It’s a new day at the Financial Services Committee. But what does it mean for policy?

With the change in control of the House of Representatives, there has been a massive change in the agenda of the Financial Services Committee.  There also is an improved relationship between the new Chair and new Ranking Member of the Committee from that in the last Congress which has already resulted in House passage of about ten noncontroversial Financial Services Committee bills and which could improve the chances for passage of some bipartisan legislation including long-term reauthorizations of some expiring programs .  However, there appears to be quite limited overlap between the Financial Services Committee’s agenda and the agenda of Senate Banking Committee Chairman Mike Crapo (R-ID). 

Thus, apart from those noncontroversial bills that are passed under suspension of the rules, many, if not most, of the bills that the Financial Services Committee reports and the House eventually passes in this Congress will be “messaging” bills that are destined to die in the Senate, such as HR 1500, the Consumers First Act , a bill designed to protect the Consumer Financial Protection Bureau (CFPB) from what Democrats see as  the Trump White House’s anti-consumer agenda and a Republican assault on the CFPB’s mission, and HR 1856, the Ending Homelessness Act.  Most of these bills will not even be taken up by the Banking Committee. 

Financial Services Committee Chairwoman Maxine Waters (D-CA) says that her  focus is on protecting consumers from harmful financial practices, ensuring that there are strong safeguards in place to prevent a financial crisis, expanding and supporting affordable housing and tackling the homelessness crisis, encouraging responsible innovation in financial technology while protecting against abusive payday lending practices, promoting diversity and inclusion in the financial services sector including through the creation of a Diversity and Inclusion Subcommittee , comprehensively reforming or, if necessary replacing, the credit reporting system and making sure that Americans and small businesses have fair access to the financial system. 

Chairwoman Waters also has laid out a set of core principles that she says should be part of legislative efforts to address the future of housing finance reform, with a particular emphasis on maintaining access to the 30-year fixed rate mortgage and to affordable mortgage credit, ensuring sufficient private capital is in place to protect taxpayers, and ensuring that underserved borrowers and communities are not overlooked

In contrast, Banking Committee Chairman Crapo’s agenda is somewhat more narrow.  He has declared pursuit of housing finance reform legislation to be his highest priority and says that the Banking Committee will determine how it can fix the housing finance system, establish appropriate levels of taxpayer protection, preserve the 30-year fixed rate mortgage,  increase competition among mortgage guarantors  and promote access to affordable housing..  He wants to ensure that the agencies effectively implement the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA),the regulatory relief law enacted last year and also wants to pursue additional legislative proposals to promote capital formation and economic growth  and better corporate governance while reducing regulatory burden.

Chairman Crapo is also not a big fan of the CFPB and wants to explore whether the CFPB should funded through the regular appropriations process and whether a commission, rather than a single Director, would allow the Bureau to pursue its mission more effectively.  Noting that the most recent NFIP reauthorization expires on May 31, he says that  any comprehensive reforms to the NFIP must achieve the appropriate balance of protecting taxpayers and assisting consumers.  He also, along with Ranking Member Sherrod Brown, has posed a series of questions and invited public comment about what types of potential data privacy legislation would give consumers more control over and enhance the protection of consumer financial data that is collected about them and ensure that consumers are notified of breaches in a timely and consistent manner. 

While both Chairwoman Waters and Chairman Crapo have expressed interest in housing  finance reform and in February the White House has published its principles for such reform, it will be a very heavy lift, especially with the 2020 presidential election on the horizon, to pass GSE reform legislation in this Congress.  With the recent confirmation of Mark Calabria, a long-time critic of Fannie Mae and Freddie Mac, as Director of the Federal Housing Finance Agency (FHFA), the open question is how much GSE reform can be accomplished through administrative action and degree to which legislation will be required. 

Assuming that enactment of GSE reform legislation remains a pipe dream, except for possible reauthorizations of the National Flood Insurance Program (NFIP), the Terrorism Risk Insurance Act (TRIA),  and the Export-Import Bank, and potential passage of HR 1595, the SAFE Banking Act of 2019, a cannabis banking bill with 165 House sponsors and 22 Senate sponsors, if Leader McConnell will allow the bill to be considered by the Senate, the prospects for the enactment of significant financial services legislation in this Congress currently appear limited. 

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Gary Goldberg

About Gary Goldberg

Gary L. Goldberg is a Senior Policy Director in Dentons' Public Policy and Regulation practice. He specializes in federal legislative, regulatory and public policy advocacy, and in providing political intelligence to corporate, trade association, nonprofit and governmental clients, with a particular emphasis on financial services, tax and budget-related matters.

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