Legislative Activity

Senate Banking, House Financial Services Committees Set Sights on Financial Services Regulatory Reform

With the first 100 days of the Trump Administration largely behind them, financial services lawmakers are beginning to move forward with their review of and efforts to reform the financial services sector. During the Senate Banking Committee’s hearing last week, Chairman Mike Crapo (R-ID) indicated that the Committee’s proposals for financial services regulatory reform and housing finance reform are likely to come after tax reform – something that is not expected until later this year (likely no earlier than fall) or early next year. According to Chairman Crapo, the bills will be “broad, robust” solutions; however, in the near-term, lawmakers are likely to work on “smaller” bills. Notably, though Ranking Member Sherrod Brown (D-OH) has indicated he has no plans to allow a complete overhaul of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), he has at the same time expressed an openness to working with Republicans to resolve issues facing community banks – something that could come in the form of examining the process by which the government designates certain financial firms as “systemically important financial institutions” (SIFIs).

Relatedly, the House Financial Services Committee will hold a hearing this week to examine the federal financial regulatory system and opportunities for reform. In addition to examining the SIFI designation process as their Senate counterparts are doing, the House will continue to focus on reforming the Consumer Financial Protection Bureau (CFPB) by, among other things, seeking to make the Director accountable to the President and brining the Bureau within the congressional appropriations process. Notably, the Committee will hold a hearing with Director Cordray this week, who will review the Bureau’s recent activities. In advance of the hearing, see here for our analysis of the current legal and legislative landscape facing the Bureau. Note that, in addition to these specific proposals, we anticipate that Chairman Hensarling will begin to move forward with more sweeping financial regulatory reform proposals (i.e., CHOICE Act 2.0) potentially as early as the end of this month.

This Week’s Hearings:

  • On Tuesday, April 4, the Senate Banking, Housing, and Urban Affairs Committee has scheduled an Executive Session on the expected nomination of Mr. Jay Clayton, of New York, to be Chairman of the Securities and Exchange Commission (SEC).
  • On Tuesday, April 4, the House Financial Services Subcommittee on Monetary Policy and Trade has scheduled a hearing titled “Examining the Federal Reserve’s Mandate and Governance Structure.”
  • On Tuesday, April 4, the House Financial Services Subcommittees on Monetary Policy and Trade and Terrorism and Illicit Finance have scheduled a joint hearing titled “Increasing the Effectiveness of Non-Nuclear Sanctions Against Iran.”
  • On Wednesday, April 5, the House Financial Services Committee has scheduled a hearing titled “The 2016 Semi-Annual Reports of the Bureau of Consumer Financial Protection.”
  • On Wednesday, April 5, the Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy has scheduled a hearing titled “EP: The Current State of Retirement Security in the United States.”
  • On Thursday, April 6, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit has scheduled a hearing titled “Examination of the Federal Financial Regulatory System and Opportunities for Reform.”

Regulatory Activity

Labor Department Sends Fiduciary Rule Delay to OMB as Acosta Nomination Moves to Senate Floor

Last Monday, March 27, the Department of Labor (DOL) sent a final proposal to the Office of Management and Budget (OMB) to delay the Fiduciary Rule’s applicability date from April 10 to June 9. The proposal is a result of President Trump’s February 3 Executive Memorandum (further discussed here) calling on the DOL to conduct a legal and economic review of the Fiduciary Rule’s potential impact. Relatedly, note that the Senate Health, Education, Labor and Pensions (HELP) Committee voted last week along party lines to advance Secretary of Labor-Nominee Alexander Acosta’s nomination to the full Senate for a confirmation vote.

SEC Equity Market Structure Advisory Committee to Meet

On Wednesday, April 5, the Securities and Exchange Commission’s (SEC) Equity Market Structure Advisory Committee will hold a meeting to discuss updates from its four subcommittees, including presentations from the Regulation NMS subcommittee on Rule 611 and the Trading Venues Regulation subcommittee on SRO rule-based limitations of liability and regulatory centralization.