Legislative Activity

Congress Turns Focus to Puerto Rico Debt Crisis

This week, House lawmakers are set to hold a hearing on Puerto Rico’s debt crisis, which is likely to kick off several weeks’ worth of debate on the matter. Importantly, in accordance with House leadership, lawmakers are expected to move legislation addressing the Commonwealth’s fiscal situation through the Natural Resources Committee – not the Judiciary Committee. As such, it is likely that the bill will focus on a financial control board (the subject of this week’s Natural Resources Committee hearing), not Chapter 9 protections, as the approach to resolving the situation in the Commonwealth. Such an approach would be similar to the one proposed by Senators Orrin Hatch (R-UT), Chuck Grassley (R-IA), and Lisa Murkowski (R-AK). Further, with House Speaker Paul Ryan (R-WI) having expressed a desire to address the issue by the end of March, we can expect increased debate and additional action on Puerto Rico in the coming weeks.

Lawmakers to Mark-Up Legislation Proposing Congressionally-Drafted Fiduciary Standard

Following the Department of Labor’s (DOL) submission last week of its Fiduciary Rule to the Office of Management and Budget (OMB), this week the House Education and the Workforce Committee will mark up twill bills seeking to “raise investment advice standards for the retirement industry to ensure financial advisers act in the best interests of their clients, while also ensuring low- and middle-income Americans have access to quality, affordable financial advice to help plan for retirement.”  Specifically, lawmakers will consider H.R. 4293, Affordable Retirement Advice Protection (ARAP) Act (amends ERISA) and H.R. 4294, Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act (amends Internal Revenue Code). These bills would require an affirmative vote by Congress before DOL’s proposed rule would take effect. If Congress rejects the proposal, the bills set out a new fiduciary standard that would take effect and:

• Require advisors to serve in their clients’ best interests;

• Penalize advisors who take action that is not in their clients’ best interests; and

• Require advisors to disclose key information to ensure that investors are fully-informed when making investment decisions

As for DOL’s proposal, OMB is expected to approve the rule by spring, after which DOL is expected to take additional steps to implement the final rule.

This Week’s Hearings:

• Tuesday, February 2: The House Financial Services Committee will meet to discuss the Committee’s views and estimates on the budget for fiscal year 2017.

• Tuesday, February 2: The House Financial Services Subcommittee on Oversight and Investigations will hold a hearing titled “Unsustainable Federal Spending and the Debt Limit.”

• Tuesday, February 2: The House Education and the Workforce will mark-up:

  • H.R. 4293, Affordable Retirement Advice Protection (ARAP) Act (amends ERISA); and

  • H.R. 4294, Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act

• Tuesday, February 2: The House Natural Resources Subcommittee on Indian, Insular, and Alaska Native Affairs will hold a hearing titled “The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority.”

• Wednesday, February 3: The House Financial Services Task Force to Investigate Terrorism Financing will hold a hearing titled “Trading with the Enemy: Trade-Based Money Laundering is the Growth Industry in Terror Finance.”

Regulatory Activity

OFR, FSOC to Hold Fifth Annual Conference

On Friday, February 5, the Office of Financial Research (OFR) and the Financial Stability Oversight Council (FSOC) will hold their fifth annual conference, bringing together financial practitioners, researchers, and regulators to discuss emerging financial stability issues. There will be four panels:

• “Orderly Resolution Around the World”;

• “Stress Tests Beyond Banks”;

• “Central Clearing for Repos in the United States”; and

• “How Can Regulators Monitor and Adapt to Changing Market Structure?”

A webcast of the conference will be available here.

SEC to Hold Meeting of Equity Market Structure Advisory Committee

On Tuesday, February 2, the Securities and Exchange Commission (SEC) will hold a meeting of its Equity Market Structure Advisory Committee. The meeting, which is open to the public, will focus on the events of August 24, 2015, and certain issues affecting customers in the current equity market structure.