemic indicator scores,” which reflects size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity relative to the other U.S. and foreign banking organizations identified by the Basel Committee on Banking Supervision and any other banking organization included in the Basel Committee’s sample for a given year.

This bill also substitutes G-SIB status in place of the current monetary threshold as the determinant for the Federal Reserve’s authority over bank holding company acquisition restrictions, prohibitions on interlocks between management of different financial companies, and enhanced supervision and prudential standards.

H.R. 3758, Senior Safe Act of 2017 

Provides that: (1) a supervisor, compliance officer, or legal advisor for a covered financial institution who has received training regarding the identification and reporting of the suspected exploitation of a senior citizen (at least 65 years old) shall not be liable for disclosing such exploitation to a covered agency if the individual made the disclosure in good faith and with reasonable care; and (2) a covered financial institution shall not be liable for such a disclosure by such an individual if the individual was employed by the institution at the time of the disclosure and the institution had provided such training.

H.R. 3857, PASS Act of 2017 (repeal of “fiduciary rule”)

Repeals the Department of Labor’s (DOL) final rule titled “Definition of the Term ‘Fiduciary’ Conflict of Interest Rule–Retirement Investment Advice” (fiduciary rule) and related prohibited transaction exemptions published on April 8, 2016. The bill also amends the second subsection (k) of Section 15 of the Securities Exchange Act of 1934 to require a broker-dealer to act in the retail customer’s best interest when providing a recommendation, which must reflect (i) reasonable diligence and (ii) the reasonable care, skill, and prudence that a broker-dealer would exercise based on the customer’s investment profile. The bill also requires a broker-dealer to provide increased disclosures to the customer before the broker-dealer may purchase a securities product on behalf of that customer, including disclosures regarding the type and scope of services the broker-dealer provides, the standard of conduct that applies to the relationship, the types of compensation the broker-dealer receives, and any material conflict of interest.

House Fin. Svcs. Cmte memo: Items for Oct. 11 markup