The House passed a government funding measure that includes a financial services appropriations bill laden with Dodd-Frank Act repeals and revisions along with other securities and banking provisions. Debate on the bill spread over two weeks due to Hurricane Irma and the dozens of amendments under consideration. The final 211-198 vote on passage closely followed partisan lines (H.R.3354, pre-amendment version).
Conflict minerals funding bar included. The securities portion of the bill contains numerous provisions, some of which relate to Dodd-Frank and others that do not. Moreover, the bill would repeal the Volcker Rule, bring certain financial regulators within the appropriations process, and establish a new financial institution bankruptcy process.
The final version of the also bill included an amendment offered by Rep. Bill Huizenga (R-Mich) that would bar the SEC from using funds to implement, administer, or enforce the conflict minerals disclosure requirement added by the Dodd-Frank Act. Huizenga characterized the overall spending package in H.R. 3354 as a long needed effort by Congress to "right-size government." He also told members in a floor speech that the conflict minerals provision had been "ineffective" and had potentially increased violence in some parts of Africa’s Great Lakes Region.
Early in 2017, then-Acting Chairman Michael Piwowar had called for a reconsideration of existing guidance on conflict minerals disclosures. That review produced new guidance from the SEC’s Division of Corporation Finance that urged non-enforcement if companies do not include due diligence disclosures, although related guidance issued in April 2014 also would appear to remain valid.
The Dodd-Frank Act’s conflict minerals provision has become a congressional test case for laws aimed at requiring socially-oriented disclosures by public companies. The Financial CHOICE Act would repeal the Dodd-Frank Act provision that authorized the SEC’s conflict minerals rule.
A summary of the securities provisions and selected additional provisions in H.R. 3354 can be found in our prior coverage.
December funding crisis looms. Overall, the appropriations bill bundles together funding measures from across the federal government, including for financial services agencies. "These investments are made responsibly. In each of the bills within this package, we have found savings, gotten rid of waste, fraud and duplication, and increased oversight to ensure that no taxpayer dollar is misspent," said Rodney Frelinghuysen, Chairman of the House Appropriations Committee.
But House Appropriations Committee Ranking Member Nita Lowey, who described the bill as "inadequate and partisan," said the spending measure has little chance of passage and called for new budget negotiations. "It was heartening that Democratic Congressional leadership reached a deal with President Trump for a temporary Continuing Resolution to avoid a government shutdown at the end of September," said Lowey. "However, without an agreement to raise Budget Control Act spending caps, we will just face another crisis in December."
President Trump previously signed a short-term appropriations bill that includes disaster relief and extends the debt limit and keeps the government open until December 8, 2017. Division D of H.R. 601 extends funding for the CFTC and the SEC based on the appropriations bill enacted earlier this year. The CFTC’s funding in that bill was set at $250 million, while the SEC’s was set at $1.605 billion.
The earlier bill also included language that had been added to several previous appropriations bills barring the SEC from finalizing, issuing, or implementing rules requiring that companies disclose political contributions. Similarly, the bill rescinded $25 million from the SEC’s Dodd-Frank Act reserve fund.
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