Tags: CLOs | Volcker | Dodd-Frank | House

House Rules Committee Prepares Regulatory Fix Bill

By    |   Tuesday, 13 Jan 2015 07:55 AM

Late Monday afternoon the House Committee on Rules, chaired by Rep. Pete Sessions, R-Texas, held a hearing on a rule for the consideration of H.R. 37, the "Promoting Job Creation and Reducing Small Business Burdens Act," which is referred to the "short title" of the bill.

This is the same bill that fell 16 votes short of passing the House last week under the "suspension of the rules" procedure that requires a two-thirds vote. Now the bill has to be considered under a rule that will specify what, if any, amendments will be allowed when the House takes up the bill, probably sometime this week.

In his opening statement, Sessions declared that the Rules Committee will work to get things done that have been passed by the House but died in the Senate while it was under Democratic control, and H.R. 37 is an example, because it consists of a number of measures that have already passed the House last Congress but were never considered by the Senate.

Rep. Scott Garrett, R-N.J., chairman of the Subcommittee on Capital Markets and Government-Sponsored Enterprises of the House Financial Services Committee, spoke for the proponents of the bill and lamented that this is not the bill some critics have attacked as dismantling the Dodd-Frank Act, although he said he wishes it were. Rather, the bill provides 11 measures that would help create jobs and benefit small business, nearly all of which have enjoyed overwhelming bipartisan support.

Rep. Maxine Waters, D-Calif., the senior Democrat on the Financial Services Committee, complained that the bill was hastily compiled and brought to the House floor before the Financial Services Committee had even met to organize. She argued that the bill deserves "robust debate" and an opportunity for the nine new committee members and 58 new House members to participate. She characterized the purpose of the bill as to offer regulatory relief to wealthy banks and corporations, and she urged the Rules Committee to allow consideration of the dozen amendments opponents have prepared.

Most of the argument against the bill was carried by Rep. Brad Sherman, D-Calif., who focused on a provision that would give the largest banks, especially JPMorgan Chase and Citigroup, as long as five additional years, until 2019, to resolve their investments in collateralized loan obligations (CLOs), which serve as a vehicle for $300 billion in financial aid for so-called middle-market companies that lack direct access to capital markets, with $80 billion of these held by banks that would be required to divest them under the Volcker rule included in Dodd-Frank.

Proponents of the bill contend that the banks, including community banks that have invested in CLOs, need additional time to divest their CLOs so that they don't have to sell them at fire sale prices. However, Rep. Alcee Hastings, D-Fla., was ready with a quote from Paul Volcker himself that the leading bankers have not been able to manage the reorganization of their CLO portfolios within the allotted time. This writer would suggest this might be because they have used the time to fight the implementation of Dodd-Frank, and so far they have been doing pretty well.

No sooner had the hearing begun than Rules Committee Democrats relayed threats by White House officials that they would advise the president to veto the bill if Congress passes it. Garrett was unfazed by this and expressed the hope that with strong bipartisan support the president might accept some or all of the bill.

(Further information on H.R. 37 can be found here.)

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Robert-Feinberg
Late Monday afternoon the House Committee on Rules, chaired by Rep. Pete Sessions, R-Texas, held a hearing on a rule for the consideration of H.R. 37, the "Promoting Job Creation and Reducing Small Business Burdens Act," which is referred to the "short title" of the bill.
CLOs, Volcker, Dodd-Frank, House
587
2015-55-13
Tuesday, 13 Jan 2015 07:55 AM
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