Mike & Co.,
Late last night, the House passed the Financial Services and General Government Act, a $21.7 billion FY17 appropriations measure. The House considered dozens of amendments Wednesday and Thursday, several of which would make sweeping changes to DFA and financial regulation generally.
It is hard to say if any of these provisions would make it into the Senate bill or be added in conference. But we map them out below, sorting out the DFA from non-DFA, and the one viable one from the showpiece amendments.
As for the bill’s ultimate disposition, a spoiler alert: never has an FSGG appropriations standalone bill been signed into law.
Great weekends, all…
The House-passed Financial Services FY17 appropriations bill would cut spending at more than two dozen agencies and has drawn a veto threat from President Obama. The bill, H.R. 5485, passed on a near-party line 239-185 and includes cuts of $1.5 billion, or 6.5 percent of fiscal 2016 allocations.
The bill is loaded with ideological policy riders as well as numerous riders to prohibit new regulations and to roll back the features of the Dodd-Frank Act. The House spent much of yesterday plowing through nearly four dozen amendments. The CFPB came in for particular attention, as approved amendments would:
- end the CFPB’s independent funding, subjecting it to annual appropriations, rather than receiving funding directly from the Federal Reserve;
- replace its efficient Director structure with a partisan, bureaucratic Commission;
- halt the CFPB’s efforts to end forced arbitration clauses in credit card contracts and give consumers their day in court;
- . rescind the CFPB’s guidance that helps to prevent racial and ethnic discrimination in automobile lending markets;
- defund the CFPB’s efforts to stop predatory lending to borrowers looking to purchase a manufactured home;
- make it harder for the CFPB to bring enforcement actions against bad actors; and
- halt the CFPB’s efforts to stop the “debt trap” created by predatory payday lending, which often escape state-level laws.
Among the furthest reaching of the amendments was one offered by Rep. Scott Garrett (R) that would prohibit the use of funds to classify nonbank firms as systemically important financial institutions. Another, offered by Rep. Sean Duffy (R), would bar funds from being used to implement, administer, or enforce new regulatory actions of more than $100 million.
Republicans also turned back Democratic amendments that would:
- eliminate language to overhaul the CFPB, putting it under the appropriations process and replacing its director with a five-member commission;
- eliminate language to put the FSOC under the appropriations process;
- restore $50 million to the SEC, making it equal to 2016 levels;
- eliminate language barring the CFPB from proceding with its arbitration and payday lending rules; and
- strike provisions barring the SEC from writing a rule requiring companies to disclose their political contributions.
A detailed list of relevant approved amendments is included at the end of the update.
Also of note, the bill includes significant decreases to funding for both the Treasury Department and the SEC. For the Treasury Department, the bill’s allocation amounts to $11.7 billion – $246 million less than the FY 2016 level and $1.45 billion less than the President’s request. The bill funds the SEC at $1.55 billion – $50 million less than the FY 2016 level and $226 million below the President’s request.
Overlooked in most press accounts, the bill also included the Financial Institutions Bankruptcy Act, proposed by Rep. David Trott (R), which would amend the U.S. Bankruptcy Code with regard to the insolvency of a covered financial institution. According to this proposal, large financial institutions with assets of more than $50 billion would face a special judicial process for addressing bankruptcy in addition to the DFA’s administrative Orderly Liquidity Authority. This proposal as a stand-alone has gained broad support, and separately passed the House by voice vote in April.
The Path Forward
The bill may become moot, as House conservatives are pushing for a vote next week on a six-month stopgap funding measure to last through March, which would effectively end the appropriations process for the year. And in any event, the White House last month threatened to veto the legislation before it reached the House floor, which now theoretically heads to the Senate. The Senate’s version (S. 3067) includes about $500 million more than the House bill and would keep the IRS budget flat. The Senate bill, largely free of riders, has been approved by appropriators but has yet to be scheduled for floor consideration.
Surprisingly, a stand-alone Financial Services and General Government Appropriations bill has never become law, as it is always combined with a larger piece of legislation. Thus, the likelihood of this bill in its present form becoming law is close to zero.
It is possible, however, that the Financial Institutions Bankruptcy Act, given that it also passed the House as a stand-alone bill, is one provision in the FSGG bill that could end up at the President’s desk and become law.
Relevant Amendments Adopted
The following approved amendments relate to the DFA and prohibit
- financial regulations with $100 million or more in compliance costs (Duffy) – Passed by voice vote
- the FSOC from designating non-bank SIFIs (Garrett) – Passed 239-182
- the CFPB from enforcing indirect auto lending guidance (Guinta) – Passed 260-162
- spending on CFPB actions more than three years after discovery (Messer) – Passed 235-179
- all financial regulation until the end of President Obama’s term (Hudson) – Passed by voice vote
Two other pertinent amendments were passed that do not pertain to DFA, prohibiting:
- the SEC from mandating universal proxy ballots (Garrett) – Passed 243-180
- the SEC from mandating pay disclosure (Huizenga) – Passed 236-185
Amendments Adopted in Committee
To prohibit (sound familiar?)
- funding for the CFPB to finalize or implement a rule that would restrict payday lending until the CFPB completes a report, with public comment, on the impact of the rule on populations with limited access to credit, and until it identifies existing credit products available to replace the current sources of short-term, small-dollar credit (Palazzo/Cuellar) – Passed 30-18.
- funding for the IRS to audit a church unless the audit is approved by the IRS Commissioner, reported to the tax committees, and takes effect 90 days after such notice (Culberson) – Passed 31-17.
7 thoughts on “The House Financial Services FY17 Approps. Bill (July 8)”
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