Fed/FOMC, BCFP, FinCEN, data security targeted in 14-bill mark-up Thursday

The House Financial Services Committee is set to begin mark-up Thursday of 14 pieces of legislation that range in focus from, among other things, Federal Reserve operations and monetary policy (for example, removing employment from the Fed’s mandate) to guidance by the federal consumer financial protection bureau, federal scrutiny of financial technology and cryptocurrency, and brokered deposits by affiliates.

According to a committee notice, the mark-up is set to begin at 9 a.m. ET and could go several days if needed to complete work on the measures.

The following borrows heavily from the text of committee’s memorandum on the bills (some of which have overlap):

  • Federal Reserve Reform Act (H.R. 6741): Introduced Sept. 7, 2018, by Rep. Andy Barr (R-Ky.), H.R. 6741 (with a substitute amendment planned) would amend the Federal Reserve Act and make reforms to Federal Reserve System operations. It would require the Federal Open Market Committee (FOMC) to annually adopt a plain English monetary policy strategy and up to three reference rules that can increase policy transparency. It “protects the Federal Reserve from political pressures to engage in credit policies through either unconventional asset purchases or emergency lending,” the memorandum states. H.R. 6741 also expands the FOMC so that all Federal Reserve Districts can vote in each meeting, and provides for the FOMC (not the Board of Governors) to set interest rates on reserves (required and excess). The bill would subject the non-monetary policy functions of the Federal Reserve to the regular appropriations process; restore full voting rights of Class A Directors at the district banks; clarify the blackout period associated with FOMC meetings; dedicate two individuals to staff each member of the Fed Board; strengthen Federal Reserve staff salary disclosures and investment rules; clarify procedures for congressional testimony in the absence of a Fed Board vice chair for supervision; and change the dual mandate (maximum employment, stable prices) to a single mandate for stable prices.
  • FOMC Policy Responsibility Act (H.R. 4758): Introduced Jan. 10, 2018, by Rep. Claudia Tenney (R-N.Y.), the bill would amend Section 19 of the Federal Reserve Act to require that the Federal Open Market Committee (FOMC) of the Federal Reserve set rates of interest paid on depository institution reserves maintained at a Federal Reserve Bank. (Current law authorizes the Fed Board to set rules for the payment of interest on reserves.)
  • Federal Reserve Supervision Testimony Clarification Act (H.R. 4753): Introduced Jan. 10, 2018, by Rep. Frank Lucas (R-Okla.), this bill would require the Fed Board’s vice chairman to give the semiannual testimony required of the vice chairman for supervision if the latter seat is vacant; if both vice chairman seats are vacant, this testimony would be given by the Fed Board’s chairman.
  • Give Useful Information to Define Effective Compliance Act, or GUIDE Compliance Act (H.R. 5534): Introduced April 17, 2018, by Reps. Sean Duffy (R-Wis.) and Ed Perlmutter (D-Colo.), this measure revises the Dodd-Frank Act to set procedures for guidance issued by the Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB). It would compel the BCFP to issue guidance, including that necessary to comply with the law; establish clear standards for guidance and how it is issued; provide a safe harbor for good faith reliance on the guidance. The bill also would require the bureau to issue a proposed regulation providing guidance for setting civil money penalties (a “penalty matrix”) that should, “to the fullest extent possible,” align with “any chart, matrix, rule or guideline” published by one of the federal banking regulators.
  • Due Process Restoration Act of 2017 (H.R. 2128): Introduced April 25, 2017, by Rep. Warren Davidson (R-Ohio), this bill provides respondents in Securities and Exchange Commission (SEC) enforcement cases with the ability to have their case removed to a federal district court and out of the SEC’s administrative in-house proceedings.
  • Small Business Audit Correction Act of 2018 (H.R. 6021): Introduced June 6, 2018, by Reps. French Hill (R-Ark.) and Vicente Gonzalez (D-Texas), this bill (to be modified by a substitute amendment offered by Hill) narrowly tailors an exception for privately held, small non-custodial brokers and dealers in good standing from the requirement to hire a Public Company Accounting Oversight Board (PCAOB)-registered audit firm to meet the annual Securities Exchange Act Rule 17a-5 reporting obligation.
  • Brokered Deposit Affiliate-Subsidiary Modernization Act of 2018 (H.R. 6158): Introduced June 20, 2018, by Reps. Scott Tipton (R-Colo.), Lacy Clay (D-Mo.) and Gregory Meeks (D-N.Y.), H.R. 6158 would exempt funds placed with a bank by an affiliate or subsidiary, including employees of an affiliate or subsidiary, from the definition of “deposit broker” under the Federal Deposit Insurance Act.
  • FinCEN Improvement Act (H.R. 6411): Introduced July 17, 2018, by Reps. Ed Perlmutter (D-Colo.) and Steve Pearce (R-N.M.), H.R. 6411 would update the Financial Crimes Enforcement Network’s (FinCEN) authorizing statute to recognize tribal law enforcement agencies, prioritize protection against all types of terrorism, and ensure a focus on emerging methods of terrorism and illicit finance, including cryptocurrencies.
  • FinCEN Modernization Act (H.R. 6721): Introduced Sept. 6, 2018, by Rep. Ted Budd (R-N.C.), H.R. would allow FinCEN to utilize “other transaction authority” and “gift acceptance authority” to develop and maintain research, development, and information sharing programs related to financial technology, data analysis, cryptocurrencies, and information sharing for five years. The legislation would require annual reports to Congress about the use of these authorities. An amendment in the nature of a substitute by Budd would clarify the bill’s reporting requirements.
  • Empowering Financial Institutions to Fight Human Trafficking Act (H.R. 6729): Introduced Sept. 7, 2018, by Reps. Ann Wagner (R-Mo.), Carolyn Maloney (D-N.Y.) and Mia Love (R-Utah), H.R. 6729 would allow qualified 501(c)(3) nonprofit organizations, upon notice to the Treasury secretary, to share information that may involve human trafficking and money laundering with financial institutions, their regulatory authorities, and law enforcement agencies under a safe harbor that offers liability protections.
  • Protect Affordable Mortgages for Veterans Act (H.R. 6737): Introduced Sept. 7, 2018, by Rep. Lee Zeldin (R-N.Y.), H.R. 6737 amends Section 306 of the National Housing Act as amended by Section 309 – Protecting Veterans from Predatory Lending – of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The legislation provides a technical fix so that recently executed loans refinanced by the Department of Veterans Affairs can remain eligible for pooling in Ginnie Mae securities.
  • Consumer Information Notification Requirement Act (H.R. 6743): Introduced Sept. 7, 2018, by Rep. Blaine Luetkemeyer (R-Mo.), H.R. 6743 establishes a federal standard on data security and breach notification based on the 2005 Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice (70 FR 15736, issued in 2005), requiring Gramm-Leah-Bliley Act (GLBA) defined financial institutions to provide consumer notification of breaches involving non-public personally identifiable information. For insurance companies, the bill would preempt state law as it would for other financial institutions, requiring standards similar to federal guidelines but reserving enforcement for state insurance regulators.
  • Access to Capital Creates Economic Strength and Supports Rural America Act, or ACCESS Rural America Act (H.R. 6745): Introduced Sept. 7, 2018, by Reps. Sean Duffy (R-Wis.) and Kyrsten Sinema (D-Ariz.), H.R. 6745 would amend section 12(g) of the Securities Exchange Act of 1934 to raise the threshold for issuers who receive support through a federal universal service support mechanism to register as a public reporting company with the SEC. Specifically, the bill would raise the threshold for such issuers who have total assets exceeding $10 million (indexed for inflation) from 500 non-accredited investors to 1,250. It addresses reporting and requires a study of the bill’s impact after three years.
  • Banking Accountability for Sponsors of Terrorism Act (H.R. 6751): Introduced Sept. 7, 2018, by Rep. Mia Love (R-Utah), H.R. 6751 requires the Treasury secretary to provide the House Financial Services and Senate Banking Committees a copy of licenses that authorize financial institutions to conduct transactions benefitting state sponsors of terrorism. It would also require a report to the committees listing any foreign financial institutions that engage in transactions with 1) sanctioned persons that are tied to the governments of state sponsors of terrorism, and 2) persons sanctioned for certain human rights abuses (including Russia-specific sanctions).

Hearing mark-up notice

Committee memorandum

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