House Financial Services Committee

The House Financial Services Committee (“HFSC”) announced that it will convene hearings this month to consider both the trend of financial technology firms partnering with chartered banks to provide financial services and the rise of mobile payments. More information about the hearing schedule is available on the HFSC’s website.
Continue Reading House Financial Services Committee to Consider Two Fintech Issues In January

On October 29, 2019, the House Committee on Financial Services held a hearing entitled “Financial Services and the LGBTQ+ Community: A Review of Discrimination in Lending and Housing.”  Witnesses at the hearing included Harper Jean Tobin, the Director of Policy at the National Center for Transgender Equality, Michael Adams, CEO of SAGE (Services and Advocacy for GLBT Elders), and Alphonso David, President of the Human Rights Campaign.

Continue Reading House Committee Holds Hearing on Financial Services and the LGBTQ+ Community

On March 28, 2019, the House Financial Services Committee (“HFSC”) voted 45-15 to advance to the full House of Representatives the bill H.R. 1595, the “Secure and Fair Enforcement Banking Act of 2019” (the “SAFE Banking Act” or the “Act”).  The SAFE Banking Act would shield banks and credit unions from federal regulatory penalties for providing financial services to legitimate cannabis-related businesses and service providers.  The bill, sponsored by Representatives Ed Perlmutter (D-CO) and Denny Heck (D-WA), had nearly 150 cosponsors and passed as an amendment in the nature of a substitute on a bipartisan basis, with eleven Republicans voting in favor of the legislation.

Background

Although 47 states, plus the District of Columbia, have legalized or decriminalized some form of adult recreational, medical, or limited-medical marijuana or marijuana cannabidiol oil, the manufacture, distribution, or possession of marijuana is illegal under the federal Controlled Substances Act (“CSA”), except as authorized in very narrow circumstances.  The legal uncertainty resulting from the divergence in federal and state law has caused most large financial institutions to decline to provide financial services to cannabis-related businesses directly, as well as to many service providers of cannabis-related businesses, such as suppliers, landlords, and other vendors.  As a result, many cannabis-related businesses that operate legally under state law are forced to operate on a cash-only basis, which creates public safety risks and provides opportunities for money laundering and other financial crimes.

The SAFE Banking Act

The SAFE Banking Act would create several important protections for depository institutions and federal and state credit unions (collectively, “depository institutions”) that provide financial services to cannabis-related legitimate businesses (“CRLBs”), which is defined broadly to include any individual or company that engages in a wide range of cannabis-related activities in accordance with state law.  These protections would also apply to CRLB service providers, defined broadly to include entities that sell goods or services to CRLBs or provide any business services, including the sale or lease of real or any other property, or any other ancillary service relating to cannabis (“Service Providers”).  Specifically, the Act would prohibit federal banking regulators from:

  • Terminating or limiting the deposit insurance or taking any other adverse action under section 8 of the Federal Deposit Insurance Act (which authorizes regulators to take enforcement actions against institutions) solely because the depository institution provides financial services to a CRLB or Service Provider;
  • Prohibiting, penalizing, or otherwise discouraging a depository institution – or entity performing a financial service for or in association with a depository institution – from providing financial services to a CRLB or Service Provider;
  • Recommending, incentivizing, or encouraging a depository institution not to offer, or to downgrade or cancel, financial services solely because the account holder is or becomes a CRLB or Service Provider, or an employee, owner, or operator of a CRLB or Service Provider; and
  • Taking any adverse or corrective supervisory action on a loan made to a CRLB or Service Provider, or an employee, owner, or operator of – or owner or operator of real estate or equipment leased to – a CRLB or Service Provider.

Importantly, the Act provides that for purposes of the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956, 1957) “and all other provisions of Federal law,” the proceeds from a transaction conducted by a CRLB or Service Provider shall not be considered proceeds from an unlawful activity solely because the transaction was conducted by a CRLB or Service Provider.  Moreover, a depository institution – or entity performing a financial service for or in association with a depository institution that provides a financial service to a CRLB or Service Provider – (and their officers, directors, and employees) “may not be held liable pursuant to any federal law or regulation” solely for providing financial services to a CRLB or Service Provider, or investing income derived from such services in states where cannabis is legal.


Continue Reading House Financial Services Committee Passes Cannabis Banking Bill

Representative Maxine Waters (D-CA), the newly appointed Chair of the House Financial Services Committee (the “Committee”), took a first step last week towards one of the major priorities of the Committee under her leadership – the promotion of diversity and inclusion in the financial services sector.  The first change under the new Chair’s watch was the creation of a new subcommittee to support this objective.  Chair Waters’ other agenda items for the Committee continue to take shape, but she has previously indicated that her focus will be on, among other things, protecting consumers and investors from abusive financial practices, ensuring appropriate safeguards are in place to prevent another financial crisis, expanding affordable housing opportunities and tackling homelessness, and encouraging responsible innovation of financial technology.

Continue Reading Renewed Focus on Diversity and Inclusion for Rep. Waters-led House Financial Services Committee

On July 16, 2018, Republican and Democratic leadership of the House Financial Services Committee announced that they have reached agreement to advance a package of financial services reforms known as the “JOBS Act 3.0,” consisting of 32 pieces of legislation that have passed the Committee or the full House with bipartisan support.

While much of the package is focused on capital markets regulation, several of the component bills relate to prudential or consumer financial services matters.


Continue Reading House Committee Agrees on JOBS Act 3.0

This week, the House Financial Services Committee (the “Committee”) approved by a vote of 35-25 a bill introduced last month by Rep. Alex Mooney (R-WV) that would exclude from the definition of “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”) law firms or licensed attorneys engaged in litigation activities to collect a debt,

On March 9, 2017, the House Financial Services Committee and Senate Banking Committee conducted their first legislative mark-ups in the new Congress and approved bipartisan bills to amend several SEC-related laws.  Observers have speculated that the simultaneous advancement of this package of bipartisan bills in both chambers may indicate that key legislators are open to pursuing financial reform efforts in narrowly focused stages rather than through comprehensive legislation.

The approved bills are reintroduced versions of bills that received consideration previously — in some cases receiving near-unanimous approval by the full House — without final enactment. They are summarized below.


Continue Reading House and Senate Panels Advance SEC Proposals

Today Senators Chuck Schumer (D-NY), Sherrod Brown (D-OH), Elizabeth Warren (D-MA) and others voiced their opposition to any attempt by President-elect Donald Trump to oust Richard Cordray, the current Director of the Consumer Financial Protection Bureau (“CFPB”), before Cordray’s term ends in July 2018. They also sent a letter to Cordray outlining and praising his