Legislative Activity

House Committees Mark-Up Fiduciary Rule Legislation as Senators Introduce Companion Bills

With the Department of Labor (DOL) having recently submitted its Fiduciary Rule to the Office of Management and Budget (OMB) – officially beginning the countdown before DOL’s proposal is released in final form – last week, the House Ways and Means and House Education and the Workforce Committees marked-up H.R. 4294, Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act (amends Internal Revenue Code), and H.R. 4293, Affordable Retirement Advice Protection (ARAP) Act (amends ERISA), respectively. The Ways and Means Committee voted 26-12 in favor of reporting the legislation to the full House, while the Education and the Workforce Committee did so by a vote of 22-14.

Notably, following the markup of the House bills, Senators for the first time have before them companion legislation addressing the Fiduciary Rule. Specifically, on Friday, February 5, Senators Mark Kirk (R-IL) and Johnny Isakson (R-GA) introduced S. 2505 (SAVERS) and S. 2502 (ARAP), respectively, for further consideration by their colleagues. As with their House counterparts, these bills would require an affirmative vote by Congress before DOL’s proposed rule would take effect. If Congress rejects the proposal, the bills set out a new fiduciary standard that would take effect and

  • Require advisors to serve in their clients’ best interests;
  • Penalize advisors who take action that is not in their clients’ best interests; and
  • Require advisors to disclose key information to ensure that investors are fully-informed when making investment decisions

No markups have been scheduled by either the Senate Finance or Health, Education, Labor, and Pensions (HELP) Committees. However, with a final Fiduciary Rule expected to be released by spring, it is likely that they will take action on the bills in the near-term.

House Passes Legislation to End Operation Choke Point, Financial Services Lawmakers to Address Short-Term Credit Providers

Last week, on Thursday, February 4, the House of Representatives passed H.R. 766, Financial Institution Customer Protection Act of 2015, by a vote of 250-169.  The bill, which was introduced by Representative Blaine Luetkemeyer (R-MO), is aimed at stopping “Operation Chokepoint,” a law enforcement initiative launched by the Department of Justice, in partnership with the Federal Deposit Insurance Corporation to “choke off” business alleged to have committed bad practices in the financial system. To do so, the bill would prohibit such action by regulators unless there was material reason (excluding reputation risk) to believe a merchant was violating the law.

This action to end Operation Choke Point, which was designed to target payday lenders and other short-term credit providers, comes as the House Financial Services Committee is set to hold a hearing on short-term, small dollar credit. Specifically, lawmakers will consider a forthcoming rulemaking by the Consumer Financial Protection Bureau (CFPB), which seeks to more strictly regulate payday, vehicle title, and other short-term credit products. During the hearing, the Committee will consider, among other things, the potential impact of the rulemaking on consumer access to credit, as well as on existing State and tribal short-term credit regulatory regimes.

This Week’s Hearings:

  • Wednesday, February 10: The House Financial Services Committee will hold a hearing titled “Monetary Policy and the State of the Economy.”
  • Wednesday, February 10: The House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies will hold a hearing to discuss the Commodity Futures Trading Commission’s budget.
  • Thursday, February 11: The House Financial Services Subcommittee on Housing and Insurance will hold a hearing titled “The Future of Housing in America: Examining the Health of the Federal Housing Administration.”
  • Thursday, February 11: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “Short-term, Small Dollar Lending: The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty.”
  • Thursday, February 11: The Senate Banking, Housing, and Urban Affairs will hold a hearing titled “The Seminannual Monetary Report to Congress.”

Regulatory Activity

SEC to Hold Meeting on Security-Based Swaps Rules; FINRA to Host Conference

On Wednesday, February 10, the Securities and Exchange Commission (SEC) will hold an open meeting to consider whether to adopt rules under the Securities Exchange Act of 1934 providing for the application of the Title VII security-based swap dealer de minimis counting requirements to security-based swap transactions connected with a non-U.S. person’s dealing activity that are arranged, negotiated, or executed by personnel located in a U.S. branch or office or by personnel of an agent of such non-U.S. person located in a U.S. branch or office.

Separately, on Thursday, February 11, the Financial Industry Regulatory Authority (FINRA) will host the 2016 Cybersecurity Conference in New York, New York.  The full agenda can be found here.