Banking Committee Set to Mark-Up Legislative Package of Financial Regulatory Reform

Thursday, May 21, the Senate Banking Committee is scheduled to hold a markup of Chairman Richard Shelby’s (R-AL) highly-anticipated legislative package of financial regulatory reform. Chairman Shelby last week released a draft of his legislation, which calls for broad reforms of financial regulation. The bill, over 200 pages long, includes eight titles, which address: (1) regulatory relief and consumer access to credit; (2) systemically important bank holding companies; (3) the Financial Stability Oversight Council’s (FSOC) designation process for nonbank financial companies; (4) the regulatory framework for the insurance industry; (5) oversight of the Federal Reserve; (6) improving access to capital and tailoring regulations in the financial markets; (7) the government-sponsored enterprises (GSEs); and (8) technical corrections to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). 

Prospects for the bill remain uncertain, particularly given the narrowly divided Senate and a President who is likely to veto any proposals that are perceived as paring down Dodd-Frank. However, we anticipate that Republicans will continue to push to approve legislation on various targeted financial reform issues and may use this proposal as a starting point to begin negotiations. Notably, in response to Chairman Shelby’s legislation, House Financial Services Committee Chairman Jeb Hensarling (R-TX) expressed support for the bill, stating he “hope[s] we can at least find some common ground with Democrats on providing some regulatory relief for our struggling community banking institutions.”

FHFA Making Progress on Single Security

Last Friday, the Federal Housing Finance Agency (FHFA) released An Update on the Structure of the Single Security, which details FHFA’s progress on the single mortgage-backed security (Single Security) that would be issued by the government-sponsored enterprises (GSEs). As the agency notes in the update, developing the Single Security is a key goal of FHFA’s 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac, and finalizing the Single Security structure is a 2015 Scorecard item for the GSEs and for Common Securitization Solutions, LLC, the joint-venture between Fannie Mae and Freddie Mac that is advancing the work on the project. According to FHFA, the Single Security project is intended “to improve the overall liquidity of Fannie Mae and Freddie Mac mortgage-backed securities, and lower costs for borrowers and taxpayers.”

As FHFA Director Mel Watt noted last week, “[w]hile the Single Security remains a multi-year initiative, we believe this Update represents another significant milestone we have reached in defining the structure and processes necessary to transition successfully to a Single Security.” FHFA is presently accepting feedback on the Single Security project.

This Week’s Hearings:

• Tuesday, May 19: The House Financial Services Subcommittee on Housing and Insurance will hold a hearing titled “The Future of Housing in America: Oversight of the Rural Housing Service.”

• Tuesday, May 19: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “Protecting Critical Infrastructure: How the Financial Sector Addresses Cyber Threats.”

• Wednesday, May 20: The House Financial Services Committee will hold a markup of the following legislation:

  • H.R. 432, the “SBIC Advisers Relief Act of 2015”;

  • H.R. 686, the “Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2015”;

  • H.R. 1334, the “Holding Company Registration Threshold Equalization Act of 2015”;

  • H.R. 1525, the “Disclosure Modernization and Simplification Act of 2015”;

  • H.R. 1675, the “Encouraging Employee Ownership Act of 2015”;

  • H.R. 1723, the “Small Company Simple Registration Act of 2015”;

  • H.R. 1847, the “Swap Data Repository and Clearinghouse Indemnification Correction Act of 2015”;

  • H.R. 1965, the “Small Company Disclosure Simplification Act”;

  • H.R. 1975, the “Securities and Exchange Commission Overpayment Credit Act”;

  • H.R. 2064, the “Improving Access to Capital for Emerging Growth Companies Act”;

  • H.R. 2354, the “Streamlining Excessive and Costly Regulations Review Act”;

  • H.R. 2356, the ‘‘Fair Access to Investment Research Act of 2015”;

  • H.R. 2357, the ‘‘Accelerating Access to Capital Act of 2015”; and

  • A resolution to name a new Republican Member of the Committee to subcommittees, and for other purposes

• Thursday, May 21: The House Financial Services Task Force to Investigate Terrorism Financing will hold a hearing titled “A Dangerous Nexus: Terrorism, Crime, and Corruption.”

• Thursday, May 21: The Senate Banking Committee will hold a markup of the “Financial Regulatory Improvement Act of 2015.”

Regulatory Activity

SEC to Hold Open Meeting on Registered Investment Companies, Investment Advisers

On Wednesday, May 20, the Securities and Exchange Commission (SEC) will hold an open meeting to consider: (1) whether to propose new rules and forms and amendments to current rules and forms to modernize the reporting and disclosure of information by registered investment companies; and (2) whether to propose form and rule amendments to require investment advisers to provide additional information concerning their operations, require the maintenance of performance records, and remove outdated transition provisions from rules.