House Fin. Services Drilldown (February 11)

Update 330 — House Fin. Services Drilldown: Subcommittee Chairs, Members, Agendas

Chairwoman Maxine Waters and the House leadership have announced assignments for House Financial Services Subcommittee seats in the 116th Congress.  No less than a dozen freshmen, including Alexandria Ocasio-Cortez of New York and Katie Porter of California, have landed spots on prominent subcommittees, such as Investor Protection, Consumer Protection and Financial Institutions, and Housing and Community Development.

How will these new members help shape the agenda of these subcommittees?  We look at these three prominent HFSC subcommittees, their jurisdiction, recent legislative history, and the newly-appointed chairs and their agendas below.

Best,

Dana

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Subcommittee on Consumer Protection and Financial Institutions

This subcommittee oversees the Consumer Financial Protection Bureau (CFPB), consumer access and protection issues. The new chair, Rep. Gregory Meeks, will also have jurisdiction over financial regulators, such as the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve, including systemic risk regulation in the banking system.

Given Subcommittee jurisdiction, agency heads will testify on their enforcement actions.  New CFPB Director, Kathy Kraninger and Vice Chairman of Supervision at the Fed, Randal Quarles can expect particularly close questioning.  

115th Congress

Rep. Luetkemeyer, Chair of the Subcommittee during the 115th Congress, was hellbent on rolling back Dodd-Frank (DFA) regulations and consumer protections. Luetkemeyer introduced bills such as the Financial Institutions Consumer Protection Act to ease rules on payday lenders, as well as the Systemic Risk Designation Improvement Act, which would have eliminated the $50 billion asset threshold for SIFI designation under Section 116(a) of DFA.

116th Congress

Chair Waters has made it clear, by contrast, that consumer protection is one of her top priorities this Congress, putting the Subcommittee at the forefront of the new HFSC agenda. Notable progressive freshmen are on the Subcommittee, including Reps. Rashida Tlaib, Katie Porter, Ayanna Pressley, and Alexandria Ocasio-Cortez. Rep. Porter has extensive legal experience in consumer protection, and Ocasio-Cortez has signaled support for Waters’ consumer-oriented agenda.

Rep. Meeks is considered part of a moderate coalition of HFSC members, but is a stalwart supporter of DFA and vociferously defended CFPB Director Richard Cordray when he came under assault from GOP lawmakers last Congress. He opposed former HFSC Chair Jeb Hensarling’s Financial CHOICE Act and the more modest, but still broadly deregulatory, Economic Growth, Regulatory Relief, and Consumer Protection Act that became law last year. Meeks is not unalterably opposed to the current tailoring regime advocated by the Fed — he signed on to a letter in 2016 seeking increased tailoring according to the size and activities of financial institutions.

It remains to be seen how Meeks’ agenda will jibe with the more liberal approach of the new members. But note that both he and fellow New Yorker, Rep. Velazquez — another tenured member on the Subcommittee — nominated Rep. Ocasio-Cortez for a seat on HFSC.

Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets

This subcommittee reviews laws and programs related to the U.S. capital markets and securities industry. It also oversees the Securities and Exchange Commission (SEC) and self-regulatory organizations, such as the New York Stock Exchange and the Financial Industry Regulatory Authority, which police the securities markets.

Rep. Carolyn Maloney, long-time HFSC member, will chair the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, formerly known as the Subcommittee on Capital Markets, Securities, and Investment.

The first Subcommittee hearing will be on Section 913 of the Dodd-Frank Act, examining the fiduciary rule for brokers and dealers. Other likely areas of interest for the Subcommittee: fine-tuning the accredited investor provision, scrutinizing proposed Regulation Best Interest changes, and reviewing broker fees and misconduct.

115th Congress

Under the previous Subcommittee chair, Rep. Bill Huizenga, deregulatory legislation was the norm. JOBS Act 3.0, a package of bills that included a number of deregulatory measures, included legislation from this subcommittee. While JOBS 3.0 enjoyed bipartisan support and passed the House by a wide margin, the bill will likely not be taken up under a Chair Maloney subcommittee or a Chair Waters full committee.

116th Congress

Rep. Maloney has not yet revealed specific priorities, but she has a history of working to expand investor and consumer protection efforts and diversify corporate board leadership. During the last two sessions of Congress, Rep. Maloney introduced a bill that would commission a study on the gender makeup of many corporate boards in an effort to increase diversity. Although not under the jurisdiction of this subcommittee, Rep. Maloney has also taken a leading role in consumer protection efforts. Last Congress, she proposed H.R.3606, the Overdraft Protection Act of 2017, to protect consumers from overdraft fees.

Reps. Alexandria Ocasio-Cortez, Cindy Axne, and Katie Porter form a new liberal coalition on the Subcommittee that will help Chair Maloney pass much needed investor protection legislation. Another freshman, Rep. Sean Casten, is a bit of a question mark. He doesn’t have a broad record on financial services issues, but boasts some more moderate ideas — he could join with Rep. Josh Gottheimer to form a small moderate block on the Subcommittee.

Subcommittee on Housing, Community Development and Insurance

This subcommittee oversees the Department of Housing and Urban Development (HUD), the Government National Mortgage Association (Ginnie Mae), the Rural House Service, and the Federal Insurance Office.

Rep. William Lacy Clay is the new Subcommittee chair. Insurance, public, affordable, and rural housing, Opportunity Zones, and community planning are under its jurisdiction.

Chair Waters has a long legislative history in the area of affordable housing, as we’ve outlined in previous updates. Rep. Clay has announced his intention to work closely with her on housing, saying that reform in the housing finance system, including mortgages and insurance, homelessness, and “vigorous” oversight of HUD will all be focuses of the Subcommittee in the 116th Congress

115th Congress

In the 115th Congress, Rep. Sean Duffy served as the chair of the Subcommittee, during which time he swiftly approved DFA rollbacks, including the Financial CHOICE Act of 2017, sponsored by then HFSC Chair Jeb Hensarling. The bill gave large amounts of regulatory relief to Wall Street banks just ten years after the Great Recession. Rep. Duffy did, however, work on a number of bipartisan housing solutions with committee Democrats, including a voucher program that seeked to increase mobility of low-income families.

116th Congress

Financial reform is one of Rep. Clay’s key issues. He supports enhanced regulatory reform and has expressed concern about systemic risk in the economy. He was an avid supporter of DFA at its inception and will likely continue to be a bulwark against efforts to “tailor” regulation into oblivion. Another issue that is likely to be high on Chair Clay’s priority list is redlining, a significant problem in his home state of Missouri and an issue he has spoken to considerably in his home district.

Reps. Cindy Axne and Rashida Tlaib are the freshman on this subcommittee, and will be welcome new and progressive voices. Though the Subcommittee’s Democrats are made up of a majority of progressives, Chair Clay and previous Ranking Member Cleaver both lean moderate. Regardless, it is very probable that, ideology aside, the Democrats in this subcommittee will work together productively.

Progressive Plurality

This Congress, Chair Waters is going to be selective about bills that get introduced, as she is aiming to pass every bill that comes to a full Committee markup. The new progressive makeup of House Financial Services and its constituent subcommittees will undoubtedly inform Chair Waters’ agenda this Congress. Still, some of the more moderate Democratic representatives, such as Reps. Foster, Himes, Scott, and Gottheimer, may have a blocking position, as Waters will need those four votes to pass bills through the Committee. Chair Waters will have allies in subcommittee Chairs Meeks, Maloney, and Clay, but will have to work hard across the Democratic caucus to achieve her more ambitious goals.

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