Cheat Sheet: House banking panel’s 14-bill marathon

December 12, 2017 5:39 PM

UPDATE: This story has been updated to reflect vote tallies.

WASHINGTON — The House Financial Services Committee passed 13 bills on Wednesday, including one that would stop Fannie Mae and Freddie Mac from being released by the government and another hailed as helping the underbanked in rural areas.

Among the most significant bills approved was one by Rep. French Hill, R-Ark., that would prevent the Treasury Department from selling its preferred stock and warrants in the government-sponsored enterprises until 2019. The bill, passed 33-27, would not prevent Congress and the Trump administration from moving forward with housing finance reform and signing legislation restructuring Fannie and Freddie.

It would, however, stop the Trump administration from recapitalizing and releasing Fannie and Freddie from conservatorship, though there is no sign that it is planning to do so. A similar bill was included as part of a 2016 omnibus bill but is set to expire next year.

Hill’s bill would also prevent the Federal Housing Finance Agency from allowing Fannie and Freddie to pay any money to the Housing Trust Fund, which is managed by the Department of Housing and Urban Development, in quarters where the GSEs are not profitable.

“I believe that if the secondary mortgage market entities are not profitable or do not make payments to the Treasury, then they should forestall payments to the Housing Trust Fund,” Hill said in an interview last week.

Fannie and Freddie contribute a small fee to the housing trust fund, which provides grants for affordable rental housing to states. In 2017, Fannie and Freddie contributed $220 million to the fund.

The panel had been scheduled to vote on a 14th bill, one that would allow some money market funds to use a Net Asset Value to calculate price per share, but the panel dropped those plans.

Following is a guide to other bills financial institutions are watching:

GSE Jumpstart Act

UPDATE: This story has been updated to reflect vote tallies.

WASHINGTON — The House Financial Services Committee passed 13 bills on Wednesday, including one that would stop Fannie Mae and Freddie Mac from being released by the government and another hailed as helping the underbanked in rural areas.

Among the most significant bills approved was one by Rep. French Hill, R-Ark., that would prevent the Treasury Department from selling its preferred stock and warrants in the government-sponsored enterprises until 2019. The bill, passed 33-27, would not prevent Congress and the Trump administration from moving forward with housing finance reform and signing legislation restructuring Fannie and Freddie.

It would, however, stop the Trump administration from recapitalizing and releasing Fannie and Freddie from conservatorship, though there is no sign that it is planning to do so. A similar bill was included as part of a 2016 omnibus bill but is set to expire next year.

Hill’s bill would also prevent the Federal Housing Finance Agency from allowing Fannie and Freddie to pay any money to the Housing Trust Fund, which is managed by the Department of Housing and Urban Development, in quarters where the GSEs are not profitable.

“I believe that if the secondary mortgage market entities are not profitable or do not make payments to the Treasury, then they should forestall payments to the Housing Trust Fund,” Hill said in an interview last week.

Fannie and Freddie contribute a small fee to the housing trust fund, which provides grants for affordable rental housing to states. In 2017, Fannie and Freddie contributed $220 million to the fund.

The panel had been scheduled to vote on a 14th bill, one that would allow some money market funds to use a Net Asset Value to calculate price per share, but the panel dropped those plans.

Following is a guide to other bills financial institutions are watching:

MOBILE Act

Bankers also hailed the passage of the Making Online Banking Initiation Legal and Easy Act of 2017, which was authored by Rep. Scott Tipton, R-Colo., with six Democrat and 18 Republican co-sponsors.

“This is a sterling example of bipartisanship…in this committee in a way of soaring magnitude,” said Rep. David Scott, D-Ga.

The measure was approved overwhelmingly, 60-0.

The bill would allow banks to swipe or use a photograph of a consumer’s driver’s license to open an account, thus helping customers in areas where branches are scarce to open accounts with a smartphone. Consumer advocates and bankers alike have hailed the bill, which they hope will be part of final regulatory relief legislation.

Credit reporting

The banking panel approved 60-0 the Credit Access and Inclusion Act, introduced by Rep. Keith Ellison, D-Minn., which would amend the Fair Credit Reporting Act to allow HUD to furnish consumer credit reports that include information on rental payments as well as utility, phone and cable bills.

“The goal is to include more on time payments… which improve the credit score of literally millions of people,” said Ellison of the bill that has 15 Democrats and 10 Republicans as co-sponsors.

Consumer groups had pushed back against the bill, which they said could override stronger state protections.

“During the various hearings on the Equifax data breach, members of Congress expressed significant concerns over the lack of control that consumers have over their own data with respect to the credit bureaus… Yet the Credit Access and Inclusion Act would actually reduce consumers’ control over their own information by preempting state and federal privacy protections for utility customers and tenants,” said a letter from 40 consumer advocates sent to members of Congress.

The groups said while they have concerns about the bill, which could result in negative information being reported on consumer credit reports, they do not oppose the concept of using additional financial data to help consumers improve their credit file.

Exam appeals

Another measure with bipartisan support was legislation to establish a deadline for regulators to provide final exam reports to banks and credit unions and create an Office of Independent Exam Review within the Federal Financial Institution Examination Council that would allow banks to appeal an exam determination.

“This has been hanging out in the ether not for months, but for years,” said House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Tex.

Rep. Carolyn Maloney, D-NY., said she has been working on the bill since the financial crisis, but said regulators are no longer pushing back against the legislation.

“The regulators are now not opposing this bill. They are not supporting it, but they are not opposing it, which is a big change in the long history of this bill,” said Maloney.

However, Rep. Maxine Waters, D-Calif., the top Democrat on the panel, proposed an amendment to limit the size of institutions that would be able to appeal their exams to institutions with $10 billion of assets or less.

“I am going to have an amendment that I hope we can get support for,” said Waters. “Let’s not hold our community banks hostage.”

The amendment was voted down. Tipton offered to exclude the largest globally systemic financial institutions from benefiting from the appeals process included in the bill, but Waters pushed back.

Ultimately, the bill was approved 50-10.

Gold plating

Under the leadership of former Federal Reserve Board Gov. Daniel Tarullo, U.S. regulators strove to have tougher regulations than their European counterparts, a practice known as “gold plating.”

Rep. Trey Hollingsworth, R-Ind., sponsored a bill, passed 34-26, that would limit that practice by requiring U.S. bank regulators to provide a reasoning and cost-benefit analysis if the banking agencies issues something that is “substantively more stringent.”

Credit union capital

Rep. Bill Posey, R-Nev., introduced a bill to repeal the National Credit Union Administration risk-based capital rule, which is set to go into effect in 2019.

Credit unions have fiercely objected to the rule because it would force credit unions that engage in riskier business lines to hold more capital.

The bill was approved by the committee, 33-25.