[House Report 118-289]
[From the U.S. Government Publishing Office]


118th Congress    }                                       {     Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                       {    118-289

======================================================================



 
ALIGNING SEC REGULATIONS FOR THE WORLD BANK'S INTERNATIONAL DEVELOPMENT 
                            ASSOCIATION ACT

                                _______
                                

December 1, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

        Mr. McHenry, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1161]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1161) to accord securities issued by the 
International Development Association the same exemption from 
the securities laws that applies to the securities of other 
multilateral development banks in which the United States is a 
member, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Aligning SEC Regulations for the World 
Bank's International Development Association Act''.

SEC. 2. EXEMPTION OF SECURITIES OF THE INTERNATIONAL DEVELOPMENT 
                    ASSOCIATION FROM THE SECURITIES LAWS.

  (a) In General.--The International Development Association Act (22 
U.S.C. 284-284cc) is amended by adding at the end the following:

``SEC. 32. EXEMPTION OF SECURITIES OF THE INTERNATIONAL DEVELOPMENT 
                    ASSOCIATION FROM THE SECURITIES LAWS.

  ``(a) Exemption From Securities Laws; Reports to Securities and 
Exchange Commission.--Any securities issued by the Association 
(including any guaranty by the Association, whether or not limited in 
scope) and any securities guaranteed by the Association as to both 
principal and interest shall be deemed to be exempted securities within 
the meaning of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 
77c(a)(2)) and section 3(a)(12) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(12)). The Association shall file with the Securities 
and Exchange Commission such annual and other reports with regard to 
such securities as the Commission shall determine to be appropriate in 
view of the special character of the Association and its operations and 
necessary in the public interest or for the protection of investors.
  ``(b) Authority of Securities and Exchange Commission to Suspend 
Exemption; Reports to Congress.--The Securities and Exchange 
Commission, acting in consultation with the National Advisory Council 
on International Monetary and Financial Problems, is authorized to 
suspend the provisions of subsection (a) of this section at any time as 
to any or all securities issued or guaranteed by the Association during 
the period of such suspension. The Commission shall include in its 
annual reports to the Congress such information as it shall deem 
advisable with regard to the operations and effect of this section.''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect 30 days after the date of the enactment of this Act.

                          PURPOSE AND SUMMARY

    Introduced on February 24, 2023, by Representative Maxine 
Waters, H.R. 1161, the Aligning SEC Regulations for the World 
Bank's International Development Associations Act, classifies 
securities issued by the World Bank's International Development 
Association (IDA) as exempted securities, subject to reporting 
requirements deemed appropriate by the Securities and Exchange 
Commission. This classification would align the treatment of 
IDA securities with that of other World Bank divisions, as well 
as the current-law treatment of securities issued by the Inter-
American Development Bank, Asian Development Bank, European 
Bank for Reconstruction and Development, and African 
Development Bank. An exemption would allow for lower legal 
expenses, negotiating private placements directly with U.S. 
investors, and issuance of short-term paper in the U.S. at low 
rates.

                  BACKGROUND AND NEED FOR LEGISLATION

    H.R. 1161 brings about parity among other World Bank groups 
and various other multilateral development banks to classify 
securities issued by the World Bank's IDA as exempted 
securities. Prior to 2018, IDA did not raise funds in the 
securities market and therefore did not require this exemption. 
Recognizing that various World Bank programs and practices need 
significant reform, continuing to support IDA's core mission of 
providing loans and grants to developing nations through 
provision of this exemption remains consistent with previous 
treatment of multilateral development bank securities.

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 1161: The Committee on 
Financial Services held a hearing on February 7, 2023, titled 
``Combatting the Economic Threat from China.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
February 28, 2023, and ordered H.R. 1161 to be reported 
favorably to the House as amended by a recorded vote of 38 ayes 
to 0 nays (Record vote no. FC-24), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Ms. Waters by voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto.
    H.R. 1161 was reported favorably to the House as amended by 
a recorded vote of 38 ayes to 0 nays (Record vote no. FC-24), a 
quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 1161 is to align the 
treatment of IDA securities with that of other World Bank 
divisions, as well as the current-law treatment of securities 
issued by the Inter-American Development Bank, Asian 
Development Bank, European Bank for Reconstruction and 
Development, and African Development Bank by classifying 
securities issued by the World Bank's IDA as exempted 
securities, subject to reporting requirements deemed 
appropriate by the Securities and Exchange Commission.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 1161 would exempt the International Development 
Association at the World Bank from the requirement to register 
securities it issues or guarantees with the Securities and 
Exchange Commission (SEC). The SEC may require the Association 
to file additional reports and, in consultation with the 
National Advisory Council on International Monetary and 
Financial Problems, suspend the exemption at any time.
    Using information about the cost of similar provisions, CBO 
estimates that it would cost the SEC less than $500,000 to 
update rules and process any additional disclosures by the 
Association. Moreover, because the SEC is authorized to collect 
fees each year to offset its annual appropriation, CBO expects 
that the net effect on discretionary spending over the 2023-
2028 period would be negligible, assuming appropriation actions 
consistent with that authority.
    If the SEC increases fees to offset the costs associated 
with implementing the bill, H.R. 1161 would increase the cost 
of an existing mandate on private entities required to pay 
those assessments, as defined in the Unfunded Mandates Reform 
Act (UMRA). CBO estimates that the incremental cost of the 
mandate would be small and would fall well below the annual 
threshold for private-sector mandates established in UMRA ($198 
million in 2023, adjusted annually for inflation).
    H.R. 1161 contains no intergovernmental mandates as defined 
in UMRA.
    The CBO staff contacts for this estimate are David Hughes 
(for federal cost) and Rachel Austin (for Mandates). The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Director 
of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform Act 
of 1995, the Committee adopts as its own the estimate of the 
Director of the Congressional Budget Office.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Committee has carefully reviewed the 
provisions of the bill and states that the provisions of the 
bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1: Short title

    This Act may be cited as the ``Aligning SEC Regulations for 
the World Bank's International Development Association Act''.

Sec. 2: Exemption of Securities of the International Development 
        Association from the Securities Laws

    This section would classify securities issued by the World 
Bank's International Development Association (IDA) as exempted 
securities, subject to reporting requirements deemed 
appropriate by the Securities and Exchange Commission. An 
exemption would allow for lower legal expenses, negotiating 
private placements directly with U.S. investors, and issuance 
of short-term paper in the U.S. at low rates.

                                  [all]