Legislative Activity

Senate Banking Committee Schedules Markup on Regulatory Relief for Community and Regional Banks

Chairman Richard Shelby (R-AL) has announced that the Committee will hold a markup on May 14 to consider proposals that would provide regulatory relief to community and regional banks. Despite earlier concerns to the contrary, it appears that Chairman Shelby has agreed to limit the upcoming markup to bills aimed at providing relief to these smaller banks. However, as we have noted in the past, successfully moving such legislation will not necessarily be an easy task.

Separately, last week, Senator Elizabeth Warren (D-MA) gave a speech in which she proposed targeted financial reforms, including suggestions focused on reforming executive compensation and implementing a “targeted financial transactions tax.”

House Approves Financial Services Bills, Future Uncertain in the Senate

Last week, the House approved numerous financial services bills to “promote a healthier economy, preserve consumer choice, and help our fellow Americans achieve the dream of financial independence.”  While many of these bills passed the House last Congress, they did not successfully make their way through the Senate. Further, as expected, Senate Democrats remain skeptical of reforms of the Consumer Financial Protection Bureau (CFPB). Chairman Shelby last week acknowledged that tweaks to the CFPB’s qualified mortgage (QM) standard may be necessary, while Ranking Member Sherrod Brown (D-OH) continues to question whether such changes would actually benefit consumers.

This Week’s Hearings:

• Tuesday, April 21: The Senate Banking Committee will hold a hearing titled “Surface Transportation Reauthorization: Building on the Successes of MAP-21 to Deliver Safe, Efficient and Effective Public Transportation Services and Projects,” which will feature Ms. Therese McMillan, Acting Administrator, Federal Transit Administration.

• Wednesday, April 22: The House Financial Services Committee Task Force to Investigate Terrorism Financing will hold a hearing titled “A Survey of Global Terrorism and Terrorist Financing.”

• Thursday, April 23: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “Examining Regulatory Burdens – Regulator Perspective.”

• Thursday, April 23: The Senate Banking Committee will hold a hearing titled “Surface Transportation Reauthorization: Building on the Successes of MAP-21 to Deliver Safe, Efficient and Effective Public Transportation Services and Projects,” which will feature witnesses representing the transportation industry.

Regulatory Activity

DoL Releases Fiduciary Rule, SEC Continues Work on Its Proposal

Last week, the Department of Labor released its long-awaited and controversial “Fiduciary Rule,” which establishes a new legal standard for brokers and requires them to offer investors retirement advice that is in the investors’ best interest. Specifically, the proposed rule expands the definition of “fiduciary” to encompass any individual receiving compensation for providing advice that is individualized or specifically directed to a particular plan sponsor, plan participant, or Individual Retirement Account (IRA) owner. Additionally, the proposal establishes a “best contract exemption” to assure clients that their advisers are acting in their best interest and allow them to hold their adviser responsible for faulty advice. According to Secretary of Labor Tom Perez, the proposal provides a “guardrail” for consumers, while providing advisers sufficient flexibility. Comments on the proposal are due on July 6.

Separately, Securities and Exchange Commission (SEC) Chair Mary Jo White has indicated that the SEC will continue its work to “implement a uniform fiduciary duty for broker-dealers and investment advisers where the standard is to act in the best interest of the investor.”  While Chair White has indicated that the SEC will seek to harmonize its “Fiduciary Rule” with the Department of Labor’s proposal, she has also emphasized that they are separate agencies and need not necessarily pursue their proposals in tandem.

SEC Announces First Meeting of Equity Market Structure Advisory Committee

The SEC has announced that its Equity Market Structure Advisory Committee will hold its first meeting on May 13. The meeting will focus on Rule 611 of SEC Regulation NMS (the “Order Protection Rule” or “Trade-through Rule”), which requires trading centers to have policies and procedures designed to prevent “trade throughs” (i.e., trades at prices that are inferior to displayed and immediately accessible quotes at other trading centers). According to Chair White, “[e]nhancing our equity market structure remains a top priority…[and] the committee’s experience and diverse viewpoints will provide valuable insight as we work together to further strengthen our overall market structure.”

FSOC to Review Draft 2015 Annual Report

On Monday, April 20, Treasury Secretary Jack Lew will preside over an executive session of the Financial Stability Oversight Council (FSOC). During the meeting, FSOC members are expected to discuss the Council’s 2015 Annual Report, which will likely be released next month.