The House, on Tuesday voting 406-4, passed a broad, bipartisan capital-formation measure that would also reduce the frequency of banking company resolution plans (living wills), provide a safe harbor for financial institutions keeping some suspicious accounts at regulators’ request and delay a risk-based capital rule for credit unions.
The package reflects an agreement between House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif., and includes 32 measures previously approved by the House or the Financial Services Committee, many with strong bipartisan support.
The legislation will now head to the Senate, where Majority Leader Mitch McConnell (R-Ky.) has committed to bring the bill up for a vote, the committee said in a release Tuesday evening.
Titled the JOBS and Investor Confidence Act of 2018, also called JOBS Act 3.0, was taken up by the House as an amendment to a narrower, previously Senate-passed bill (S. 488); it was considered under a suspension of House rules. Below are some key provisions affecting financial institutions:
- Living wills: The bill’s Section 1201 would require federally supervised nonbanks and large bank holding companies to provide regulators statutorily required resolution plans, or “living wills,” only once every two years. These plans are currently required “periodically” under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank); the one-year interval is the requirement set by the Federal Reserve Board and Federal Deposit Insurance Corp. (FDIC). In addition to the two-year interval, the bill would give regulators six months to provided feedback on living will submissions and would be required to publicly disclose the assessment framework used. (The bill applies these requirements also to plans that are not required under Dodd-Frank, for federally supervised banking organizations as well as federally insured credit unions.)
- Penalties for disclosure of living will, stress test data: Section 1301 would establish 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.”
- Nonbank stress-test relief: Section 1501 of the bill would exempt nonbank financial institutions not primarily regulated by a federal banking agency or the Federal Housing Finance Agency from Dodd-Frank’s requirement for company-run stress tests. It would clarify that the Securities and Exchange Commission and Commodity Futures Trading Commission retain authority to issue requirements for nonbank financial companies to “conduct periodic analyses of the financial condition, including available liquidity, of such companies under adverse economic conditions.”
- Delay of risk-based capital for credit unions: Section 1701 would delay until Jan. 1, 2021, the effective date of the National Credit Union Administration (NCUA) risk-based capital rule. The rule, published in 2015, is currently set to take effect Jan. 1, 2019.
- Safe harbor for keeping certain suspicious accounts open: Section 1901 would provide a safe harbor for financial institutions that maintain a customer account at the request of a federal, state, tribal or local law enforcement agency.
- Disclosure for charitable mortgage transactions: Section 2101 would allow 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.
JOBS and Investor Confidence Act of 2018 (PDF)
Hensarling & Waters Unveil Bipartisan Capital Markets Reform Legislation