[Congressional Record Volume 164, Number 29 (Wednesday, February 14, 2018)]
[House]
[Pages H1155-H1169]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1515
TRID IMPROVEMENT ACT OF 2017
Mr. HENSARLING. Madam Speaker, pursuant to House Resolution 736, I
call up the bill (H.R. 3978) to amend the Real Estate Settlement
Procedures Act of 1974 to modify requirements related to mortgage
disclosures, and for other purposes, and ask for its immediate
consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 736, an
amendment in the nature of a substitute consisting of the text of Rules
Committee Print 115-59, modified by the amendment printed in part B of
House Report 115-559 is adopted, and the bill, as amended, is
considered read.
The text of the bill, as amended, is as follows:
H.R. 3978
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Table of contents.
TITLE I--TRID IMPROVEMENT
Sec. 101. Amendments to mortgage disclosure requirements.
TITLE II--PROTECTION OF SOURCE CODE
Sec. 201. Procedure for obtaining certain intellectual property.
TITLE III--FOSTERING INNOVATION
Sec. 301. Temporary exemption for low-revenue issuers.
TITLE IV--NATIONAL SECURITIES EXCHANGE REGULATORY PARITY
Sec. 401. Nationally traded securities exemption.
TITLE V--ELIMINATING BARRIERS TO JOBS FOR LOAN ORIGINATORS
Sec. 501. Eliminating barriers to jobs for loan originators.
Sec. 502. Amendment to civil liability of the Bureau and other
officials.
Sec. 503. Effective date.
TITLE VI--FINANCIAL STABILITY OVERSIGHT COUNCIL IMPROVEMENT
Sec. 601. SIFI designation process.
Sec. 602. Rule of construction.
SEC. 2. SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.
Notwithstanding section 4(i)(2)(B)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78d(i)(2)(B)(i)), the amount
deposited in the Securities and Exchange Commission Reserve
Fund for fiscal year 2018 may not exceed $48,000,000.
TITLE I--TRID IMPROVEMENT
SEC. 101. AMENDMENTS TO MORTGAGE DISCLOSURE REQUIREMENTS.
Section 4(a) of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2603(a)) is amended--
(1) by striking ``itemize all charges'' and inserting
``itemize all actual charges'';
(2) by striking ``and all charges imposed upon the seller
in connection with the settlement and'' and inserting ``and
the seller in connection with the settlement. Such forms'';
and
(3) by inserting after ``or both.'' the following new
sentence: ``Charges for any title insurance premium disclosed
on such forms shall be equal to the amount charged for each
individual title insurance policy, subject to any discounts
as required by State regulation or the title company rate
filings.''.
TITLE II--PROTECTION OF SOURCE CODE
SEC. 201. PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL
PROPERTY.
(a) Persons Under Securities Act of 1933.--Section 8 of the
Securities Act of 1933 (15 U.S.C. 77h) is amended by adding
at the end the following:
``(g) Procedure for Obtaining Certain Intellectual
Property.--The Commission is not authorized to compel under
this title a person to produce or furnish source code,
including algorithmic trading source code or similar
intellectual property that forms the basis for design of the
source code, to the Commission unless the Commission first
issues a subpoena.''.
(b) Persons Under the Securities Exchange Act of 1934.--
Section 23 of the Securities Exchange Act of 1934 (15 U.S.C.
78w) is amended by adding at the end the following:
``(e) Procedure for Obtaining Certain Intellectual
Property.--The Commission is not authorized to compel under
this title a person to produce or furnish source code,
including algorithmic trading source code or similar
intellectual property that forms the basis for design of the
source code, to the Commission unless the Commission first
issues a subpoena.''.
(c) Investment Companies.--Section 31 of the Investment
Company Act of 1940 (15 U.S.C. 80a-30) is amended by adding
at the end the following:
``(e) Procedure for Obtaining Certain Intellectual
Property.--The Commission is not authorized to compel under
this title an investment company to produce or furnish source
code, including algorithmic trading source code or similar
intellectual property that forms the basis for design of the
source code, to the Commission unless the Commission first
issues a subpoena.''.
(d) Investment Advisers.--Section 204 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-4) is amended--
(1) by adding at the end the following:
``(f) Procedure for Obtaining Certain Intellectual
Property.--The Commission is not authorized to compel under
this title an investment adviser to produce or furnish source
code, including algorithmic trading source code or similar
intellectual property that forms the basis for design of the
source code, to the Commission unless the Commission first
issues a subpoena.''; and
(2) in the second subsection (d), by striking ``(d)'' and
inserting ``(e)''.
TITLE III--FOSTERING INNOVATION
SEC. 301. TEMPORARY EXEMPTION FOR LOW-REVENUE ISSUERS.
Section 404 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7262) is amended by adding at the end the following:
``(d) Temporary Exemption for Low-Revenue Issuers.--
``(1) Low-revenue exemption.--Subsection (b) shall not
apply with respect to an audit report prepared for an issuer
that--
``(A) ceased to be an emerging growth company on the last
day of the fiscal year of the issuer following the fifth
anniversary of the date of the first sale of common equity
securities of the issuer pursuant to an effective
registration statement under the Securities Act of 1933;
``(B) had average annual gross revenues of less than
$50,000,000 as of its most recently completed fiscal year;
and
``(C) is not a large accelerated filer.
``(2) Expiration of temporary exemption.--An issuer ceases
to be eligible for the exemption described under paragraph
(1) at the earliest of--
``(A) the last day of the fiscal year of the issuer
following the tenth anniversary of the date of the first sale
of common equity securities of the issuer pursuant to an
effective registration statement under the Securities Act of
1933;
``(B) the last day of the fiscal year of the issuer during
which the average annual gross revenues of the issuer exceed
$50,000,000; or
``(C) the date on which the issuer becomes a large
accelerated filer.
``(3) Definitions.--For purposes of this subsection:
``(A) Average annual gross revenues.--The term `average
annual gross revenues' means the total gross revenues of an
issuer over its most recently completed three fiscal years
divided by three.
``(B) Emerging growth company.--The term `emerging growth
company' has the meaning given such term under section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c).
``(C) Large accelerated filer.--The term `large accelerated
filer' has the meaning given that term under section 240.12b-
2 of title 17, Code of Federal Regulations, or any successor
thereto.''.
TITLE IV--NATIONAL SECURITIES EXCHANGE REGULATORY PARITY
SEC. 401. NATIONALLY TRADED SECURITIES EXEMPTION.
Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C.
77r(b)(1)) is amended--
(1) by striking subparagraph (A);
(2) in subparagraph (B)--
(A) by inserting ``a security designated as qualified for
trading in the national market system pursuant to section
11A(a)(2) of the Securities Exchange Act of 1934 that is''
before ``listed''; and
(B) by striking ``that has listing standards that the
Commission determines by rule (on its own initiative or on
the basis of a petition) are substantially similar to the
listing standards applicable to securities described in
subparagraph (A)'';
(3) in subparagraph (C), by striking ``or (B)''; and
(4) by redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively.
TITLE V--ELIMINATING BARRIERS TO JOBS FOR LOAN ORIGINATORS
SEC. 501. ELIMINATING BARRIERS TO JOBS FOR LOAN ORIGINATORS.
(a) In General.--The S.A.F.E. Mortgage Licensing Act of
2008 (12 U.S.C. 5101 et seq.) is amended by adding at the end
the following:
``SEC. 1518. EMPLOYMENT TRANSITION OF LOAN ORIGINATORS.
``(a) Temporary Authority To Originate Loans for Loan
Originators Moving From a
[[Page H1156]]
Depository Institution to a Non-Depository Institution.--
``(1) In general.--Upon employment by a State-licensed
mortgage company, an individual who is a registered loan
originator shall be deemed to have temporary authority to act
as a loan originator in an application State for the period
described in paragraph (2) if the individual--
``(A) has not had an application for a loan originator
license denied, or had such a license revoked or suspended in
any governmental jurisdiction;
``(B) has not been subject to or served with a cease and
desist order in any governmental jurisdiction or as described
in section 1514(c);
``(C) has not been convicted of a felony that would
preclude licensure under the law of the application State;
``(D) has submitted an application to be a State-licensed
loan originator in the application State; and
``(E) was registered in the Nationwide Mortgage Licensing
System and Registry as a loan originator during the 12-month
period preceding the date of submission of the information
required under section 1505(a).
``(2) Period.--The period described in paragraph (1) shall
begin on the date that the individual submits the information
required under section 1505(a) and shall end on the earliest
of--
``(A) the date that the individual withdraws the
application to be a State-licensed loan originator in the
application State;
``(B) the date that the application State denies, or issues
a notice of intent to deny, the application;
``(C) the date that the application State grants a State
license; or
``(D) the date that is 120 days after the date on which the
individual submits the application, if the application is
listed on the Nationwide Mortgage Licensing System and
Registry as incomplete.
``(b) Temporary Authority To Originate Loans for State-
Licensed Loan Originators Moving Interstate.--
``(1) In general.--A State-licensed loan originator shall
be deemed to have temporary authority to act as a loan
originator in an application State for the period described
in paragraph (2) if the State-licensed loan originator--
``(A) meets the requirements of subparagraphs (A), (B),
(C), and (D) of subsection (a)(1);
``(B) is employed by a State-licensed mortgage company in
the application State; and
``(C) was licensed in a State that is not the application
State during the 30-day period preceding the date of
submission of the information required under section 1505(a)
in connection with the application submitted to the
application State.
``(2) Period.--The period described in paragraph (1) shall
begin on the date that the State-licensed loan originator
submits the information required under section 1505(a) in
connection with the application submitted to the application
State and end on the earliest of--
``(A) the date that the State-licensed loan originator
withdraws the application to be a State-licensed loan
originator in the application State;
``(B) the date that the application State denies, or issues
a notice of intent to deny, the application;
``(C) the date that the application State grants a State
license; or
``(D) the date that is 120 days after the date on which the
State-licensed loan originator submits the application, if
the application is listed on the Nationwide Mortgage
Licensing System and Registry as incomplete.
``(c) Applicability.--
``(1) Any person employing an individual who is deemed to
have temporary authority to act as a loan originator in an
application State pursuant to this section shall be subject
to the requirements of this title and to applicable State law
to the same extent as if such individual was a State-licensed
loan originator licensed by the application State.
``(2) Any individual who is deemed to have temporary
authority to act as a loan originator in an application State
pursuant to this section and who engages in residential
mortgage loan origination activities shall be subject to the
requirements of this title and to applicable State law to the
same extent as if such individual was a State-licensed loan
originator licensed by the application State.
``(d) Definitions.--In this section, the following
definitions shall apply:
``(1) State-licensed mortgage company.--The term `State-
licensed mortgage company' means an entity licensed or
registered under the law of any State to engage in
residential mortgage loan origination and processing
activities.
``(2) Application state.--The term `application State'
means a State in which a registered loan originator or a
State-licensed loan originator seeks to be licensed.''.
(b) Table of Contents Amendment.--The table of contents in
section 1(b) of the Housing and Economic Recovery Act of 2008
(42 U.S.C. 4501 note) is amended by inserting after the item
relating to section 1517 the following:
``Sec. 1518. Employment transition of loan originators.''.
SEC. 502. AMENDMENT TO CIVIL LIABILITY OF THE BUREAU AND
OTHER OFFICIALS.
Section 1513 of the S.A.F.E. Mortgage Licensing Act of 2008
(12 U.S.C. 5112) is amended by striking ``are loan
originators or are applying for licensing or registration as
loan originators.'' and inserting ``have applied, are
applying, or are currently licensed or registered through the
Nationwide Mortgage Licensing System and Registry. The
previous sentence shall only apply to persons in an industry
with respect to which persons were licensed or registered
through the Nationwide Mortgage Licensing System and Registry
on the date of the enactment of this sentence.''.
SEC. 503. EFFECTIVE DATE.
This title and the amendments made by this title shall take
effect on the date that is 18 months after the date of the
enactment of this Act.
The SPEAKER pro tempore. The bill, as amended, shall be debatable for
1 hour equally divided and controlled by the chair and ranking minority
member of the Committee on Financial Services.
After 1 hour of debate on the bill, as amended, it shall be in order
to consider the further amendment printed in part C of House Report
115-559, if offered by the Member designated in the report, which shall
be considered read, shall be separately debatable for the time
specified in the report equally divided and controlled by the proponent
and an opponent, and shall not be subject to a demand for a division of
the question.
The gentleman from Texas (Mr. Hensarling) and the gentlewoman from
California (Ms. Maxine Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Madam Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks and submit extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise today in strong support of H.R. 3978, which is
a package of five strongly bipartisan bills, yet again, from the
Financial Services Committee of the House. As standalone bills, all
were favorably reported, again, with strong bipartisan support of at
least three-quarters of the committee.
The title provision of this package is the TRID Improvement Act by
Congressman French Hill. This bill amends CFPB's complex TILA/RESPA
integrated disclosure, known as the TRID rule, in order to simplify the
closing documents consumers get when they close a mortgage.
It does this by allowing for the calculation of the discounted rate
that title insurance companies provide to consumers when they purchase
a lender's and owner's title insurance policy simultaneously. This
makes it more accurate, Madam Speaker.
Title II is the Protection of Source Code Act introduced by
Representatives Sean Duffy and David Scott, a Republican and a
Democrat. This provision ensures that the Securities and Exchange
Commission cannot require financial services firms to disclose
algorithmic trading source code without first obtaining a subpoena.
Source code is among a firm's most sensitive information, and this
bipartisan provision balances privacy and due process concerns while
preserving the SEC's ability to obtain such information when necessary.
The third title is the Fostering Innovation Act which was introduced
by Representatives Sinema and Hollingsworth to provide relief to small
and emerging businesses by extending the popular onramp exemption of
the JOBS Act for emerging growth companies in a more tailored manner.
In short, it provides emerging growth companies more time to reach a
size when they reasonably can be expected to financially sustain the
legal, accounting, and compliance costs associated with the full
Sarbanes-Oxley section 404(b) compliance.
Fourth, Madam Speaker, is the National Securities Exchange Regulatory
Parity Act which was introduced by Mr. Royce and which will ensure
further clarity and competition among national security exchanges by
modernizing the blue sky exemption in the Securities Act. Modernizing
this provision will ensure all national security exchanges operate on a
level regulatory playing field and help protect retail investors from
arbitrary acts by State regulators that may bar investors in one State
from buying stock freely available to investors in every other State.
[[Page H1157]]
The final title of this bill is a provision introduced by Congressman
Stivers to allow mortgage loan originators who work as loan officers in
banks and credit unions to transition to a new job at a nonmortgage
company without losing the ability to originate loans. Without this
bill, the transition process can take weeks or months depending on the
State.
Each of these measures, Madam Speaker, will cut through layers of red
tape and help level the playing field making regulations smarter,
fairer, clearer, and more efficient, thus ensuring that there are more
competitively priced credit opportunities, more credit opportunities
for consumers, and that investors have greater investment opportunities
in competitive markets. They will provide commonsense regulatory
relief. They are practical, they are bipartisan, and they are needed.
Madam Speaker, I encourage all of my colleagues to support the
measure, and I reserve the balance of my time.
Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such
time as I may consume.
Madam Speaker, I rise in strong opposition to H.R. 3978, the TRID
Improvement Act of 2017.
H.R. 3978 has been dramatically expanded without input from Democrats
to include several highly problematic and damaging bills. If enacted,
this amended package of bills would ease the ability of high frequency
traders to manipulate the stock markets undetected, encourage a
regulatory race to the bottom in our Nation's stock exchanges, and harm
investors and small businesses by weakening efforts to prevent
accounting fraud at smaller public companies.
Taken together, this deregulatory package could significantly
undermine market stability and gut investor and consumer protections at
a time when our financial markets are already rattled.
Madam Speaker, from January 26 until last Thursday, the stock markets
plunged just over 10 percent, becoming what the financial services
industry calls ``stock market correction,'' and for the past two
trading days, markets have rebounded the most since 2016.
Although market corrections are not new, what distinguishes today's
volatility is that it is driven by complex computer strategies designed
to buy and sell stocks and options millions of times a day. As many of
us have witnessed, the Dow Jones Industrial Average may be up 500
points and then down 600 in less than a few minutes. For the average
American who was hoping to one day retire with dignity by investing her
hard-earned savings in the stock market, it can be distressing to see
such wild swings always wondering whether the markets are truly fair or
whether she is going to be fleeced. Unfortunately, the passage of H.R.
3978 would likely make those swings more extreme and increase the
likelihood of problems going forward.
I am going to walk through each of the problematic provisions in this
bill. Beginning with title IV, this provision is identical to H.R.
4546, the National Securities Exchange Regulatory Parity Act, which
would weaken the standards for listing public companies for trading at
U.S. stock exchanges. Today, exchanges listing standards set minimum
requirements for a company's shares to be sold to the public without
having to comply with State law. Exchanges can only revise these
standards if the Securities and Exchange Commission first finds that
new standards are substantially similar to the listing standards of the
New York Stock Exchange.
This bill would remove any separate analysis for changing the
standards and, thus, automatically preempt State oversight. As a
result, the bill would encourage a race to the bottom of listing
standards as exchanges compete with each other to attract companies
with less restrictions, even if the standards are beneficial to the
investors.
I believe that we should be strengthening the current analysis to
promote fair and rigorous listing standards and only preempt State law
when companies meet high standards. This is why I worked with the
cosponsors last Congress to strike a bipartisan compromise which passed
the House unanimously to require the SEC to develop a core qualitative
listing standard. Unfortunately, my Republican colleagues have reversed
their position in favor of empowering the industry over the investing
public.
Turning to title III which is identical to H.R. 1645, the so-called
Fostering Innovation Act, this provision would eliminate the
independent audit of a company's financial reporting controls for up to
10 years for newly public companies provided that they have $50 million
or less in gross revenues and less than $700 million in outstanding
shares. Passed in the wake of the Enron and WorldCom accounting
scandals, the requirement that public companies conduct an independent
audit of financial controls is one of the many accounting provisions
required by the bipartisan Sarbanes-Oxley Act that directly benefits
investors and public companies by improving the accuracy of their
financial reporting.
In fact, companies that are not subject to such review by an
independent auditor are more likely to issue corrections to their
financial reports leading to investor losses and higher losses for the
company.
Investors like these audits because they improve the veracity of the
reports they rely on to make investment decisions. Today, truly small
public companies--those with less than $75 million worth of shares--are
already exempt from the audit requirement. But this bill would extend
the exemption to large companies that are nearly ten times that size.
The law already provides newly public companies with an exemption for 5
years. Extending it to a decade would harm investor confidence and all
such companies, hurting the very companies the bill's supporters
purport to help.
Title II of this bill is the same language as H.R. 3948, the
Protection of Source Code Act. This bill bans the SEC from inspecting
source code used by regulated entities to engage in algorithmic or
computer-driven trading and other activities that impact the securities
markets and investors without first obtaining a subpoena. This
provision would severely hamper the ability of the SEC to effectively
examine persons like high-frequency traders and to investigate market
disruptions.
The recent stock market volatility, which has seen all of the major
stock indices decline by more than 10 percent in less than 2 weeks, has
been exacerbated by high-frequency traders using complex computer
algorithms to determine when to buy and sell millions of trades per
second by making it harder for the capital markets COP to detect and
stop bad actors and rein in fraudulent trading schemes. This provision
will inevitably harm everyday Americans and retirees who rely on fair
capital markets to invest their hard-earned savings.
To make matters worse, Republicans added a provision to pay for the
cost of the bill by taking $2 million from the Securities and Exchange
Commission's reserve fund. As a result, our financial watchdog will
have less resources to support its capacity to oversee the markets
through investments in IT and to respond to unforeseen market events
like the flash crash.
In short, this bill asks taxpayers to pay for the costs of diminished
capital market oversight by taking away SEC's funding to respond to
emergency market situations that threaten market stability. This
provision doubles down on the irresponsible policymaking we often see
by the opposite side of the aisle.
The bill before us today would also make two less significant changes
which I believe the Republicans included to garner additional support
for the legislation. Nevertheless, even with these provisions, the
package should be soundly rejected.
Title I, which includes the version of H.R. 3978, TRID Improvement
Act of 2017, that the committee previously considered, would amend a
mortgage disclosure known as TRID or the know-before-you-owe disclosure
that informs home buyers of the terms and conditions of their mortgage.
Responding to the concerns of some in the real estate industry, this
provision would amend the disclosure to account for the discounts paid
to borrowers in States where simultaneous lender and buyer title
insurance is issued. However, the revised form does nothing for bars in
States that do not provide such special rates to home buyers, and the
provision eliminates the Consumer Bureau's ability to fix this aspect
of the form even if a problem arises in the future.
[[Page H1158]]
The final provision, title V, is identical to H.R. 2948, the SAFE
Mortgage Licensing Act. This title would ease the ability of
individuals employed as mortgage originators to change employers by
creating a temporary 120-day licensing regime so that they can continue
to work at their new employer.
This bill would effectively treat mortgage originators who work for
State registered firms the same as federally registered firms and was
unanimously supported by committee Democrats. Unfortunately, because
this legislation has been packaged with other deeply problematic and
destructive bills, sensible relief to these individuals that has broad
bipartisan support is being held hostage by Republicans' efforts to
roll back as many safeguards as they can this year.
Madam Speaker, H.R. 3978, as amended, threatens many of the important
reforms Democrats made to restore investor confidence to our capital
markets after the worst financial crisis in generations. As the stock
markets continue to wobble ominously in ways that threaten the savings
of hardworking Americans, Congress should be strengthening oversight of
the financial system, not weakening it.
Not surprisingly, H.R. 3978 is strongly opposed by the North American
Association of Securities Administrators who serve on the frontline
combating securities fraud on the State level and by nonpartisan
organization who speak on behalf of our Nation's consumers, investors,
and unions, including Consumer Federation of America, Center for
American Progress, Americans for Financial Reform, AFL-CIO, and Public
Citizen, and so do I.
Madam Speaker, I urge everyone to reject this harmful package of
bills and to vote ``no'' on H.R. 3978.
Madam Speaker, I reserve the balance of my time.
{time} 1530
Mr. HENSARLING. Madam Speaker, I yield 5 minutes to the gentleman
from Arkansas (Mr. Hill), the majority whip of the committee and the
sponsor of the legislation.
Mr. HILL. Madam Speaker, I rise in support of my bill, H.R. 3978, the
TRID Improvement Act.
I want to focus my comments on the actual improvements to the Truth
in Lending and RESPA form, TILA-RESPA, which is now referred to as
TRID.
Back in 2010, when Dodd-Frank was being considered, one of the goals
that then-White House staffer Elizabeth Warren, now Senator Elizabeth
Warren, had was: Well, we are going to make this a win for both banks
and consumers. One of the things we are going to do is we are going to
make forms simpler and consumer disclosure better. America's exhibit A
today is the TILA-RESPA form.
TILA was about truth in lending, and let's make sure the interest
rate you are going to pay on your mortgage is calculated right, it is
accurate. And RESPA, the Real Estate Settlement Act, said that whatever
you were paying in extras, such as title insurance, was disclosed
accurately.
Well, we now flash forward a number of years.
Back in 2013, the CFPB finalized this new, combined rule, the TRID
rule: know before you owe. It should have been called: know before you
confuse.
This rule, finalized in 2013, was still subject to delay due to
errors that the CFPB made, and it finally got put in place back in
2015.
There was $1.5 billion in software compliance costs for banks to try
to merge this form that is supposed to be so simple and so easy for
consumers. The CFPB offered no concrete guidance about it. So this
House came together and over 300 Members of this House voted to direct
the CFPB to improve this rule; that it was not a success story.
So, in fact, in April 2016, the CFPB decided to open the rulemaking
for TILA-RESPA and try to find some clarifying and amending procedures
that would make it more clear.
Well, as you can hear, it is a massive, complex rule that is
expensive. The American Bankers Association said if there was one thing
to fix in consumer compliance, it would be TILA-RESPA; the TRID. It
wouldn't be the qualified mortgage definition. It wouldn't be all the
capital rules embedded in Dodd-Frank. It would be this rule.
When I have been at home in my district, I have heard about it
countless times from mortgage bankers and community bankers.
So we are still not there, which is why we are here today, Madam
Speaker. And that is, this bill does one simple thing, which says: if
you buy a title insurance policy, in the majority of States, the CFPB
rule is not accurate.
You can see here that the rule for Arkansas on a $200,000 sales price
house says that the consumer should pay $382.50 after this complex
formula when, in reality, they are really paying either $525 or the
actual charge of $35. So it is not an improvement.
In these States, the CFPB is not allowing for the calculation of a
discounted rate, known as a simultaneous issue, which is a rate title
insurance companies provide to consumers when they purchase both the
lender's and owner's title policy simultaneously.
Madam Speaker, this bill offers clarity and actually takes a complex
rule and makes this part of it simpler so our consumers actually will
see on the closing statement what the cost of the title insurance is.
It will be transparent.
There are many other challenges with this rule, and we have talked
about them in our committee. Today, we are only debating and discussing
one small one.
But I urge my colleagues on both sides of the aisle--when this bill
came out of our committee--bipartisan--this is a bill that Members of
Congress have heard from across this country and all 50 States from
community bankers, mortgage bankers of all sizes who are trying to
provide an accurate, fast closing for our most important thing we do as
a family, and that is to decide to buy a home.
I thank the chairman of the full committee for yielding. I urge my
colleagues to support this full package of bipartisan bills through
regular order, through our committee, and that are presented here to
improve our economy, improve the balance in our regulatory system, and
help make credit more accessible for consumers at better prices.
Ms. MAXINE WATERS of California. Madam Speaker, I reserve the balance
of my time.
Mr. HENSARLING. Madam Speaker, I yield 4 minutes to the gentleman
from Wisconsin (Mr. Duffy), the chairman of the Subcommittee on Housing
and Insurance and the sponsor of title 2 of the Protection of Source
Code in this bill.
Mr. DUFFY. Madam Speaker, I thank the chairman for all of his work
and support on this legislation, as well as the gentleman from Arkansas
(Mr. Hill), for which my provision is made part of a larger package.
I also thank the gentlemen from Georgia and Illinois, my good friends
across the aisle, David Scott and Bill Foster, both of whom are
cosponsors of the Protection of Source Code Act. It is a bipartisan
bill.
The recent cyber incidents at Equifax, SEC, and even at the NSA, has
shown that all organizations are vulnerable to security risks. These
incidents are a timely reminder of the risks that we face in this
digital age.
Given this reality, it is important for government agencies such as
the SEC to rethink what they collect, how they collect it, how it is
stored, and what they do with this information in the long run.
The Protection of Source Code Act is a bipartisan bill intended to
reduce some of the cybersecurity risks to our financial markets posed
by the SEC when it gathers highly sensitive trading or source code
information as part of their oversight duties.
The Protection of Source Code Act establishes a process for the SEC
with respect to requesting source code and other intellectual property
that forms the basis of source code.
It does not preclude the SEC from requesting data that it determines
it needs for market oversight. It merely puts a process in place for
how the SEC seeks access to certain intellectual property.
Having a process in place for how the SEC requests source code and
similar intellectual property will better protect registrants and their
clients and investors from inadvertent disclosure or cyber theft of
their most valuable and important intellectual property.
[[Page H1159]]
Such disclosure or theft could destroy the American businesses that
own the intellectual property. Worse, it could undermine investor
confidence and create significant volatility in our financial markets.
In general, the SEC should not be requesting source code or
intellectual property that forms the basis of source code. They
shouldn't be collecting that on a regular basis. Such information is
generally unnecessary for the SEC to perform its market oversight
function and, as we have learned from recent cyber hacks, could create
a very inviting treasure trove of sensitive data for computer hackers.
This bill ensures that the SEC will gather source code when it is
truly needed, under a subpoena process that provides appropriate due
process for the information.
Under this bill, the SEC, in conducting an exam, may continue to ask
a registrant for general information about a registrant's trading
system or trading strategies.
So let's break this down a little bit. We have source code that is
highly sensitive. It is intellectual property. If you are the SEC, you
can actually go onsite and look at the source code. I am fine with
that.
But if you are going to collect the source code and take it back to
the SEC and store it and you have a whole bunch of intellectual
property from American businesses stored at the SEC, this is one-stop
shopping for hackers. You have just got to do it once. Get in the SEC
and you get it all.
My friend across the aisle, the ranking member, wants to talk about
volatility. Wait and see if there is an SEC hack where they get all
this information, all this source code. That is a risk we don't want to
have.
We want due process. If you want to come in and take the source code,
get a subpoena.
Do we believe in due process in America?
For the most sensitive data, the most sensitive information, get a
subpoena and you can take it. But those are basic measurers, basic
protections that we offer in America that we should employ at the SEC
when they want this intellectual property that is of great value to
these firms.
My bill, contrary to the ranking member's point, Madam Speaker,
doesn't offer exemptions to exams. Exams will still happen. Also, it is
still illegal to manipulate markets. Those things haven't changed.
This is just about due process.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. Madam Speaker, I yield an additional 30 seconds to
the gentleman from Wisconsin.
Mr. DUFFY. It is important that we have truthful and honest
information on the floor. This does not prohibit exams. This doesn't
make legal manipulation of the markets. It is still illegal. All we are
saying is we have sensitive source code, and if you want to take it to
the SEC, you get a subpoena.
Frankly, we think there are problems with that. The SEC has been
hacked. The NSA has been hacked. Everybody has been hacked. If you
compile all this information, the risk that poses to our markets and
volatility to our markets, I think, is unacceptable. That is why it is
bipartisan.
I would encourage all Members of this House to take a step forward
for due process.
Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such
time as I may consume.
Madam Speaker, given the extreme volatility in the stock markets over
the past few weeks, I am particularly troubled by title II of this
bill, which would make it easier for high-frequency traders to evade
regulatory oversight of their potentially disruptive automated trading
algorithms.
This provision is widely opposed by nonpartisan consumer and investor
advocacy groups who recognize the impact automated trading has on our
markets.
Let me read for you excerpts from a few letters from these groups
that highlight the dangers of title 2.
Americans for Financial Reform--a coalition of more than 200
consumer, civil rights, investor, retiree community, labor, faith-
based, and business groups--wrote: ``Title II would prevent regulators
from inspecting not only their raw source code used in automated
trading, but also any related intellectual property that `forms the
basis for the design of' source code. Examination of such intellectual
property would only be possible in an enforcement context pursuant to a
subpoena. This implies that the SEC would have to wait until the damage
was done through a `flash crash' or similar market disruption before
taking any action, which would have to be retrospective.
``In light of the significance of automated trading to modern
markets, and the potential risk of high-frequency trading, it makes no
sense to tie the hands of regulators in examining detailed trading
strategies and methods of high frequency traders.''
The Center for American Progress cautioned that: ``But in an era of
fast-moving, `flash-crash'-prone markets, the SEC may have a wide range
of regulatory reasons for why it may need to examine source codes,
including approvals of new trading products or the supervision of
trading venues. The SEC should only exercise that authority carefully
and under the strictest protections for confidential information, but
blocking it by law dangerously limits the SEC's ability to address the
significant technology-based challenges to financial markets.''
The Consumer Federation of America, an association of nearly 300
consumer advocacy groups, similarly opposed title 2 because it ``would
weaken SEC oversight of algorithmic trading and hamstring the agency
from responding quickly to flash crashes or other market breakdowns.''
Further, the CFA wrote that: ``At a time when algorithmic trading is
taking on increased importance in our capital markets, this bill would
make it more difficult for the SEC to properly oversee such trading.
{time} 1545
``The bill would require the SEC to first issue a subpoena before it
could compel a person to produce or furnish to the SEC algorithmic
trading source code or `similar intellectual property.' This would
undermine the SEC's examination authority by creating a gaping hole in
its ability to gain access to firm records relevant to the examination.
It would also have a devastating effect on the agency's ability to
respond quickly in the event of another `flash crash' or such events in
the future. In order to oversee the markets effectively, the SEC needs
to be able to accurately and efficiently reconstruct order entry and
trading activity, including for algorithmic traders.''
Public Citizen, a consumer rights advocacy group with over 400,000
members and supporters, wrote: ``Market volatility caused not by real
events such as outbreak of a war, but by computers, including computer
glitches, threatens to erase savings to some innocent investors and
erodes general investor confidence. The recent swings in the markets
attest to the need for robust and urgent supervisory inspection. The
May 6, 2010 `Flash Crash,' where markets collapsed by more than $1
trillion in less than an hour, revealed that such a robust and urgent
supervision has been lacking. The SEC required nearly a half year to
investigate this incident before identifying a flawed algorithmic at
one major trader. SEC oversight should be streamlined, not hampered.
Trading instructions and records of human traders are already subject
to inspection, so it should be no different for those instructions and
records generated by a machine. Hiding source code from regulatory
scrutiny will leave those responsible for mistakes as well as those
attempting to manipulate markets unaccountable.''
These letters demonstrate the wide opposition to title II by groups
that truly understand that robust oversight of algorithmic trading is
necessary for the help of our makers.
Madam Speaker, I include in the Record letters from these groups.
February 13, 2018.
Please vote NO on H.R. 3299 and H.R. 3978.
Hon. Member,
House of Representatives,
Washington, DC.
Dear Hon. Member: On behalf of more than 400,000 members
and supporters of Public Citizen, we ask you to vote NO on
H.R. 3299 and H.R. 3978, which are expected to be considered
by the full House on Wednesday, February 14, 2018. Provisions
in these bills would expose borrowers to abusive loans,
investors to dubious securities, and Americans generally to a
riskier financial system.
[[Page H1160]]
H.R. 3299, the Protecting Consumers' Access to Credit Act
of 2017, would allow predatory lenders to escape state limits
on high interest rates. The bill would nullify the Second
Circuit Court ruling in Madden v. Midland Funding. That
decision provided that a financial institution that buys
loans originated by a national bank could not benefit from
the National Bank Act's preemption of state interest rate
caps. While the Madden decision did not limit interest rates
that banks charge on credit, it does limit nonbanks from
evading state interest rate caps. This bill would pave the
way for payday lenders, financial technology (fintech)
companies and others to exploit that loophole and use a
``rent-a-bank'' arrangement in order to charge high interest
rates. Twenty state Attorneys General have written to oppose
this measure, noting that it undermines their efforts to
protect borrowers from abusive loan rates. We urge you to
oppose this bill.
H.R. 3978, the TRID Improvement Act of 2017, is actually a
package of bills that were considered separately in the House
Financial Services Committee. One of these is the Financial
Stability Oversight Council Improvement Act (formerly H.R.
4061). This measure would add numerous procedural
requirements for the Financial Stability Oversight Council
(FSOC) when it considers the designation or continued
designation of a nonbank firm as a systemically important
financial institution (SIFI). Current rules already make SIFI
designation a high hurdle. The case of MetLife, for example,
shows that firms enjoy more than ample methods to contest
designation. After FSOC designated MetLife as systemically
important, it contested it in court and the case is pending.
Increasing the government's burden for designation would
restrict its ability to apply enhanced supervision to major
institutions. However, the largest bailout of the 2008
financial crash went to AIG, a nonbank engaged in reckless
derivatives activity beyond the purview of banking
supervisors. We oppose this measure.
Another bill contained in H.R. 3978 is the Fostering
Innovation Act (previously H.R. 1645). This bill amends
Section 404(b) of the Sarbanes-Oxley (SOX) law by increasing
from five to 10 years the time that CEOs of firms with less
than $50 million in revenue must attest to the accuracy of
their financial reporting. Congress approved SOX in response
to the accounting scandals at the turn of the millennium. The
rules are designed to promote accounting accuracy to the
shareholders who have entrusted their savings to these firms.
A Government Accountability Office (GAO) report found that
companies with inferior financial reporting controls have a
significantly higher likelihood of issuing a restatement of
their financial accounts. Firms that are unwilling to oblige
SOX should not be trusted with the capital of savers.
Extending the CEO attestation requirement from five to 10
years exacerbates the problem. From an investor perspective,
accounting safeguards are more important for smaller
companies, since larger companies generally attract a larger
and more sophisticated base of stock and bond holders who can
perform effective oversight. We oppose this measure.
A third bill that is part of the H.R. 3978 package is the
National Securities Exchange Regulatory Parity Act (formerly
H.R. 4546). This bill would eliminate state supervision of
securities if they are listed on an exchange, even if the
exchange has reduced standards compared with those of major
exchanges such as the New York Stock Exchange. Under current
law, state supervision is pre-empted only if the security is
listed on exchanges with rules overseen by the Securities and
Exchange Commission (SEC). Rules may differ between
exchanges, but they must be approved by the SEC to ensure
that they prevent fraud, serve the public interest and
protect investors. Moreover, exchanges must adopt and enforce
rules that are ``substantially similar'' to the major
exchanges, known formally as ``Named Markets,'' under current
law. The existing system deters a race to the bottom, where
an exchange may attempt to attract companies with weaker
rules. Conversely, this bill would actually promote that race
to the bottom by removing the requirement that the exchange
adopt rules that are substantially similar to those of the
Named Markets. We oppose this measure.
A fourth measure in H.R. 3978 is the Protection of Source
Code Act, (formerly H.R. 3948). This measure would impede the
ability of the SEC to conduct effective compliance
examinations of market volatility involving computer-driven
algorithms. The bill imposes a strict subpoena requirement
before staff could inspect otherwise routine business records
that involve source code. Market volatility caused not by
real events such as the outbreak of a war, but by computers,
including computer glitches, threatens to erase savings to
some innocent investors and erodes general investor
confidence. The recent swings in the markets attest to the
need for robust and urgent supervisory inspection. The May 6,
2010 ``Flash Crash,'' where markets collapsed by more than $1
trillion in less than an hour, revealed that such robust and
urgent supervision has been lacking. The SEC required nearly
a half year to investigate this incident before identifying a
flawed algorithm at one major trader. SEC oversight should be
streamlined, not hampered. Trading instructions and records
of human traders are already subject to inspection, so it
should be no different for those instructions and records
generated by a machine. Hiding source code from regulatory
scrutiny will leave those responsible for mistakes as well as
those attempting to manipulate markets unaccountable. We
oppose this measure.
Because of our opposition to these elements in H.R. 3978
and to H.R. 3299 we urge you to vote NO on these bills. As we
are marking the 10th anniversary of the Wall Street Crash,
it's clear that American consumers and investors deserve
stronger financial reforms, not weakened protections that
will make our economy more susceptible to another collapse.
Thank you for your consideration. For questions, please
contact Bartlett Naylor.
Sincerely,
Public Citizen.
____
Americans for
Financial Reform,
Washington, DC, February 13, 2018.
Dear Representative: On behalf of Americans for Financial
Reform, we are writing to urge you to vote in opposition to
H.R. 3978, which is being considered on the House floor
today. This legislation is a grab bag of bad legislative
ideas that should never have advanced through the House
Financial Services Committee. Especially notable given the
recent wild swings in stock prices, Title II of this bill
would sharply limit the ability of the Securities and
Exchange Commission (SEC) to investigate high-frequency
automated trading strategies that can disrupt markets. But
that is hardly the only harmful bill in this package. There
are several other provisions that would weaken consumer and
investor protections.
Title I, ``TRID Improvement,'' would amend the TILA/RESPA
Integrated Disclosure Rule (also known as TRID) to change how
title insurance fees are disclosed, in a manner that would
increase confusion and potentially misinform consumers as to
the final cost of these important fees. The title insurance
market already lacks transparency and fairness; fees are
grossly inflated in relation to the value of the insurance.
The Consumer Financial Protection Bureau (CFPB) carefully
studied this issue in its rulemaking to determine the
clearest and most accurate way to disclose fees in light of
varying state laws on title insurance and differences in
practices by different companies. The changes in the
statutory language here would limit the CFPB's authority to
create a consistent method of disclosure across different
companies and different states, and to reflect ways in which
title insurance costs can change at closing. Further
refinement in title insurance disclosures can be addressed
through rulemaking by the CFPB itself in consultation with
stakeholders.
Title II, ``Protection of Source Code,'' would severely
restrict the ability of the SEC to examine the detailed
trading strategies of high-frequency traders or automated
traders, even in cases where such traders posed a risk to
markets or the financial system. Title II would prevent
regulators from inspecting not only the raw source code used
in automated trading, but also any related intellectual
property that ``forms the basis for the design of'' source
code. Examination of such intellectual property would only be
possible in an enforcement context pursuant to a subpoena.
This implies that the SEC would have to wait until the damage
was done through a ``flash crash'' or similar market
disruption before taking any action, which would have to be
retrospective.
In light of the significance of automated trading to modern
markets, and the potential risks of high frequency trading,
it makes no sense to tie the hands of regulators in examining
detailed trading strategies and methods of high frequency
traders. At any brokerage, trading instructions to a human
trader, including the conditions under which such a trade
would be carried out (e.g., a limit order) are part of the
books and records routinely open to inspection by FINRA or
the SEC. Trading instructions must not be exempt from
inspection simply because they are automated. They should be
part of the books and records of the organization, just as
other order-related documents are. Intellectual property
related to source code clearly involves trading strategies,
which have always been a subject for regulatory inspection
and oversight.
The continued high volatility on Wall Street is giving
evidence of the potential systemic dangers of high-frequency
automated trading. Now is not the time to tie the SEC's hands
in doing oversight of such trading.
Title III, ``Fostering Innovation,'' would double the time
for which certain new public companies are exempt from key
financial reporting controls, most notably attestation by an
auditor that their earnings and accounting are accurate. It
grants this exemption to a class of companies, newly public
companies with low revenue growth, which have a particular
strong incentive to manipulate their financial statements and
deceive investors. This piece of the legislation would both
harm investors and undermine the integrity of our capital
markets.
Title IV, ``National Securities Exchange Regulatory
Parity,'' would dangerously expand Federal pre-emption from
state securities laws designed to protect investors from
securities fraud. Under current law, a national securities
exchange needs to meet listing standards similar to those of
a major national exchange--e.g., the New York Stock Exchange,
NASDAQ--for its securities to be deemed ``covered
securities.'' Under this
[[Page H1161]]
classification, securities enjoy the advantages of exemptions
from state-level regulations.
Title IV in H.R. 3978 would amend the Securities Act of
1933 to remove the requirement that companies meet listing
standards rigorous enough to be considered similar to those
of major exchanges, effectively allowing riskier, less liquid
securities to qualify as ``covered securities'' and avoid
state securities laws designed to protect investors and
financial markets. Under this section of H.R. 3978, a
security would be exempt from state-level fraud protections
as long as it is traded on a national exchange that is a
member of the National Market System. This would mean that
securities could be pre-empted from the oversight of state
securities regulators without meeting the strong standards
that the SEC has laid out for individual securities to
qualify for preemption under Section 18 of the Securities
Act.
Both the North American Securities Administrators
Association (NASAA), the main body of state securities
regulators, and the chief securities regulator for the
Commonwealth of Massachusetts have made the dangers of this
legislation clear in strongly worded opposition letters. In
these letters, they advocated for fair and rigorous listing
standards as essential to protect retail investors and
savers, to maintain high standards for corporate governance,
and to avoid conflicts of interests that harm investors.
Title IV of H.R. 3978 unacceptably weakens these listing
standards.
The sections of H.R. 3978 discussed above are,
individually, bad bills for consumers and investors rights
and protections. Packaging them together only worsens the
harm. We urge you to reject H.R. 3978.
Thank you for your attention to this matter. For more
information please contact AFR's Policy Director, Marcus
Stanley.
Sincerely,
Americans for Financial Reform.
____
Mortgage Bankers Association,
Washington, DC, February 13, 2018.
Hon. Paul Ryan, Speaker of the House,
House of Representatives, Washington, DC.
Hon. Jeb Hensarling,
Chairman, House Financial Services Committee, House of
Representatives, Washington, DC.
Hon. Nancy Pelosi,
Minority Leader, House of Representatives, Washington, DC.
Hon. Maxine Waters,
Ranking Member, House Financial Services Committee, House of
Representatives, Washington, DC.
Dear Speaker Ryan, Leader Pelosi, Chairman Hensarling and
Ranking Member Waters: On behalf of the Mortgage Bankers
Association (MBA), I am writing to express our support for
H.R. 3978, the TRID Improvement Act, which the House of
Representatives will vote on this week. I would highlight
MBA's strong support for the inclusion of two individual
bills--H R. 2948 and the previously free-standing H.R. 3978--
within this updated vehicle.
MBA enthusiastically supports the inclusion of Title V,
Section 501, entitled ``Eliminating barriers to jobs for loan
originators,'' within the newly re-packaged bill. The Secure
and Fair Enforcement for Mortgage Licensing (SAFE) Act of
2008 created two parallel but asymmetrical regimes for
mortgage loan originators (MLOs) that have resulted in uneven
consumer protections and an un-level playing field for
mortgage originators. The SAFE Act requires MLOs employed by
non-bank lenders to be licensed, which includes pre-licensing
and annual continuing education requirements, passage of a
comprehensive test, and criminal and financial background
reviews conducted by state regulators. These MLOs are also
registered in the Nationwide Mortgage Licensing System and
Registry (NMLS). By contrast, MLOs employed by federally-
insured depositories or their affiliates must only be
registered in the NMLS, and do not have to pass a test or
meet specific education requirements.
The result is a two-tiered system that inhibits job
mobility for loan officers and makes it difficult for non-
bank lenders to compete for talented employees. Rather than
leaving a job on a Friday and starting a new job on a Monday,
an MLO who moves from a bank to a non-bank lender must sit
idle for weeks, and sometimes months, unable to engage in
loan origination activities while they complete the SAFE
Act's licensing and testing requirements -- despite the fact
they have already been registered in the NMLS and originating
loans. This bill promotes a fair and competitive labor market
by eliminating barriers to the ability of non-bank lenders
(especially small lenders) to compete for talented staff, and
allowing MLOs to more easily move to the employer that offers
them the best chance to succeed.
Section 501 of the bill is a bipartisan, narrow solution
that would provide ``transitional authority'' to originate
mortgages for individuals who change corporate affiliation
from a federally-insured institution to a non-bank lender, or
move across state lines, while they work to meet the SAFE
Act's licensing and testing requirements. Transitional
authority would be available only to MLOs that have a clean
history as an originator (e.g., no license denials,
revocations or suspensions, cease and desist orders, or
felonies that preclude licensing).
MBA is especially grateful for the leadership of the bill's
author, Representative Steve Stivers (R-OH), as well as its
bipartisan original cosponsors: Representatives Joyce Beatty
(D-OH), Bruce Poliquin (R-ME), and Kyrsten Sinema (D-AZ).
Last Congress, the bill was unanimously reported from the
House Financial Services Committee, and shortly thereafter
passed the full House of Representatives under suspension of
the rules. Again, late last year, the bill was reported from
committee by a unanimous vote of 60-0.
MBA also supports Title I, Section 101, entitled ``TRID
Improvement'', of the newly re-packaged bill, as originally
introduced as a free-standing vehicle by Representatives
French Hill (R-AR) and Ruben Kihuen (D-NV). This section
would amend the Real Estate Settlement Procedures Act (RESPA)
to require the Consumer Financial Protection Bureau (CFPB) to
allow the accurate disclosure of title insurance premiums and
any potential available discounts to homebuyers. Under
current regulations, the CFPB does not permit title insurance
companies to disclose available discounts for lender's title
insurance on the government-mandated disclosure forms. This
creates inconsistencies in mortgage documents and causes
confusion for consumers. This section would minimize that
confusion by allowing title insurance companies to disclose
available discounts and accurate title insurance premiums to
consumers across the country.
MBA urges all members of the House to support the newly
reframed H.R. 3978. Thank you for your consideration of our
views on this bill, which will help promote a more
competitive real estate finance market and thereby enhance
overall economic development and growth.
Sincerely,
Bill Killmer,
Senior Vice President, Legislative
and Political Affairs.
Ms. MAXINE WATERS of California. Madam Speaker, I reserve the balance
of my time.
Mr. HENSARLING. Madam Speaker, I yield myself 30 seconds to say the
widespread opposition to the bill alluded to by the ranking member
doesn't include roughly half the Democrats on the committee, including
the gentleman from Illinois (Mr. Foster), who was quoted in our markup
as saying: ``As someone who can code in at least seven languages, I
understand that source code is qualitatively different from other
documents that a firm might have and that our regulators should have
legitimate access to. They are truly the crown jewels of an electronic
trading firm, and there are obvious dangers that have been exposed in
transferring things really not just to the government, to any entity.
The first line of defense in cybersecurity is to keep the data as
closely held as reasonable and still be able to do your job.''
Madam Speaker, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Madam Speaker, I yield 2 minutes to the gentleman
from Illinois (Mr. Hultgren), the vice chairman on the Subcommittee on
Capital Markets, Securities, and Investment.
Mr. HULTGREN. Madam Speaker, I thank Chairman Hensarling, and I am so
grateful for his work on this package of bills that are so important.
I rise today to speak in support of H.R. 3978, the TRID Improvement
Act, and all the additional measures that have been included in the
Rules Committee print. I am a cosponsor of four of the five bills. The
TRID Improvement Act sponsored by Representatives Hill and Kihuen make
important improvements to the TILA-RESPA integrated disclosure forms so
home purchasers have the accurate representation of title insurance
costs.
I am also a strong supporter of the National Securities Exchange
Regulatory Parity Act, which I cosponsored with Chairman Royce. This is
a commonsense technical fix to a 20-year-old statute that didn't
foresee an increase in the number of exchanges in today's competitive
market structure.
Currently, exchanges not named in the law must have substantially
similar listing standards as those that are specifically named. This
means the Chicago Stock Exchange, the CBOE, and others that have
registered with the SEC since 1996 cannot be first movers in adopting
innovative listing standards.
The Chicago Stock Exchange has told me: ``This change would remove
this current impediment to companies listing their securities on CHX
and would help in the exchange's efforts to develop a robust primary
listing market here in Illinois.''
I am also very supportive of Chairman Duffy's legislation, the
Protection of Source Code Act, and I am an original cosponsor of that,
because I
[[Page H1162]]
recognize that the entire value of some companies are embodied in their
source code. We need to have strong checks in place before our
government can demand such information.
Chris Giancarlo, now chairman of the CFTC, described the value of a
subpoena when criticizing the idea of a source code repository at the
agency he serves. I quote him when he said: ``The subpoena process
provides property owners with due process of law before the government
can seize their property. It protects owners of property, not the
government that already has abundant power.''
Finally, I want to mention my support for the Fostering Innovation
Act, sponsored by Kyrsten Sinema and Trey Hollingsworth; and the SAFE
Mortgage Licensing Act, sponsored by Steve Stivers and Joyce Beatty. I
am a cosponsor of those measures as well.
I urge all of my colleagues to vote in support of this very
bipartisan package of bills.
Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Madam Speaker, I yield 2 minutes to the gentleman
from Texas (Mr. Williams), the vice chairman of our Subcommittee on
Monetary Policy and Trade.
Mr. WILLIAMS. Madam Speaker, I rise in support of H.R. 3978, the TRID
Improvement Act introduced by my colleague from Arkansas (Mr. Hill) and
my colleague from Nevada (Mr. Kihuen).
This important and overwhelmingly bipartisan legislation, which
passed out of the House Financial Services Committee by a vote of 53-5,
is a straightforward, commonsense solution that will help hardworking
Americans buy a new home or refinance their existing home.
Under the CFPB's misnamed ``Know before you owe'' TRID rule, those in
the home buying or refinancing process may not actually know everything
about the price they are going to pay before closing.
Because of the TRID rule and the restrictions placed on the listing
of discounted title loan insurance rates on loan estimates, consumers
may see one title loan insurance price on their loan estimate and
another on their closing form.
The TRID rule creates unnecessary confusion, and this bill is a step
in the right direction to reducing the burdensome and overreaching
authority of the CFPB.
I am proud to join this bipartisan effort, but I do wish that the
CFPB had been more willing to work with the chorus of voices from both
sides of the aisle calling for this change.
The home buying experience is complicated enough as it is, and the
rationale displayed by the CFPB discourages homeownership and levies
unjust penalties for those Americans striving for the dream of
homeownership.
I am proud to join my colleagues in support of this measure, the TRID
Improvement Act.
In God we trust.
Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Madam Speaker, I yield 2 minutes to the gentleman
from Maine (Mr. Poliquin), a hardworking member of the Financial
Services Committee.
Mr. POLIQUIN. Madam Speaker, I thank the chairman for moving this
very important package of bills through the Financial Services
Committee and now to the floor.
Madam Speaker, I want to congratulate a terrific Congressman from the
State of Arkansas (Mr. Hill) for the great work he has done in
reconstituting the TRID Improvement Act. This bill, Madam Speaker, is
designed to help our homeowners or would-be homeowners go through the
process comfortably and efficiently, and also help our financial
professionals who help them, in turn, to secure residential mortgages.
This bill, as has been noted earlier, Madam Speaker, passed with very
strong bipartisan support, and I encourage everybody on the floor,
Republicans and Democrats, to weigh in with a ``yes'' vote on H.R.
3978.
Now, Madam Speaker, Mr. Hill's bill has two very important pieces
that help our families and also help our economy grow.
First, in title I, section 101, this bill allows title insurance
companies to accurately disclose the premiums they charge for their
service and also the discounts that are available to our home buyers
across the country. Right now, the CFPB does not allow such
disclosures, which is unfair and confusing for our home buyers.
Madam Speaker, secondly, in title V, section 501, this bill includes
the Eliminating Barriers to Jobs for Loan Originators Act, of which I
am proudly a cosponsor. This bill, Madam Speaker, allows mortgage loan
officers at a bank to move to do the same work at a nonbank financial
institution without sometimes waiting weeks or months for redundant and
unnecessary relicensing.
Now, that is just not fair, Madam Speaker, to the folks who are
trying to help our families secure mortgages so they can move into a
new place to work.
I encourage everybody on both sides of the aisle to support this
excellent bill. It is bipartisan. Again, I congratulate the gentleman
from Arkansas (Mr. Hill), and I salute our chairman for moving this so
quickly through the process.
Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Madam Speaker, I yield 2 minutes to the gentleman
from New York (Mr. Zeldin), another member of the Financial Services
Committee.
Mr. ZELDIN. Madam Speaker, I rise in strong support of the TRID
Improvement Act, bipartisan legislation introduced by the gentleman
from Arkansas (Mr. Hill).
I am a proud cosponsor of this legislation, which combines three
bipartisan proposals that will improve the home buying process, protect
intellectual property, and help emerging businesses thrive and create
jobs. By reforming confusing regulations that make it difficult for
prospective buyers or businesses to get title insurance, this
legislation will help get more families into homes and help local
businesses grow.
By protecting the intellectual property of investors, we are
improving the access to capital that is essential for growth and job
creation in communities on Long Island, where my district is located,
and all across our country.
And last but not least, by reforming the outdated definition of what
constitutes an emerging growth company, this legislation takes
important steps towards fostering innovation and ensuring that new
businesses are not discouraged from expansion and job creation.
The sum of these important bipartisan solutions are more innovation,
more hiring, and a more vibrant economy. I urge all of my colleagues to
vote for this important piece of legislation. I thank my colleague,
Congressman Hill, for his leadership with it, and Chairman Hensarling
and his great staff for all their efforts to get this bill to the
floor.
Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Madam Speaker, I yield 2 minutes to the gentleman
from Georgia (Mr. Loudermilk), another proud member of the Financial
Services Committee.
Mr. LOUDERMILK. Madam Speaker, I thank Chairman Hensarling for his
leadership and for allowing me to come here and speak in support of the
TRID Improvement Act and the other bills that are in this package.
Madam Speaker, we have seen countless examples of overregulation and
regulatory mission creep by many agencies, and especially of the CFPB.
But one of the things the CFPB should be doing is making sure that
consumers have the right information when closing on a home.
Unfortunately, the CFPB's 2015 mortgage disclosure caused many home
buyers to not have an accurate disclosure of their title insurance
premiums. The commonsense bill proposed by my colleague, Mr. Hill, will
make sure that home buyers know exactly the cost of their title
insurance, not two different prices from a loan estimate and a closing
document.
I also strongly support several other pieces of legislation that have
been included in this package. Mr. Ross' bill, the FSOC Improvement
Act, will make regulation of large financial institutions much smarter
and more effective.
[[Page H1163]]
Instead of only focusing on punishing companies for violations of
rules, regulators should also focus on what should be the real purpose
of financial regulations, which is reducing risk.
Mr. Ross' bill will also allow nonbank financial companies the
opportunity to reduce any risky activities before they are designated
as systemically important. This will help financial regulators to
achieve their intended purpose rather than simply being a gotcha game
on regulated companies.
All of these bills we are considering today received overwhelming
bipartisan support in the Financial Services Committee, and I urge all
of my colleagues to support this legislative package.
Ms. MAXINE WATERS of California. Madam Speaker, may I inquire as to
whether or not the chairman has more speakers?
Mr. HENSARLING. Madam Speaker, I would tell the ranking member that I
have potentially two speakers, if they make it. They are on their way
from a hearing, but they are not here now.
{time} 1600
Ms. MAXINE WATERS of California. Madam Speaker, I yield myself the
balance of my time.
Madam Speaker, it has become par for the course for the majority to
recklessly advance harmful deregulatory packages like H.R. 3978. My
friends on the other side of the aisle are moving forward with
regulatory roadblocks at a furious pace, pushing dangerous bills
through the House nearly every week.
It appears that they may have already completely forgotten a way that
lacks financial regulation and allowed the crisis in 2008 to occur.
That crisis badly damaged the whole economy and harmed all of our
constituents. The impact was enormous: $13 trillion in household wealth
was lost; 11 million people lost their homes to foreclosure; and the
unemployment rate reached 10 percent.
Democrats responded by enacting Wall Street reform to ensure that
consumers, investors, and our economy are protected from reckless
actors and bad practices, but now Republicans cannot wait to take us
back to the bad old days. It makes no sense.
As we have discussed, the package of bills now before us guts
important financial protections at a time when markets are already
experiencing turmoil. It would allow high-frequency traders to
manipulate the stock markets undetected, encourage a regulatory race to
the bottom at our Nation's stock exchanges, and harm investors by
weakening efforts to detect accounting fraud at smaller public
companies. This package of bills threatens important progress we have
made to reduce risk in the financial system and return investor
confidence.
In recent weeks, we have seen volatile markets that threaten the
savings of hardworking American families. These circumstances should
serve as a clear reminder that Congress should be strengthening
oversight of the financial system, not weakening it by undermining or
removing important protections.
H.R. 3978 is strongly opposed by our State's security cops, who are
at the front line of combating fraud, and it is opposed by groups
representing consumers, investors, and unions.
Madam Speaker, for all of these reasons, I urge Members to oppose
H.R. 3978, and I yield back the balance of my time.
Mr. HENSARLING. Madam Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore. The gentleman from Texas has 7 minutes
remaining.
Mr. HENSARLING. Madam Speaker, there may be other Members coming, so,
at the moment, I yield myself 4 minutes.
Madam Speaker, again, all over America today, fortunately, because of
the Tax Cuts and Jobs Act, people are waking up to new opportunities.
They are finally seeing their wages begin to grow. We have seen the
greatest wage growth in almost a decade, Madam Speaker, again, thanks
to President Trump and thanks to a Republican Congress, a bill that was
opposed by every single Democrat.
But as they wake up to these new opportunities, Madam Speaker, they
also need new credit. As their incomes rise--this is good--they still
need credit in order to buy a home, in order to purchase that car, and
sometimes just to put groceries on the table. Unfortunately, over the
last 8 years of the Obama administration where we saw probably one of
the greatest increases in the cost, expense, and burden of costly
Washington red tape, we have seen fewer credit opportunities.
So now, fortunately, today there are good men and women on both sides
of the aisle who are trying to work together to bring some rationale
and reason to the regulatory burden. Many Members on the other side of
the aisle do realize that Dodd-Frank did not come down as tablets from
Mt. Sinai, that it isn't chiseled into stone, and that maybe there are
some improvements that could be made.
So today, we are taking a number of very bipartisan bills to the
House floor. The Protecting Consumers' Access to Credit Act, which we
debated earlier, Madam Speaker, passed by 42-17.
The TRID Improvement Act by Mr. Hill from Arkansas passed through our
committee 53-5--90 percent. Almost all of the Democrats but the ranking
member supported the bill. The Protection of Source Code Act, 46-14;
the Fostering Innovation Act passed by a vote of 48-12, a Democratic
bill; the National Securities Exchange Regulatory Parity Act, 46-14.
We have a lot of bipartisan bills, but with one exception, title V of
the TRID Improvement Act, none of them were supported, unfortunately,
by the ranking member.
So there is, again, a lot of bipartisan work we are trying to get
done here. Unfortunately, very little of it is supported by the ranking
member.
And why is this important? It is important, Madam Speaker, because
every day we are still hearing from our constituents who need access to
competitive affordable credit. And because of this Washington red tape
and regulatory burden, they are not getting it.
It wasn't that long ago we heard from Ann of Wisconsin, who said:
My husband and I had very high credit scores. We have
plenty of equity in our home. But because my husband has a
seasonal job and finds other employment in the winter, many
banks we contacted rejected our loan request. They based our
annual income only on the job he has currently and said that
was part of the new regulations.
Part of the new regulations--there is somebody who won't buy a home;
they can't get a home.
I heard from a mortgage banker in North Carolina who said:
Last year, we declined a young man and his family fixed
rate financing to purchase a primary home. The applicant
recently relocated to work for a family business. Prior to
Dodd-Frank, it would have been easy to qualify, but no more.
Another potential American home buyer denied credit because of this
regulatory burden. Madam Speaker, that is what many of us, on both
sides of the aisle, are trying to remedy today.
Madam Speaker, I am pleased to yield 2 minutes to the gentlewoman
from Arizona (Ms. Sinema), a sponsor of title III of the Fostering
Innovation Act.
Ms. SINEMA. Madam Speaker, I rise in support of H.R. 3978, a package
of commonsense solutions, each passed with support of both parties by
the House Financial Services Committee. Madam Speaker, I also thank
Congressman Hill of Arkansas for his leadership in moving the package
forward.
One of these solutions is H.R. 1645, the Fostering Innovation Act,
legislation we introduced to help Arizona biopharmaceutical companies
make lifesaving breakthroughs.
Business expenses always involve tradeoffs. When Arizona small
businesses spend money on costly regulations that provide little public
benefit, they have less money to invest in research, development, and
job creation for Arizona families.
That is why I introduced this bill. This narrow fix ensures that
innovative emerging growth companies, or EGCs, have the time and
capital to develop and perfect scientific breakthroughs. Right now,
they are exempted only for 5 years from these costly external audit
requirements. That is often not enough time for these emerging
companies to prepare innovations for commercialization. Our bill
temporarily extends this exemption for an additional 5 years for a
small subset of these EGCs with an annual revenue of less than $50
million and less than $700 million in public float.
[[Page H1164]]
The Fostering Innovation Act empowers innovative Arizona companies,
like HTG Molecular Diagnostics, to use valuable resources to remain
competitive, stable, and, ultimately, successful.
HTG is a Tucson-based developer of targeted molecular profiling
technology. This innovation ensures genetic testing can be turned
around accurately and quickly, in as little as 24 hours. For patients,
doctors, and families grappling with unexplainable symptoms or
illnesses, genetic testing can provide critical insights and inform the
best course of treatment.
These are lifesaving breakthroughs. It is what companies like HTG
should use their limited resources to fund, not unnecessary and costly
paperwork.
I urge my colleagues to support American ingenuity, job creation, and
growth by passing this act.
Mr. Speaker, I thank, in particular, Chairman Hensarling and
Congressman Hollingsworth of Indiana for working with me on a consensus
solution that cuts red tape and supports innovative and potentially
lifesaving medical research.
Mr. HENSARLING. Mr. Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore (Mr. Yoder). The gentleman from Texas has 1
minute remaining.
Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, once again, I want to hear the voices of hardworking
Americans, not just Washington, D.C., letterhead groups.
We heard from a community banker, who said:
A local union member wanted to refinance his primary
residence. He was currently laid off due to the winter
season. His tax return showed he was generally laid off for
about 6 weeks each year during the extreme cold but was
always called back when weather improved. Since he was laid
off, we could not meet the requirement to validate his
current income that would continue for 3 years. We had to
deny the loan.
Yet again, Mr. Speaker, more Washington red tape taking away home
opportunities from hardworking Americans. It is wrong. We must do
something about it. It is why, on a bipartisan basis, so many of us
have gotten together to pass H.R. 3978.
Yes, we want to make sure that people can buy homes, they can buy
cars, they can put groceries on the table, and right now, when the
economy is finally starting to improve, thanks to President Trump and
the Tax Cuts and Jobs Act, we want them to have opportunities.
Mr. Speaker, I encourage all Members to support H.R. 3978, and I
yield back the balance of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I include in the Record
the following letters of opposition.
Center for American Progress,
Washington, DC, February 13, 2018.
Hon. Paul Ryan,
Speaker, House of Representatives,
Washington, DC.
Hon. Nancy Pelosi,
Democratic Leader, House of Representatives,
Washington, DC.
Dear Speaker Ryan and Leader Pelosi: The Center for
American Progress (``CAP'') is writing today to express
opposition to H.R. 4061, the Financial Stability Oversight
Council Improvement Act of 2017, which is included as Title
VI of the revised H.R. 3978 package. It is our understanding
that the revised H.R. 3978 package will be considered on the
floor of the House of Representatives this week, so we
welcome the chance to share our concerns regarding this
legislation with you and your Members.
In short, this bill erodes a vital new financial regulatory
tool implemented following the devastating 2007-2008
financial crisis. If enacted, the U.S. financial regulatory
structure will be less equipped to handle risks that build up
outside of the traditional banking sector--making the
financial sector as a whole more vulnerable to another shock
and economic downturn. Americans paid for the last crisis
with their jobs, homes, and savings, while banks and other
financial institutions were bailed out. This bill
inexplicably makes a repeat of that economic calamity more
likely.
The 2007-2008 financial crisis demonstrated that excessive
risk could build up outside of the traditional banking
sector. Nonbank financial institutions like Lehman Brothers,
Bear Stearns, and AIG did not face the type of oversight and
regulatory standards warranted by their systemic importance.
The failure or near-failure of these institutions threatened
the stability of the U.S. financial sector. AIG and Bear
Stearns were bailed out accordingly, while the failure of
Lehman Brothers brought the global financial system to the
brink of collapse. The crisis also revealed that no one
financial regulator had a system-wide mandate, meaning
individual regulators were only focused on their respective
segments of the financial sector. This left financial
regulators in the dark regarding risks that built up across
different parts of the sector or that emerged in
underregulated parts of the sector.
In the wake of the financial crisis, President Obama worked
with Congress to pass the Dodd-Frank Wall Street Reform and
Consumer Protection Act--the most significant financial
regulatory reforms enacted since the Great Depression. One
important pillar of Dodd-Frank was the creation of the
Financial Stability Oversight Council (``FSOC''), a new
systemic risk regulatory body. The FSOC was created to bring
the disparate financial regulators together to identify and
mitigate threats to financial stability. The most important
tool given to the FSOC to fulfill this mission is the
authority to subject a nonbank financial company to enhanced
oversight and regulation by the Federal Reserve Board if
material distress at the company, or the company's
activities, could threaten financial stability. The FSOC has
used this designation authority sparingly and only after a
thorough, multi-stage review process in which the FSOC
communicates extensively with the company and the company's
primary regulators.
H.R. 4061 would add multiple additional hurdles to the
FSOC's already-rigorous designation process. The proposed
changes would add an estimated two years to the designation
process, meaning it would take roughly four years for the
FSOC to designate a nonbank financial company that could
threaten U.S. financial stability. The four-year estimate
does not even factor in the time it will take for the legal
proceedings to play out when a company challenges the
designation in court. The legal challenge by MetLife took
years, and likely would have taken longer if the Trump
administration didn't agree to stop pursuing the case. If
anything, this bill increases the procedural issues a
designated company could raise in court. H.R. 4061
practically invites a legal filibuster of the designation. It
renders the designation authority nearly useless. Hollowing
out this crucial post-crisis authority makes it far more
likely that an underregulated systemically important nonbank
will cause or aggravate the next financial crisis.
Contrary to critics of the FSOC, it is not a rigid body and
has in the past responded to legitimate process and
transparency suggestions. In 2015, after soliciting public
comment, the FSOC adopted 17 changes to its designation
process and transparency policies The current designation
process in place is rigorous and appropriately thorough. H.R.
4061 would add no less than nine new bureaucratic steps.
These proposed changes are excessive, and the intent is
clear: To prevent the FSOC from using this vital tool.
This legislation is even more concerning given the actions
Treasury Secretary Steven Mnuchin, Chairman of the FSOC, has
taken since the start of the Trump administration. The FSOC,
under Mnuchin's leadership, has: (i) rescinded the
designation of AIG, the company that received a $182 billion
bailout during the crisis; (ii) slashed the FSOC's budget and
staff; (iii) dropped the legal proceedings regarding
MetLife's designation; (iv) signaled that Prudential's
designation may be rescinded this year; and (v) recommended
some deeply concerning additional changes to the FSOC's
designation process in a report published in late 2017.
Further restricting the FSOC's authority at a time when it is
being dismantled from within would be a grave mistake.
For these reasons, CAP recommends that Members vote ``NO''
when the revised H.R. 3978 package of bills, which includes
H.R. 4061, is considered on the floor.
If you have any questions about this letter or would like
to discuss these issues further, please contact Gregg
Gelzinis.
Sincerely,
Gregg Gelzinis,
Research Assistant, Economic
Policy, Center for American Progress.
____
February 13, 2018.
Dear Representative, The undersigned organizations urge you
to vote against H.R. 3978, the TRID Improvement Act. The
bill, which amends Section 2603 of RESPA, would create
confusion and undermine consistency in mortgage disclosures.
In particular, the bill would make it harder for consumers to
understand how much they are paying for title insurance, a
required fee that already lacks a transparent, functioning
market.
In 2007, a GAO report concluded that borrowers ``have
little or no influence over the price of title insurance but
have little choice but to purchase it.'' Instead, the lender
typically chooses the insurer. As a result, the fees are
grossly inflated in relation to the value of the insurance.
Recent studies have found that barely 5% to 11% of premiums
are paid out in claims. Almost the entirety of a title
insurance premium goes to commissions, not insurance
coverage. In contrast, for health insurance, minimally 80% of
premiums are returned to consumers in claim payouts and the
loss ratios for auto insurance fluctuate between 50% and 70%.
Borrowers already pay inflated title insurance costs.
Increased confusion in title insurance price disclosures
would only serve to exacerbate the problems in the market
with transparency and fairness.
[[Page H1165]]
The method required by the Consumer Financial Protection
Bureau for disclosing title insurance premiums reduces
consumer confusion and enhances consistency between the
estimated and final loan cost disclosures. The bill would
change the final loan disclosure, decreasing consistency with
the initial disclosure. As a result, it would increase
consumer confusion, especially where the consumer opts not to
purchase both lender and owner policies (only the lender
policy is required) after getting the early disclosure
containing both.
The bill's requirement to disclose the ``actual'' cost of
the insurance will lead to confusion in almost half of the
states because the calculation of premiums is not
standardized under state law and title companies within those
states do not provide comparable rates. In contrast, the CFPB
regulations take into account that comparison shopping in
such states is not possible and provides a standardized
approach. Further refinement of the title insurance
disclosures can be addressed by the CFPB itself in
cooperation with stakeholders to ensure any outstanding
issues are addressed with the input of all affected parties.
We urge you not to undermine the CFPB's careful rules for
restoring transparency and market competition to the title
insurance market. Please vote no on H.R. 3978.
Sincerely,
Americans for Financial Reform.
Center for Responsible Lending.
National Association of Consumer Advocates.
National Consumer Law Center (on behalf of its low-income
clients).
____
Consumer Federation of America,
February 12, 2018.
Dear Representative: We understand the House is scheduled
to vote this week on H.R. 3978, the ``TRID Improvement Act.''
While we did not take a position on this bill when it came
before the House Financial Services Committee, we urge you to
oppose it now that it includes the following extraneous,
anti-investor bills: H.R. 3948, the ``Protection of Source
Code Act;'' H.R. 1645, the ``Fostering Innovation Act;'' and
H.R. 4546, the ``National Securities Exchange Regulatory
Parity Act.'' Each of these bills would harm investors and
undermine the integrity of our capital markets.
H.R. 1645, the ``Fostering Innovation Act,'' would make
financial accounting fraud more likely.
This legislation would extend the period of time in which
certain public companies would be exempt from a requirement
that provides important protections against financial
reporting errors, including errors that are the result of
fraud. That is the requirement under Section 404(b) of the
Sarbanes-Oxley Act that requires auditors, as part of their
audits of public company financial statements, to assess and
attest to the adequacy of the company's internal controls to
ensure accurate financial reporting. This bill would extend
this exemption for up to five years to a class of companies,
including those that have gone public but may be struggling
to produce significant revenues, that could have a particular
incentive to manipulate their financial statements in order
to attract more capital. Companies should not be permitted to
raise capital in the public markets if they do not have
adequate controls in place to prevent financial reporting
errors and fraud. And auditors cannot reasonably attest to
the accuracy of a company's financial statements without
carefully assessing those controls. Requiring auditors to
attest to the adequacy of those controls as part of the
financial statement audit contributes to the market
transparency and integrity that is essential to a healthy
capital formation process. Moreover, the number and severity
of financial restatements has declined since the requirement
was adopted, which demonstrates that these requirements have
benefited the market significantly. Because this legislation
would make financial accounting fraud more likely, we oppose
it. Furthermore, because this legislation is being attached
to the TRID bill, we urge you to oppose the entire package.
H.R. 3948, the ``Protection of Source Code Act,'' would
weaken SEC oversight of algorithmic trading and hamstring the
agency from responding quickly to flash crashes or other
market breakdowns.
At a time when algorithmic trading is taking on increased
importance in our capital markets, this bill would make it
more difficult for the SEC to properly oversee such trading.
The bill would require the SEC to first issue a subpoena
before it could compel a person to produce or furnish to the
SEC algorithmic trading source code or ``similar intellectual
property.'' This would undermine the SEC's examination
authority by creating a gaping hole in its ability to gain
access to firm records relevant to the examination. It would
also have a devastating effect on the agency's ability to
respond quickly in the event of another ``flash crash'' or
other such events in the future. In order to oversee the
markets effectively, the SEC needs to be able to accurately
and efficiently reconstruct order entry and trading activity,
including for algorithmic traders. Because this legislation
would weaken SEC oversight of algorithmic trading and
hamstring the agency from responding quickly to flash crashes
or other market breakdowns, we oppose it. Furthermore,
because this legislation is being attached to the TRID bill,
we urge you to oppose the entire package.
H.R. 4546, the ``National Securities Exchange Regulatory
Parity Act,'' would drastically weaken standards for
securities to be listed and traded on exchanges.
H.R. 4546 would change the terms on which securities are
deemed ``covered securities,'' and thus exempt from state
oversight. It would do so by removing any requirement that
these securities have to meet conditions comparable to the
current listing standards on leading national exchanges.
Instead, any security listed on an exchange that is a member
of the National Market System (NMS) would be exempt from
state regulation and oversight. Because the bill would not
establish any core quantitative or qualitative requirements
for covered securities to replace those eliminated by the
bill, it would likely accelerate an already troubling race to
the bottom in listing standards among NMS members. Moreover,
the bill does not sufficiently protect against the
possibility that a venture exchange could eventually be
established specifically to meet the bill's requirements for
state preemption. If this were to occur, smaller, more local
offerings typically overseen by states could be ``designated
as qualified for trading'' on such an exchange without any
assurance that they can meet basic quantitative and
qualitative standards designed to ensure investors are
appropriately protected. In short, this bill would eliminate
protections afforded by state oversight, fail to replace the
current meaningful protections afforded by high listing
standards with a comparable alternative, and leave investors
without any reasonable hope that the SEC will be able to
provide effective oversight at the federal level. Because
this legislation would drastically weaken standards for
securities to be listed and traded on exchanges, we oppose
it. Furthermore, because this legislation is being attached
to the TRID bill, we urge you to oppose the entire package.
The TRID bill should not be used as a vehicle to pass
extraneous, anti-investor bills. Because the bills attached
to the TRID bill would harm investors and undermine the
integrity of our capital markets, we urge you to vote no on
the entire package when H.R. 3978 comes to the floor this
week.
Respectfully submitted,
Barbara Roper,
Director of Investor Protection.
Micah Hauptman,
Financial Services Counsel.
The SPEAKER pro tempore. All time for debate on the bill has expired.
Amendment No. 1 Offered by Mr. Foster
Mr. FOSTER. Mr. Speaker, I have an amendment at the desk.
The SPEAKER pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 3, line 4, strike ``source code, including''.
Page 3, line 6, insert ``algorithmic trading'' before
``source code''.
Page 3, line 15, strike ``source code, including''.
Page 3, line 17, insert ``algorithmic trading'' before
``source code''.
Page 3, line 25, strike ``source code, including''.
Page 4, line 2, insert ``algorithmic trading'' before
``source code''.
Page 4, line 11, strike ``source code, including''.
Page 4, line 13, insert ``algorithmic trading'' before
``source code''.
The SPEAKER pro tempore. Pursuant to House Resolution 736, the
gentleman from Illinois (Mr. Foster) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentleman from Illinois.
Mr. FOSTER. Mr. Speaker, my amendment clarifies that this bill is
only intended to apply to the source code underpinning algorithmic
trading rather than any computer code that exists anywhere in the
enterprise.
The algorithmic source code at a trading firm are its crown jewels.
It is basically the core of its existence in its intellectual property.
It is not merely historical or descriptive like books or records that
regulators routinely have access to. Likewise, it is not a broad
expression of strategies that a firm might use some time in the future.
Rather, it is a specific and prescriptive algorithm that generates a
specific outcome based on a specific set of inputs.
The firms that rely on algorithmic trading have Ph.D. scientists,
mathematicians, and economists researching correlations that lead to
these relationships between the inputs and outputs. These may be simple
but may also be incredibly complex, involving multiple inputs that do
not appear related at first glance.
This complexity, coupled with the fact that they are written largely
in computer code, limits the usefulness of
[[Page H1166]]
inspecting source code as an examination tool. It is, rather, the
behavior of the firm in the market that represents potential violations
of security laws. Manipulative behavior, like frequently displaying or
canceling orders, should get the regulators' attention and prompt them
to ask the firm to explain it.
Source code would be and will be a valuable part of any investigation
or enforcement action into observed manipulation of the market, but
this is not the basis and should not be the basis for casual
inspection. It would probably be central to proving the element of
intent in an enforcement action because it demonstrates that the
algorithm was designed to engage in, for example, manipulative or
abusive behavior.
To this end, it is imperative that the firms achieve archived
versions in effect at any given time and log modifications to those
algorithms, including who made them, at any time that the code is
altered. These should always be available by subpoena.
Additionally, I believe that most firms would allow the regulator on
site to examine the source code on an air gap computer. To treat the
source code as ordinary books and records would not limit the regulator
to onsite examination, but would allow for staff to request it and that
it be made available offsite, which has real dangers.
Because of the value the firm carries with its proprietary
algorithms, it makes sense that the firm would be reluctant to allow
any undue access to its crown jewels. It is really, I believe and I
think the majority of my colleagues believe, something that should be
accessible only by a subpoena.
My amendment simply clarifies that it is only the algorithmic trading
code and related information that should be covered. I urge my
colleagues to support my amendment and, upon its adoption, to support
the bill on final passage.
Mr. Speaker, I reserve the balance of my time.
{time} 1615
Ms. MAXINE WATERS of California. Mr. Speaker, I rise in opposition to
the amendment.
The SPEAKER pro tempore. The gentlewoman from California is
recognized for 5 minutes.
Ms. MAXINE WATERS of California. Mr. Speaker, the current language of
title II of H.R. 3978 would require SEC examination staff to obtain a
subpoena before it could inspect any source code whatsoever, including,
for example, computer code reflecting a firm's adherence to the SEC's
cybersecurity regulations.
The amendment offered by Mr. Foster would narrow the requirement in
title II to only apply to proprietary source code related to
algorithmic trading. While I applaud Mr. Foster and the amendment's
cosponsor, Mr. Scott, for narrowing the overbroad language of title II,
the amendment cannot fix this untimely and ill-advised legislation.
Even as amended, title II would undermine effective oversight of the
high-frequency traders that simultaneously create and stand to benefit
from the kind of extreme market volatility that we have seen in the
past few weeks.
Let's not forget that, on May 6, 2010, in an event referred to as the
``flash crash,'' major U.S. stock indices inexplicably plummeted nearly
$1 trillion in less than an hour before mostly rebounding. Alarmingly,
market regulators took nearly 5 months to determine that the flash
crash was caused by a combination of a flawed execution algorithm of
one institutional investor and aggressive algorithmic trading by HFTs.
While it is too early to tell exactly what created the recent
volatility in the U.S. stock market, market analysts have suggested
that algorithmic trading has played a central role. In fact, just last
Tuesday, the day after the Dow Jones Industrial Average saw its biggest
one-day point drop in history, Treasury Secretary Steve Mnuchin
testified before the House Financial Services Committee that
algorithmic trading ``definitely had an impact on market moves.''
Given the importance of algorithmic trading in our stock market, it
makes no sense to obstruct the SEC's access to the information that
enables such activity merely because it exists in an electronic format.
Americans who have trillions of their dollars in 401(k) and other
retirement and savings plans deserve the SEC's best efforts in
investigating and mitigating computer-driven market disruptions. For
this reason and for all of these reasons, and given my broader concerns
that the bill would significantly harm investor confidence in our
markets even if the amendment is adopted, I am urging a ``no'' vote on
H.R. 3978.
Mr. Speaker, I yield back the balance of my time.
Mr. FOSTER. Mr. Speaker, I would just like to simply reiterate that
it should be the actions in the market that are the first indications
that the regulators should have a look at, and when they see suspicious
activity in the market, that is the time to get the subpoena and go
after the source code.
With that, I just urge the adoption of the amendment and the passage
of the underlying bill.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Pursuant to the rule, the previous question
is ordered on the bill, as amended, and on the amendment offered by the
gentleman from Illinois (Mr. Foster).
The question is on the amendment offered by the gentleman from
Illinois (Mr. Foster).
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit
Mr. CAPUANO. Mr. Speaker, I have a motion to recommit at the desk.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. CAPUANO. I am, in its current form.
Mr. HENSARLING. Mr. Speaker, I reserve a point of order on the
gentleman's motion.
The SPEAKER pro tempore. A point of order on the motion is reserved.
The Clerk will report the motion to recommit.
The Clerk read as follows:
Mr. Capuano moves to recommit the bill H.R. 3978 to the
Committee on Financial Services with instructions to report
the same back to the House forthwith with the following
amendment:
Page 5, line 13, strike ``and''.
Page 5, line 14, strike the period and insert ``; and''.
Page 5, after line 14, insert the following:
``(D) has claw back policies to require any executive
officer incentive-based compensation to be clawed-back in the
event that the issuer is required to prepare an accounting
restatement due to the material noncompliance of the issuer
with any financial reporting requirement under the securities
laws (as defined in section 3(a) of the Securities Exchange
Act of 1934), regardless of whether such compensation was
paid to an officer who was a party to the actions that
resulted in such restatement.''.
Mr. CAPUANO (during the reading). Mr. Speaker, I ask unanimous
consent that the motion be considered as read.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
Mr. HENSARLING. I object.
The SPEAKER pro tempore. Objection is heard.
The Clerk will continue to read.
The Clerk continued to read.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Massachusetts is recognized for 5 minutes in support of his motion.
Mr. CAPUANO. Mr. Speaker, my amendment simply requires a company to
have a policy in place to claw back executives' incentive-based pay if
it is materially noncompliant with financial reporting requirements.
Now, those words matter because the words ``materially noncompliant''
mean something in the accounting world. It has to be a big change, not
just some minor, little accounting error.
This amendment really should be noncontroversial. It is outrageous,
not to mention shortsighted, that almost a decade after the crisis that
wrecked the economy we still don't have commonsense safeguards in place
to ensure that CEOs do not turn a blind eye to problems that lead to a
public restatement of their company's financials.
This is not something hypothetical. It happens on a pretty regular
basis. It is not relegated to just the past. Everybody here is pretty
familiar with Wells Fargo Bank. It has generated scandal after scandal
by ripping off its own
[[Page H1167]]
consumers. Last year, the bank settled an 11-year lawsuit with the
Department of Justice because it overcharged veterans who applied for
home loan refinancing. At the same time, we learned of hundreds of
thousands of car loan customers charged for car insurance that they
never agreed to purchase.
In 2016, we learned of millions of fake deposits and credit card
statements opened up by Wells Fargo and then charging their customers.
Last September, the bank failed to refund insurance payments made by
customers who paid off their car loans early. And most recently, we
found out that they delayed mortgage closing dates in order to jack up
their own fees.
These abuses come on top of $10 billion in fines by that bank that
has been paid in recent years for everything from mortgage fraud,
illegal marketing, kickback schemes, insider trading, racial
discrimination, and student loan scams. Yet the bank believes that this
kind of consistent misconduct is not materially financially important
enough to require a restatement.
Wells Fargo has only ever clawed back a few tiny dollars from its
executives. All this recommit does is simply says that if you commit an
act that requires a material change in your public statements, you
shouldn't profit by it. That is all. Not basic pay; just the incentive
pay tied to those actions.
The underlying bill goes in the opposite direction. It makes it more
likely that there will be material inaccuracies in certain public
companies' financial statements. If this is what Congress is going to
do, we should, at the very least, not incentivize that bad behavior.
Title III of this bill allows new public companies to get out of
independent audit requirements for 10 years--ten years.
Now, we all think, well, that is fine for a small company. Small
company? Up to $700 million of company shares? That is a small company?
Those are significant companies that put lots of people at risk,
shareholders and investors.
In 2002, the Sarbanes-Oxley Act--I want to repeat, the Sarbanes-Oxley
Act because Mike Oxley was the Republican chair of the Financial
Services Committee at the time--requires companies to issue stock to
publicly report their internal control structures and procedures for
financial reporting. Those reports have to be attested to and covered
in an audit report.
There is a reason why an independent audit of large corporations is a
good thing: it makes it harder for them to hide bad actions. This
recommit, again, it is simple. It doesn't change the underlying bill.
It simply says: If a corporation makes a material change to its
publicly stated financial records and an executive's incentive pay has
been tied to the profits made off of that now-changed policy, the
company has to have a policy in place whereby to claw back those ill-
gotten profits. I don't think that is controversial. I don't think that
is partisan. I don't think that is antibusiness. I don't think that is
overregulation. It is simply fair.
We don't let bank robbers keep their money. We don't let other people
who commit wrongdoings keep the profits that they have. Why should we
let corporations who go out of their way--some, not all, only a handful
go out of their way--to make sure that they hide their bad actions,
report them badly? And when they get caught and have to report them
appropriately, they still get to keep the ill-gotten gains.
That is all this recommit does. It is simple. It is straightforward.
And I would hope that my friends on not just the other side but on both
sides of this aisle see this as a thoughtful, insightful, and
commonsense approach to amend this bill.
Mr. Speaker, with that, I yield back the remainder of my time.
Mr. HENSARLING. Mr. Speaker, I withdraw my reservation of a point of
order.
The SPEAKER pro tempore. The reservation of a point of order is
withdrawn.
Mr. HENSARLING. Mr. Speaker, I claim time in opposition.
The SPEAKER pro tempore. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Speaker, I listened very carefully to my
colleague on the Financial Services Committee. I lost track of how many
times he mentioned Wells Fargo. That has nothing to do with an early
growth company. That has nothing to do with this title of the bill.
So the Fostering Innovation Act by the gentlewoman from Arizona is
all about allowing emerging-growth companies the opportunity to
actually grow. What a novel concept.
What we know is, Mr. Speaker, in 8 years of Obamanomics, they were
only able to produce about 1.8 percent economic growth, for all intents
and purposes. Nobody's savings account came back. Wages were stagnant.
And now that we have sensible regulation, now that we have passed the
Tax Cuts and Jobs Act, now we have 3 percent economic growth, which is
economic growth for America's working families. Unemployment is at a
17-year low. It remains at a 17-year low.
Again, wages grew at 2.9 percent last year, the fastest in almost a
decade. Two million Americans have gone back to work, Mr. Speaker, and
this is not by accident.
So what the gentleman is doing with his motion to recommit is sending
us back. He is rolling the clock back to an era where working Americans
didn't get ahead, where entrepreneurship was at a generational low,
where small businesses were finding it hard to access lines of credit.
So the bill that he so much maligns from the gentlewoman from Arizona,
who happens to reside on his side of the aisle--at markup, the ranking
member of the relevant subcommittee, the gentlewoman from New York
(Mrs. Maloney), supported the provision and said: This is a sensible
compromise that provides a narrowly targeted relief to only the
companies that truly need it.
Researching a new drug and getting FDA approval is a very, very long
process, which is exactly what we heard in our committee. For example,
we have heard from John Blake, senior vice president of finance at Atyr
Pharma, who testified before the Subcommittee on Capital Markets,
Securities, and Investments. He said: It remains the case that the
biotech development time line is a decades-long affair. It is extremely
likely that Atyr will still be in the lab, in the clinic, when our EGC
clock expires, our early growth company.
In other words, they may have revenues, but they don't have profits.
They don't have profits. This is something that is especially common in
the biotech area. They need this capital for innovation.
So once again, we have heard this rhetoric on the other side of the
aisle before. This is all about Dodd-Frank revisited. They aim at Wall
Street, but they are hitting Main Street, Mr. Speaker. The MTR, the
motion to recommit, hits Main Street in the gut. It will mean fewer
early growth companies. It will mean fewer jobs. It will mean lower
wage growth. And it will mean, again, a decimated and declining
American Dream.
{time} 1630
Mr. Speaker, we should reject the motion to recommit, and we should
support the underlying bill.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. CAPUANO. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule
XX, this 15-minute vote on the motion to recommit will be followed by
5-minute votes on:
Passage of the bill, if ordered; and
Passage of H.R. 3299.
The vote was taken by electronic device, and there were--yeas 189,
nays 228, not voting 13, as follows:
[Roll No. 76]
YEAS--189
Adams
Aguilar
Barragan
Beatty
Bera
Beyer
Bishop (GA)
Blum
Blumenauer
Blunt Rochester
Bonamici
Brady (PA)
Brown (MD)
Brownley (CA)
Bustos
Butterfield
Capuano
Carbajal
Cardenas
Carson (IN)
Cartwright
Castor (FL)
Castro (TX)
Chu, Judy
Cicilline
Clark (MA)
Clarke (NY)
[[Page H1168]]
Clay
Cleaver
Clyburn
Cohen
Connolly
Cooper
Correa
Courtney
Crist
Crowley
Cuellar
Davis (CA)
Davis, Danny
DeFazio
DeGette
Delaney
DeLauro
DelBene
Demings
DeSaulnier
Deutch
Dingell
Doggett
Doyle, Michael F.
Ellison
Engel
Eshoo
Espaillat
Esty (CT)
Evans
Foster
Frankel (FL)
Fudge
Gabbard
Gallego
Garamendi
Gomez
Gonzalez (TX)
Gottheimer
Green, Al
Green, Gene
Grijalva
Hanabusa
Hastings
Heck
Higgins (NY)
Himes
Hoyer
Huffman
Jackson Lee
Jayapal
Jeffries
Johnson (GA)
Johnson, E. B.
Jones
Kaptur
Keating
Kelly (IL)
Kennedy
Khanna
Kihuen
Kildee
Kilmer
Kind
Krishnamoorthi
Kuster (NH)
Langevin
Larsen (WA)
Larson (CT)
Lawrence
Lawson (FL)
Lee
Levin
Lewis (GA)
Lieu, Ted
Lipinski
Loebsack
Lofgren
Lowenthal
Lowey
Lujan Grisham, M.
Lujan, Ben Ray
Lynch
Maloney, Carolyn B.
Maloney, Sean
Matsui
McCollum
McEachin
McGovern
McNerney
Meeks
Meng
Moore
Moulton
Murphy (FL)
Nadler
Napolitano
Neal
Nolan
Norcross
O'Halleran
O'Rourke
Pallone
Panetta
Pascrell
Payne
Pelosi
Perlmutter
Peters
Peterson
Pingree
Pocan
Polis
Price (NC)
Quigley
Raskin
Rice (NY)
Richmond
Rosen
Roybal-Allard
Ruiz
Ruppersberger
Rush
Ryan (OH)
Sanchez
Sarbanes
Schakowsky
Schiff
Schneider
Schrader
Scott (VA)
Scott, David
Serrano
Sewell (AL)
Shea-Porter
Sherman
Sinema
Sires
Slaughter
Smith (WA)
Soto
Speier
Suozzi
Swalwell (CA)
Takano
Thompson (CA)
Thompson (MS)
Titus
Tonko
Torres
Tsongas
Vargas
Veasey
Vela
Velazquez
Visclosky
Walz
Wasserman Schultz
Waters, Maxine
Welch
Wilson (FL)
Yarmuth
NAYS--228
Abraham
Aderholt
Allen
Amash
Amodei
Arrington
Babin
Bacon
Banks (IN)
Barletta
Barr
Barton
Bergman
Biggs
Bilirakis
Bishop (MI)
Bishop (UT)
Black
Blackburn
Bost
Brady (TX)
Brat
Bridenstine
Brooks (AL)
Brooks (IN)
Buchanan
Buck
Bucshon
Budd
Burgess
Byrne
Calvert
Carter (GA)
Carter (TX)
Chabot
Cheney
Coffman
Cole
Collins (GA)
Collins (NY)
Comer
Comstock
Conaway
Cook
Costello (PA)
Cramer
Crawford
Culberson
Curbelo (FL)
Curtis
Davidson
Davis, Rodney
Denham
Dent
DeSantis
DesJarlais
Diaz-Balart
Donovan
Duffy
Duncan (TN)
Dunn
Emmer
Estes (KS)
Farenthold
Faso
Ferguson
Fitzpatrick
Fleischmann
Flores
Fortenberry
Foxx
Frelinghuysen
Gaetz
Gallagher
Garrett
Gianforte
Gibbs
Gohmert
Goodlatte
Gosar
Gowdy
Granger
Graves (GA)
Graves (LA)
Graves (MO)
Griffith
Grothman
Guthrie
Handel
Harper
Harris
Hartzler
Hensarling
Herrera Beutler
Hice, Jody B.
Higgins (LA)
Hill
Holding
Hollingsworth
Hudson
Huizenga
Hultgren
Hunter
Hurd
Issa
Jenkins (KS)
Jenkins (WV)
Johnson (LA)
Johnson (OH)
Johnson, Sam
Jordan
Joyce (OH)
Katko
Kelly (MS)
Kelly (PA)
King (IA)
King (NY)
Kinzinger
Knight
Kustoff (TN)
Labrador
LaHood
LaMalfa
Lamborn
Lance
Latta
Lewis (MN)
Long
Loudermilk
Love
Lucas
Luetkemeyer
MacArthur
Marchant
Marino
Marshall
Massie
Mast
McCarthy
McCaul
McClintock
McHenry
McKinley
McMorris Rodgers
McSally
Meadows
Meehan
Messer
Mitchell
Moolenaar
Mooney (WV)
Mullin
Newhouse
Noem
Norman
Nunes
Olson
Palazzo
Palmer
Paulsen
Perry
Pittenger
Poe (TX)
Poliquin
Ratcliffe
Reed
Reichert
Renacci
Rice (SC)
Roby
Roe (TN)
Rogers (AL)
Rohrabacher
Rokita
Rooney, Francis
Rooney, Thomas J.
Ros-Lehtinen
Roskam
Ross
Rothfus
Rouzer
Royce (CA)
Russell
Rutherford
Sanford
Scalise
Schweikert
Scott, Austin
Sensenbrenner
Sessions
Shimkus
Shuster
Simpson
Smith (MO)
Smith (NE)
Smith (NJ)
Smith (TX)
Smucker
Stefanik
Stewart
Taylor
Thompson (PA)
Thornberry
Tipton
Trott
Turner
Upton
Valadao
Wagner
Walberg
Walden
Walker
Walorski
Walters, Mimi
Weber (TX)
Webster (FL)
Wenstrup
Westerman
Williams
Wilson (SC)
Wittman
Womack
Woodall
Yoder
Yoho
Young (AK)
Young (IA)
Zeldin
NOT VOTING--13
Bass
Boyle, Brendan F.
Costa
Cummings
Duncan (SC)
Gutierrez
LoBiondo
Pearce
Posey
Rogers (KY)
Stivers
Tenney
Watson Coleman
{time} 1656
Messrs. BOST, MESSER, DAVIDSON, BISHOP of Michigan, SMITH of Texas,
McHENRY, STEWART, BARR, HUNTER, LaMALFA, and ROKITA changed their vote
from ``yea'' to ``nay.''
Messrs. COOPER, DOGGETT, and GRIJALVA changed their vote from ``nay''
to ``yea.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. MAXINE WATERS of California. Mr. Speaker, on that I demand the
yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 271,
nays 145, not voting 14, as follows:
[Roll No. 77]
YEAS--271
Abraham
Aderholt
Aguilar
Allen
Amash
Amodei
Arrington
Babin
Bacon
Banks (IN)
Barletta
Barr
Barton
Bera
Bergman
Beyer
Biggs
Bilirakis
Bishop (MI)
Bishop (UT)
Black
Blackburn
Blum
Bost
Brady (TX)
Brat
Bridenstine
Brooks (AL)
Brooks (IN)
Buchanan
Buck
Bucshon
Budd
Burgess
Bustos
Byrne
Calvert
Carter (GA)
Carter (TX)
Chabot
Cheney
Coffman
Cole
Collins (GA)
Collins (NY)
Comer
Comstock
Conaway
Cook
Cooper
Correa
Costello (PA)
Cramer
Crawford
Cuellar
Culberson
Curbelo (FL)
Curtis
Davidson
Davis, Rodney
Delaney
DelBene
Denham
Dent
DeSantis
DesJarlais
Diaz-Balart
Donovan
Duffy
Duncan (TN)
Dunn
Emmer
Estes (KS)
Farenthold
Faso
Ferguson
Fitzpatrick
Fleischmann
Flores
Fortenberry
Foster
Foxx
Frelinghuysen
Gaetz
Gallagher
Garrett
Gianforte
Gibbs
Gohmert
Gonzalez (TX)
Goodlatte
Gosar
Gottheimer
Gowdy
Granger
Graves (GA)
Graves (LA)
Graves (MO)
Griffith
Guthrie
Handel
Harper
Harris
Hartzler
Heck
Hensarling
Herrera Beutler
Hice, Jody B.
Higgins (LA)
Hill
Himes
Holding
Hollingsworth
Hudson
Huizenga
Hultgren
Hunter
Hurd
Issa
Jenkins (KS)
Jenkins (WV)
Johnson (LA)
Johnson (OH)
Johnson, Sam
Jordan
Joyce (OH)
Katko
Kelly (MS)
Kelly (PA)
Kihuen
Kilmer
Kind
King (IA)
King (NY)
Kinzinger
Knight
Kuster (NH)
Kustoff (TN)
Labrador
LaHood
LaMalfa
Lamborn
Lance
Larsen (WA)
Latta
Lewis (MN)
Lipinski
Loebsack
Long
Loudermilk
Love
Lucas
Luetkemeyer
MacArthur
Maloney, Sean
Marchant
Marino
Marshall
Massie
Mast
McCarthy
McCaul
McClintock
McHenry
McKinley
McMorris Rodgers
McSally
Meadows
Meehan
Meeks
Messer
Mitchell
Moolenaar
Mooney (WV)
Mullin
Murphy (FL)
Napolitano
Newhouse
Noem
Norman
Nunes
O'Halleran
O'Rourke
Olson
Palazzo
Palmer
Paulsen
Perry
Peters
Peterson
Pittenger
Poe (TX)
Poliquin
Polis
Ratcliffe
Reed
Reichert
Renacci
Rice (NY)
Rice (SC)
Roby
Roe (TN)
Rogers (AL)
Rohrabacher
Rokita
Rooney, Francis
Rooney, Thomas J.
Ros-Lehtinen
Roskam
Ross
Rothfus
Rouzer
Royce (CA)
Ruppersberger
Russell
Rutherford
Sanford
Schneider
Schrader
Schweikert
Scott, Austin
Scott, David
Sensenbrenner
Sessions
Sewell (AL)
Sherman
Shimkus
Shuster
Simpson
Sinema
Smith (MO)
Smith (NE)
Smith (NJ)
Smith (TX)
Smucker
Soto
Stefanik
Stewart
Suozzi
Taylor
Tenney
Thompson (PA)
Thornberry
Tipton
Trott
Turner
Upton
Valadao
Vargas
Veasey
Vela
Wagner
Walberg
Walden
Walker
Walorski
Walters, Mimi
Weber (TX)
Webster (FL)
Wenstrup
Westerman
Williams
Wilson (SC)
Wittman
Womack
Woodall
Yoder
Yoho
Young (AK)
Young (IA)
Zeldin
NAYS--145
Adams
Barragan
Beatty
Bishop (GA)
Blumenauer
Blunt Rochester
Bonamici
Brady (PA)
Brown (MD)
Brownley (CA)
Butterfield
Capuano
Carbajal
Cardenas
Carson (IN)
Cartwright
Castor (FL)
Castro (TX)
Chu, Judy
Cicilline
Clark (MA)
Clarke (NY)
Clay
Cleaver
Clyburn
Cohen
Connolly
Courtney
Crist
Crowley
Davis (CA)
Davis, Danny
DeFazio
DeGette
DeLauro
Demings
DeSaulnier
Deutch
Dingell
Doggett
Doyle, Michael F.
Ellison
Engel
Eshoo
Espaillat
Esty (CT)
Evans
Frankel (FL)
Fudge
Gabbard
Gallego
Garamendi
Gomez
Green, Al
Green, Gene
Grijalva
Hanabusa
Hastings
Higgins (NY)
Hoyer
Huffman
Jackson Lee
Jayapal
Jeffries
Johnson (GA)
Johnson, E. B.
Jones
Kaptur
[[Page H1169]]
Keating
Kelly (IL)
Kennedy
Khanna
Kildee
Krishnamoorthi
Langevin
Larson (CT)
Lawrence
Lawson (FL)
Lee
Levin
Lewis (GA)
Lieu, Ted
Lofgren
Lowenthal
Lowey
Lujan Grisham, M.
Lujan, Ben Ray
Lynch
Maloney, Carolyn B.
Matsui
McCollum
McEachin
McGovern
McNerney
Meng
Moore
Moulton
Nadler
Neal
Nolan
Norcross
Pallone
Panetta
Pascrell
Payne
Pelosi
Perlmutter
Pingree
Pocan
Price (NC)
Quigley
Raskin
Richmond
Rosen
Roybal-Allard
Ruiz
Rush
Ryan (OH)
Sanchez
Sarbanes
Schakowsky
Schiff
Scott (VA)
Serrano
Shea-Porter
Sires
Slaughter
Smith (WA)
Speier
Swalwell (CA)
Takano
Thompson (CA)
Thompson (MS)
Titus
Tonko
Torres
Tsongas
Velazquez
Visclosky
Walz
Wasserman Schultz
Waters, Maxine
Welch
Wilson (FL)
Yarmuth
NOT VOTING--14
Bass
Boyle, Brendan F.
Costa
Cummings
Duncan (SC)
Grothman
Gutierrez
LoBiondo
Pearce
Posey
Rogers (KY)
Scalise
Stivers
Watson Coleman
{time} 1704
Mr. POLIS changed his vote from ``nay'' to ``yea.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________