Legislative Activity

Senate Banking Committee Likely to Let Export-Import Bank Lapse, Timing Unclear for Regulatory Relief

Last week, Senate Banking Chairman Richard Shelby (R-AL) noted that he does not “see any crying-out need for a markup” of legislation to reauthorize the Export-Import Bank, making clear that he has no plans to markup the legislation that was introduced by Senators Mark Kirk (R-IL) and Heidi Heitkamp (D-ND). “At the end of the day, if it expires, we really won’t miss it,” he stated.

At the same time, we do not expect the Senate Banking Committee to proceed quickly with community and regional bank legislation. There are no hearings or markups scheduled for this week at the Senate Banking Committee. As noted previously, financial services lawmakers are now tasked with finding middle ground on the issue, as the legislation introduced by Chairman Shelby and the bill supported by all Democrats on both committees of jurisdiction vary drastically in their approaches.

House Votes to Reauthorize the CFTC, Senators Introduce End-User Relief Bill

On Tuesday, June 9, the House voted 264 to 171to pass the Commodity End-User Relief Act (H.R. 2289), which would reauthorize the Commodity Futures Trading Commission (CFTC). The bill was opposed by six leading Democrats – including the Ranking Members of the House Financial Services, Agriculture, and Natural Resources Committees. The President has already indicated that he will veto the legislation should it reach his desk, as he opposes proposed changes to the CFTC’s authority to regulate derivatives markets.

In the Senate, Senators Pat Roberts (R-KS) and Heidi Heitkamp (D-ND) introduced legislation aimed at providing end-users with relief from certain Dodd-Frank rules. Specifically, the legislation addresses the CFTC’s “residual interest rule” and would adopt in law the same approach the CFTC took in implementing the provision by rule.

The legislation also includes a provision to repeal the indemnification requirements in the Dodd-Frank Act that impede information sharing among jurisdictions and market participants. According to the Senators, “[t]he Committee plans to incorporate this legislation into CFTC reauthorization package this year.”

House Appropriators Push for Changes to the Dodd-Frank Act

Last week, House appropriators released and marked up their $20.2 billion FY 2016 Financial Services Appropriation bill, which includes reductions in funding for financial services regulatory agencies. Specifically, the legislation would fund the Securities and Exchange Commission (SEC) at $1.5 billion – commensurate with last year’s funding level and $222 million below the amount requested by the Administration. The legislation would also prohibit the SEC from spending money in its reserve fund. Additionally, the legislation would bring the Consumer Financial Protection Bureau (CFPB) within the appropriations process beginning in FY 2016, rather than providing the CFPB with direct funding from the Federal Reserve. Similarly, the legislation would directly subject the Office of Financial Research (OFR) and the Financial Stability Oversight Council (FSOC) to the appropriations process, and would also require a broad study on the costs and benefits of the rules and agencies created by the Dodd-Frank Act. The bill, which has been marked up by the Financial Services Subcommittee, now heads to the full Committee for consideration. Given the bill’s proposed reforms to the Dodd-Frank Act, it is expected that the President will veto the legislation should it reach his desk.

This Week’s Hearings:

  • Tuesday, June 16: The House Financial Services Subcommittee on Oversight and Investigations will hold a hearing titled “A Global Perspective on Cyber Threats.”
  • Tuesday, June 16: The House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises will hold a hearing titled “Legislative Proposals to Modernize Business Development Companies and Expand Investment Opportunities.”
  • Wednesday, June 17: The House Financial Services Committee will hold a hearing titled “The Annual Report of the Financial Stability Oversight Council.”
  • Wednesday, June 17: The House Financial Services Subcommittee on Monetary Policy and Trade will hold a hearing titled “The Impact of the International Monetary Fund: Economic Stability or Moral Hazard.”

Regulatory Activity

SEC Requests Comments on Exchange-Traded Products

The SEC has requested comments about how to best regulate exchange-traded products as they move further away from plain-vanilla exchange-traded funds (ETFs). According to SEC Chair Mary Jo White, “[a]s new products are developed and their complexity grows, it is critical that we have broad public input to inform our evaluation of how they should be listed, traded, and marketed to investors, especially retail investors.” Comments will be due 60 days after the request is published in the Federal Register.

With two SEC Commissioners – Republican Dan Gallagher and Democrat Luis Aguilar – set to leave the Commission in the coming months, President Obama is expected to soon nominate their successors.