Legislative Activity

Senate Committees to Consider Labor, SEC Nominations This Week; House Has Full Slate of Hearings After Examining Flood Insurance and the Fed Last Week

This week, two Senate committees will consider the nominations of President Trump’s picks to lead the Department of Labor (DOL) and the Securities and Exchange Commission (SEC). On Wednesday, the Senate Health, Education, Labor, and Pensions Committee has scheduled a hearing to consider the nomination of Alex Acosta to be U.S. Secretary of Labor. Then, on Thursday, the Senate Banking Committee has scheduled a hearing to consider the nomination of Mr. Jay Clayton to be the next SEC Chairman. Both nominees, if confirmed, will play key roles in the Trump Administration’s efforts to reduce the government’s footprint on the financial services sector.

Meanwhile, the House Financial Services Committee has scheduled hearings to consider the constitutionality of the Consumer Financial Protection Bureau (CFPB), “de novo” financial institutions, the World Bank, and the JOBS Act. Last week, the Housing and Insurance Subcommittee held its second in a series of hearings this year examining the National Flood Insurance Program (NFIP). Members of the subcommittee heard from a panel of witnesses who provided a community-level perspective on flood insurance. Additionally, the Monetary Policy and Trade Subcommittee held its first hearing of the 115th Congress to examine how the Federal Reserve (Fed) has departed from conventional monetary policy. The subcommittee heard from a panel of expert witnesses who discussed how the Fed can facilitate an orderly return to a conventional balance sheet and how monetary policies can reliably support economic growth going forward.

This Week’s Hearings:

• On Tuesday, March 21, the House Financial Services Committee has scheduled a hearing titled “The Bureau of Consumer Financial Protection’s Unconstitutional Design.”

• On Tuesday, March 21, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit has scheduled a hearing titled “Ending the De Novo Drought: Examining the Application Process for De Novo Financial Institutions.”

• On Wednesday, March 22, the House Financial Services Subcommittee on Monetary Policy and Trade has scheduled a hearing titled “Examining Results and Accountability at the World Bank.”

• On Wednesday, March 22, the House Financial Services Subcommittee on Capital Markets, Securities, and Investment has scheduled a hearing titled “The JOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness of the U.S. Capital Markets.”

• On Wednesday, March 22, the Senate Health, Education, Labor, and Pensions Committee has scheduled a hearing to consider the nomination of Alex Acosta to be U.S. Secretary of Labor.

• On Thursday, March 23, the Senate Banking, Housing, and Urban Affairs Committee has scheduled a hearing to consider the nomination of Mr. Jay Clayton to be Chairman of the Securities Exchange Commission.

Regulatory Activity

DOJ Sides With Challenger – Not the CFPB – in PHH Lawsuit

Last Friday, the Department of Justice (DOJ) argued that President Trump should be allowed to remove the CFPB’s independent director, Richard Cordray. Note, however, that DOJ stopped short of calling the CFPB itself unconstitutional, as a previous D.C. Circuit Court of Appeals panel had determined. In its legal brief filed with the D.C. Circuit last week, the DOJ wrote that “while we do not agree with all of the reasoning in the panel’s opinion, the United States agrees with the panel’s conclusion that single-headed agencies are meaningfully different” from independent commissions like the Federal Trade Commission (FTC). DOJ’s criticism, filed as part of a lawsuit between the CFPB and mortgage company PHH Corp., adds to a long list of challenges confronting the CFPB and its director. If the court ultimately sides with PHH, it would hand President Trump the authority to remove Director Cordray for any reason before the director’s term expires in July 2018. The CFPB has until March 31 to file its own brief in the case, which is scheduled to be argued in court May 24.

OCC Releases FinTech Charter Requirements

Last Wednesday, the Office of the Comptroller of the Currency (OCC) released its long-awaited licensing manual supplement, which includes more information on how it plans to evaluate and supervise FinTech companies seeking a bank charter. The supplement explains how the OCC will apply the licensing standards and requirements in existing regulations and policies to FinTech companies applying for special purpose national bank charters. Earlier this month, all Republicans on the House Financial Services Committee sent a letter to Comptroller Thomas Curry urging him to delay the release of any FinTech charter until a new comptroller is appointed by President Trump. Note that Comptroller Curry’s term will expire next month. The licensing manual supplement is subject to public comment until April 14.

Trump Picks Giancarlo to Lead CFTC

Last Tuesday, President Donald Trump selected J. Christopher Giancarlo to head the Commodity Futures Trading Commission (CFTC). Mr. Giancarlo, a Republican, began serving as the CFTC’s Acting Chairman the day of President Trump’s inauguration on January 20. If confirmed by the Senate as full-time chairman, Mr. Giancarlo will play a pivotal in regulating derivatives and swaps, and is expected to adopt a more industry-friendly approach than his predecessors.

Patrick Kirby is co-author of this article.