The House Financial Services Committee advanced 15 regulatory reform bills to the full House during a two-day markup on Wednesday and Thursday.
One reverses portions of the 2014 Securities and Exchange Commission rule on money market funds; another would help federal courts curb abusive mutual fund litigation; and a third would exempt those engaged in the business of insurance from Consumer Financial Protection Bureau enforcement.
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said the bills the committee passed were designed to lift regulatory burdens.
“Even as tax reform is massively boosting our economy, regrettably excessive regulation will continue to clog the arteries and prevent the free flow of capital that is the lifeblood of economic growth,” Hensarling said.
Congress, he continued, “must do more to reduce the burdensome and often unnecessary red tape that prevents companies from growing and creating more and better jobs and those regulatory burdens that hinder Main Street financial institutions from serving their customers.”
Some of the 15 bills, which advanced to the full House, include measures that were included in Hensarling’s Financial Choice Act, which was designed to dismantle the Dodd-Frank Act. The Act passed the House but is seen as having little chance at getting through the Senate.
The Mutual Fund Litigation Reform Act, H.R. 4738, which passed by a 31-25 vote, amends section 36(b) of the Investment Company Act to provide that in derivative actions brought under the Act alleging a breach of fiduciary duty, the plaintiff must state with particularity all the facts establishing a breach of fiduciary duty and that the plaintiff must prove the breach of fiduciary duty to be clear and convincing evidence.
A spokesperson for the Investment Company Institute explained to ThinkAdvisor that “under current law, plaintiffs’ attorneys use Section 36(b) to file suits that lack merit; waste the time of courts, fund advisors and fund independent directors; and rarely benefit shareholders.”
H.R. 4738 “will help federal courts to curb these abusive lawsuits without precluding meritorious suits, in the same manner as the Private Securities Litigation Reform Act of 1995 successfully did for securities litigation,” the ICI spokesperson said.
The Consumer Financial Choice and Capital Markets Protection Act, H.R. 2319, which passed by a 34-21 vote, reverses portions of the money market fund rule issued by the SEC in 2014 to allow MMFs, regardless of whether their investors are retail or institutional, to elect to use the stable net asset value (NAV) approach to calculate price per share.
The bill also states that if a money market fund makes the appropriate election, the MMF will not be subject to the mandatory liquidity fee provision of the rule.
The Business of Insurance Regulatory Reform Act of 201, H.R. 3746, which passed by a 37-18 vote, amends the Consumer Financial Protection Act of 2010 to exempt from the CFPB’s enforcement persons engaged in the business of insurance and who are already regulated by a state insurance regulator.
The Financial Stability Oversight Council Improvement Act, H.R. 4061, which passed by a 45-10 vote, amends the Dodd-Frank Act to require the Financial Stability Oversight Council, when determining whether to subject a U.S. or a foreign nonbank financial company to supervision by the Federal Reserve, to consider the appropriateness of imposing heightened prudential standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability. The bill is based on Section 151 of the Financial Choice Act.
Also passed by a 38-17 vote was the Comprehensive Regulatory Review Act, H.R. 4607,which amends the Economic Growth and Regulatory Paperwork Reduction Act of 1996 to require the Federal Financial Institutions Examination Council and each of the federal financial regulators to conduct, at least once every seven years, a comprehensive review of all regulations prescribed by the council or the regulator.