UPDATED: Financial Services Committee mark up interrupted; likely to continue later

Provisions on contracts, options, CU capital rule delay being considered

Three bills (out of five total) affecting federal financial institution regulation were in the process of being marked up Tuesday in the House Financial Services Committee; however, other business in the House (including roll call votes throughout the day).

The committee is expected to return to the session either later in the day, or on Wednesday.

Details of bills being considered, according to the committee memo on the markup, include:

H.R. 4439, the “Modernizing Credit Opportunities Act”

Introduced by Rep. Trey Hollingsworth (R-Ind.), H.R. 4439 amends the Revised Statutes, the Bank Service Company Act, the Federal Deposit Insurance Act, and the Home Owners’ Loan Act to clarify that the role of the insured depository institution as lender and the location of an insured depository institution under applicable law are not affected by any contract between the institution and a third- party service provider, and to clarify that Federal preemption of state usury laws applies to any loan to which an insured depository institution is the party to which the debt is initially owed according to its terms.

H.R. 5749, the “Options Markets Stability Act”

Introduced by Rep. Randy Hultgren (R-Ill.), H.R. 5749 would implement a risk-adjusted approach to value centrally-cleared options as it relates to capital rules to better and more accurately reflect exposure and promote options market-marking activity. The Current Exposure Method (CEM) requires options contracts to be calculated on their notional face-value rather than through a risk-adjusted value which reflects actual exposures. Changing this calculation will incentivize the use of hedged positions and would reduce the amount of capital required to place those positions and reduce overall exposure.

H.R. 5841, the “Foreign Investment Risk Review Modernization Act of 2018”

H.R. 5841 includes the text of H.R. 5288, the “Common Sense Credit Union Capital Relief Act of 2018” sponsored by Reps. Bill Posey (R-Fla.) and Denny Heck (D-Wash.), which delays the effective date of the National Credit Union Administration’s (NCUA) rule on “risk-based capital” to Jan. 1, 2021.

Committee Memorandum: Markup of H.R. 4439, H.R. 5735, H.R. 5749, H.R. 5793, and H.R. 5841