Legislative Activity

Housing Finance Reform “Huge Priority” for Hensarling

Last week, House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced that reforming the government-sponsored enterprises (GSEs) will be a “huge priority” for him this Congress. Chairman Hensarling’s pronouncement coincides with his recent announcement that his committee’s first hearing this Congress will feature Federal Housing Finance Agency (FHFA) Director Mel Watt, who will likely discuss the agency’s recent decision to finance loans with as little as three-percent down.

Moreover, Chairman Hensarling stated that he is confident that he will be able to partner with Senate Banking Committee Chairman Richard Shelby (R-AL) on the issue and is “willing to sit down with [his] colleagues in the Senate and find a way forward again to a sustainable housing finance system.”  Chairman Hensarling also indicated that he hopes to speak with Treasury Secretary Jack Lew and Department of Housing and Urban Development (HUD) Secretary Julián Castro to gauge their willingness to work on the matter.

On the Senate side, Chairman Shelby has also indicated that he plans to scrutinize the Obama Administration’s housing policies, with a particular focus on the Federal Housing Administration (FHA) and its recent decision to lower its annual mortgage insurance premiums by .5 percentage points. According to Chairman Shelby, FHA should be focused on rebuilding its capital reserves, which are presently below the required level.

Financial Services, Agriculture Committees Release Oversight Plans for the 114th Congress

Last week, both the House Financial Services Committee and House Agriculture Committee adopted their oversight plans for the 114th Congress.  The House Financial Services Committee’s main focus will remain on reforming the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), as well as oversight of the Consumer Financial Protection Bureau (CFPB) and Financial Stability Oversight Council (FSOC), among other priorities.  Similarly, the House Agriculture Committee will continue its oversight of Dodd-Frank Act implementation, as well as of the Commodity Futures Trading Commission (CFTC).

This Week’s Hearings:

  • Tuesday, January 27: The House Financial Services Committee will hold a hearing titled “Sustainable Housing Finance: An Update from the Director of the Federal Housing Finance Agency.”
  • Tuesday, January 27: The Senate Banking Committee will hold a hearing titled “Perspectives on the Strategic Necessity of Iran Sanctions.”
  • Wednesday, January 28: The Senate Agriculture Committee will hold an organizational meeting to approve the Committee Funding Resolution, Committee Rules, and Subcommittee Assignments.
  • Thursday, January 29: The Senate Banking Committee will hold a markup of the “Nuclear Weapon Free Iran Act of 2015.”

Regulatory Activity

FSOC to Consider Changes to Designation Process

Last week, the FSOC held an opening meeting during which the Council discussed its process for considering nonbank financial companies for potential designation and received an update on benchmark reform efforts. With regard to the designation process, Secretary Lew emphasized that, while FSOC’s existing designation process is rigorous, the agency is “young” and should remain flexible to changes that will allow it to grow and mature. Generally, the FSOC received three main suggestions regarding its designation process: (1) companies would like to know earlier in the process about their designation status; (2) the public would benefit from more information and the reasoning for designations; and  (3) the  Council  could  better  explain  the  process  for  the  annual  review  of  designated companies and provide additional opportunities for engagement in the process. Secretary Lew expressed support for the recommendations and urged the staff to continue working to formalize such recommendations for the Council’s consideration in the near future.

SEC Adopts Derivatives Rulemakings, Final Text Not Yet Available

On Wednesday, January 14, Securities and Exchange Commission (SEC) voted to adopt it first significant set of final derivatives rulemakings.  Specifically, the SEC adopted final rules on security-based swap reporting (Regulation SBSR) and security-based swap data repository registration.  The SEC also issued a proposal for notice and comment related to security-based swap “reporting duties for cleared and platform-executed security-based swap transactions.” However, as of today, the final text of these rules has not yet been publicly released.