Editor’s note: This column first appeared in Human Capital, a newsletter by Washington Bureau Chief Melanie Waddell about the people who shape the financial regulatory space.
Bank regulatory reform is in the air with the House set to vote (Tuesday, it’s been said) on what’s been dubbed the Dodd-Frank rollback bill: the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155).
House Financial Services Committee Chairman Jeb Hensarling told Politico Live on Thursday that passage of the legislation will “be the most significant pro-growth banking reform since Graham-Leach-Bliley.”
But the Republican lawmaker from Texas, who’s not seeking re-election, says S.2155 doesn’t go far enough in its capital formation attempts, so he’ll be pushing for a “JOBS 3.0” (Jumpstart Our Business Startups Act) follow-up package to hit the House floor in the summer.
This week’s Human Capital takes a look at Hensarling’s legislative swan song, but also a view into a recent talk among U.S. and Canadian officials on where the North American Free Trade Agreement negotiations stand post House Speaker Paul Ryan’s Thursday deadline for a deal. (Hint: as of Friday, no deal has been reached).
Hensarling said that he has “a commitment from the Senate leader that we’re going to get a vote on the Senate floor for a trailing package of bills” to S.2155.
S.2155 “is essentially a community financial institutions regulatory relief bill — that’s its major thrust,” Hensarling said, “but it has a really small capital formation title.”
So as good as S.2155 is, “it leaves 80% of bank assets untouched,” he continued.
What he’s hoping for “in this trailing bill is something that is going to be in the vein of the JOBS Act; Jobs 1.0 was signed into law by President Barack Obama, who at the time said, ‘This is a an important step on the journey to remove barriers to entreprenuers getting capital.’”
JOBS 2.0 legislation “was conveniently placed into a transportation bill,” he added. “Frankly it’s time for a JOBS 3.0,” he said, as “80% of our corporate debt financing doesn’t come from banks, it comes from our capital markets.”
Until recently, entrepreneurship “was at a generational low; we know that IPOs over the last two decades have been cut in half. Fortunately we’re starting to see an uptick in those, and 90% of those are part of the early growth companies that are taking advantage of either Jobs 1.0 or 2.0,” Hensarling said.
Noting that he’s carrying on “very constructive talks” with Senate democrats, Hensarling cited “sometime this summer” he expects his JOBS 3.0 deal to be done. “But the pace is going to be somewhat negotiated with our friends and colleagues in the Senate.”
Whither a NAFTA Deal?
On Wednesday, one day before the Thursday deadline set by House Speaker Paul Ryan for a NAFTA deal was to be struck, I listened in on an event held by The Hill at the Newseum in Washington, dubbed “NAFTA & North American Competitiveness,” that tackled such issues as a deal’s importance and the need to update the 24-year-old agreement.
As was noted at the event: U.S and Canada have the single biggest trading relationship in the world, with over $2 billion a day in bilateral trade, which is unprecedented globally. Here are some key highlights from speakers at the event.
Wayne Easter, a member of the Canadian Parliament:
“There’s no question that it [the agreement] needs to be updated, but don’t undermine the agreement … build on the agreement.”
The thorniest issues to tackle in an agreement: “auto, dairy (from the U.S. side), scientific and digital.”
The focus regarding the trade agreement should be: “How do we as a North American continent compete against the rest of the world? How do we set up our trading system, our trade bloc so that we compete against China, against Europe, against the rest of the world and create prosperity and jobs in our own region? That’s what we ought to be thinking about.”
A deal is “too important to the United States, to Canada and to Mexico to let it fall apart. When it’s completed is certainly up in the air.”
If no deal is struck? “Keep the one in place, but with improvements. There has been a lot of change in 24 years—as you look going down the road in the next 10 to 12 years, artificial intelligence is going to be one of the bigger issues, as is blockchain technology…all that has to be taken into consideration to protect our countries’ and our citizens’ interests.”
Rep. Erik Paulsen, R-Minn., member of the House Ways and Means Committee:
“The NAFTA negotiations have been very protracted; in my mind this should have been a fairly quick modernization effort, yet it’s focused on a number of irritants that have really bogged this whole thing down.”
He added: “The world is not standing still — there are 350 trade agreements worldwide today.”
In any agreement, “it’s critically important to set high standards. This is what was attempted in TPP [Trans-Pacific Partnership]. This is what the U.S. and Canada could do together with Mexico in the NAFTA agreement. We need to see a real modernization beyond just simple tariff reductions …We really need to see high standards on digital trade, IP and IP protections, things that promote the innovative economy, without that others will write the rules and it will be problematic for the U.S. and Canada.”
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