In a wide-ranging speech on November 16 before the Exchequer Club of Washington, DC, US House of Representatives (House) Financial Services Committee (Committee) Chairman Jeb Hensarling outlined the Committee’s and House’s legislative and regulatory priorities for the next session of US Congress.
Hensarling identified a number of House financial services reform priorities for next year, including the following:
- Department of Labor (DOL) Fiduciary Rule. Stating that the DOL Fiduciary Rule would deprive small savers of retirement investment options and advice, as well as harm small businesses, Hensarling said that the House would work with the new presidential administration to suspend the effectiveness of the rule.
- Consumer Financial Protection Bureau (CFPB) Payday Lender Rule. The House will take action, in cooperation with the new administration, to reverse the CFPB’s small dollar lender rule (note that the rule currently is only in the proposal stage).
- Regulatory Accountability. The House proposes to consider measures to increase regulatory agency accountability to Congress, including provisions that, among other things, would (i) require major regulatory agency rulemakings to be submitted to Congress for review, (ii) require cost-benefit analyses for regulatory agency rulemaking actions, and (iii) change the judicial Chevron doctrine under which the federal courts give “substantial deference” to reasoned federal agency actions to implement and interpret federal regulatory laws.
- Dodd-Frank Act Reform. The House will take up, in consultation with the Trump administration, the provisions of the Committee’s Financial CHOICE Act (CHOICE), a series of Dodd-Frank Act reform measures introduced in the House late last summer, and expects to consider them “fairly early” in 2017. In general, CHOICE would have substantially reconfigured and reduced the scope and authority of the Dodd-Frank Act systemic regulation and resolution framework—an objective that Hensarling strongly favors—and implemented a host of Dodd-Frank Act deregulatory measures affecting the activities of the federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
- Federal Reserve Board Accountability. Stating that the Federal Reserve Board lacks transparency and accountability for its monetary policy activities, and referring approvingly to the Fed Oversight Reform and Modernization Act (FORM Act) passed by the House in late 2015, Hensarling said that the House will revisit this issue in the next Congress.
Hensarling’s remarks, albeit understandably lacking in details, provided a concise and understandable roadmap to the House majority’s priorities for 2017. Although the prospects for definitive action on some or all of these and other financial services measures still are highly uncertain, the likelihood of successful action on these measures certainly is materially better in the wake of the 2016 election results.
At the same time, the House and Senate GOP majority will need the cooperation of House and Senate Democrats to move at least some of these initiatives forward, and on that point, Hensarling remarked that he and his colleagues were prepared to work cooperatively with the Democratic minority on reform matters. At the same time, the enthusiasm of the Democratic leadership and membership for support on these initiatives remains very much to be seen, and congressional Democrats almost certainly will steadfastly oppose some of the House majority’s initiatives. What is also not entirely clear are the incoming Trump administration’s positions on each of these proposals, although Hensarling said that he and Committee staff have discussed a number of these proposed financial services initiatives with the campaign and transition team of President-Elect Donald Trump.
In sum, all that is safe to say right now is that interesting times are coming to financial services legislation and regulation, and we all need to pay close attention to developments in this area.