Fed, BCFP, data security bills approved by House committee

A dozen bills were approved and reported out by the House Financial Services Committee Thursday, among them one that would modify Federal Reserve monetary policy operations and another that would require the Bureau of Consumer Financial Protection to establish guidance and provide a safe harbor for good-faith efforts to follow it.

House Financial Services Committee during mark-up Sept. 13.

Also approved were bills on data security and breach notification, brokered deposits in banks, shareholder registration and more.

One bill previously included on Thursday’s mark-up schedule, the FinCEN Improvement Act (H.R. 6411), was instead brought up by the House Wednesday and approved under a suspension of the rules. Introduced July 17 by Reps. Ed Perlmutter (D-Colo.) and Steve Pearce (R-N.M.), the bill 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.

The House also cleared a bill discussed earlier this summer in committee to limit the Federal Reserve’s oversight of insurance savings and loan holding companies (ISLHCs). Titled the State Insurance Regulation Preservation Act (H.R. 5059), the measure is sponsored by Keith Rothfus (R-Pa.).

As for Thursday’s mark-up, the committee amended and approved the following bills:

  • Federal Reserve Reform Act of 2018 (H.R. 6741): Introduced by Rep. Andy Barr (R-Ky.), the bill would require the Federal Open Market Committee (FOMC) to annually adopt a monetary policy strategy and up to three reference rules for transparency. It would authorize the FOMC (instead of the Fed Board) to set the rates of interest paid on depository institutions’ reserve balances and expand the FOMC to include representatives from each of the Federal Reserve Banks (up from five). The committee says the bill “also protects the Federal Reserve from political pressures to engage in credit policies,” altering the Fed’s asset-purchase authority and involving Congress in emergency lending decisions. The bill cleared the panel on a nearly straight party-line vote of 30-21, with Rep. Peter King (R-N.Y.), providing the lone Republican “no” vote.
  • Federal Reserve Supervision Testimony Clarification Act (H.R. 4753): Introduced by Rep. Frank Lucas (R-Okla.), the bill requires the Fed Board vice chairman to fulfill the statutory requirement for semi-annual testimony of the Fed’s vice chairman for supervision if the latter position is vacant. It was approved on a vote of 49-0.
  • Give Useful Information to Define Effective Compliance Act (GUIDE Act, H.R. 5534): Introduced by Rep. Sean Duffy (R-Wis.), the bill would require the Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB) to issue rulemaking on how it will produce guidance to aid compliance with its rules, along with a safe harbor for ”good faith” reliance on it. The bill was approved on a vote of 38-14.
  • Consumer Information Notification Requirement Act (H.R. 6743): Introduced by Rep. Blaine Luetkemeyer (R-Mo.), this bill would modify the Gramm-Leach-Bailey Act to direct the federal financial regulatory agencies to establish a federal standard for financial institutions regarding data security measures, as well as a notification system that responds to any breach or unauthorized access of customer information. It was approved on a vote of 32-20.
  • Brokered Deposit Affiliate-Subsidiary Moderation Act of 2018 (H.R. 6158): Introduced by Rep. Scott Tipton (R-Colo.), the bill would revise the definition of “deposit broker” under the Federal Deposit Insurance (FDI) Act to exempt funds collected through an insured depository institution’s affiliate or subsidiaries of an insured depository institution.  This bill was approved on a vote 34-17. (As previously reported, the Federal Deposit Insurance Corp., FDIC, also on Thursday released a proposal allowing some banks to except a portion of deposits from affiliates, or “reciprocal” deposits, from treatment as brokered deposits; the rule is to implement a provision of the Economic Growth, Regulatory Relief and Consumer Protection Act, or EGRRCPA.)
  • Banking Transparency for Sanctioned Persons Act of 2018 (H.R. 6751): Introduced by Rep. Mia Love (R-Utah), the bill would require the Treasury secretary to issue a semi-annual report to the House Financial Services Committee and Senate Banking Committee regarding financial services provided to state sponsors of terrorism or certain sanctioned individuals. The bill was approved on a vote of 48-0.
  • Protect Affordable Mortgages for Veterans Act of 2018 (H.R. 6737): Introduced by Rep. Lee Zeldin (R-N.Y.), the bill would make a technical change to the National Housing Act so that recently executed mortgage loans refinanced by the Department of Veterans Affairs Home Loans remain eligible for pooling in Ginnie Mae securities. It was approved on a vote of 49-0.
  • Empowering Financial Institutions to Fight Human Trafficking Act of 2018 (H.R. 6729): Introduced by Rep. Ann Wagner (R-Mo.), the measure would instruct the Treasury secretary to establish a mechanism for non-profit organizations to qualify for safe harbor when sharing specific information with financial institutions that facilitates their duties of customer due diligence and suspicious activity reporting related to human trafficking. The bill was approved on a vote of 44-5.
  • Access to Capital Creates Economic Strength and Supports Rural America Act (H.R. 6745): Introduced by Duffy, the measure would modify the Securities Exchange Act to modify the shareholder threshold for registration so that issuers who receive universal service funding are better protected in their decision to stay private or go public. The bill would require an SEC report to Congress on the bill’s impact after three years. The bill was approved on a vote of 37-15.
  • Due Process Restoration Act of 2017 (H.R. 2128): Introduced by Rep. Warren Davidson (R-Ohio), the bill would allow respondents in SEC enforcement cases to remove their proceedings out of the SEC’s administrative in-house tribunal to a federal district court. The panel approved it on a vote of 31-20.
  • FOMC Policy Responsibility Act (H.R. 4758): Introduced by Rep. Claudia Tenney (R-N.Y.), the bill would make the FOMC responsible for setting rates of interest on reserve balances (reflected also in above-noted H.R. 6741). The measure was approved on voice vote.
  • Small Business Audit Correction Act of 2018 (H.R. 6021): Introduced by Rep. French Hill (R-Ark.), the measure would modify the Sarbanes-Oxley Act of 2002 so that small, privately owned non-custodial brokers and dealers in good standing are no longer required to hire a Public Company Accounting Oversight Board (PCAOB)-registered audit firm in order to meet the annual reporting obligations outlined by Title I of that Act. The panel approved it on a vote of 36-16.

Mark-up amendments, votes

Committee release