On Sept. 13, the House Financial Services Committee passed Chairman Jeb Hensarling’s (R-TX) Financial CHOICE Act (H.R. 5983). The bill would repeal substantial portions of the 2010 Dodd-Frank financial reform law and fundamentally restructure a significant number of the regulations administered by federal financial regulators.
Although the Financial CHOICE Act is not expected to advance further in Congress this year, it is likely to serve as a first draft of the House Financial Service Committee's 2017 agenda.
The Financial CHOICE Act includes several provisions with particular relevance to REITs, including measures that would:
- Repeal of the Department of Labor’s (DOL’s) fiduciary rule;
- Repeal the authority of the Financial Stability Oversight Council (FSOC) to designate non-bank financial companies as systematically important financial institutions (SIFIs) and retroactively repeal previous SIFI designations;
- Repeal the FSOC’s authority to impose regulations or standards on particular “risky” activities;
- Convert the Consumer Financial Protection Bureau (CFPB), the Office of Comptroller of Currency (OCC) and the Federal Housing Finance Agency (FHFA) into bipartisan, five-member commissions;
- Require proxy advisory firms to register with the Securities and Exchange Commission (SEC);
- Amend the Investment Company Act of 1940 to raise the leverage limit applicable to Business Development Companies (BDCs) to 2-to-1;
- Exempt all non-residential mortgage asset classes from Dodd-Frank’s risk retention requirements for asset-backed securities;
- Prohibit the SEC from issuing policy statements or other procedural rules without providing for public notice and comment;
- Prohibit federal financial regulators from participating in international regulatory negotiations without providing for public notice and comment;
- Require all of the financial regulators to conduct detailed cost-benefit analysis prior to issuing all new rules; and
- Repeal the doctrine requiring judicial deference to the interpretations of federal financial regulators.
(Contact: Victoria Rostow at email@example.com)