March 10, 2017

Senate Banking Committee Passes Capital-Raising Bills

Here’s the news from this WSJ article by Andrew Ackerman:

The Senate Banking Committee approved a series of modest, bipartisan bills aimed at making it easier for companies to grow and raise cash, the first legislation to move through the panel in the new Congress. Thursday’s bills, which the panel approved as a single package by voice vote, is significant because they are among the first of several deregulatory measures congressional Republicans are expected to advance this Congress.

The measures—most of which were introduced in prior years but failed to clear the Senate—are separate from broader efforts to rollback the 2010 Dodd-Frank financial overhaul which are expected to advance in the House but face an uncertain path in the Senate. The Trump administration, which has laid out plans to roll back Obama-era financial regulations, now appears to be more focused on other parts of its agenda, such as tax changes.

Banking Committee Chairman Mike Crapo (R., Idaho) on Thursday said he wanted to move ahead on bipartisan legislation that lawmakers had already developed in the prior Congress. His panel is working “to build the consensus” on broader changes to Dodd-Frank, though he acknowledged that work is more “contentious” and offered no timetable for such legislation. Only two Democrats, Massachusetts Sen. Elizabeth Warren and Rhode Island Sen. Jack Reed, voiced opposition to Thursday’s package of bills, with Ms. Warren saying she didn’t believe some of the measures had adequate investor protections.

One of the bills, authored by Sens. Pat Toomey (R., Pa.) and Mark Warner (D., Va.) would give privately held firms and startups greater flexibility in awarding stock to employees without triggering what critics say are overly intrusive reporting requirements. The legislation, endorsed by regional grocer Wegmans Food Markets Inc., would boost a $5 million cap in the amount of stock closely held companies can award employees before triggering certain disclosures the companies find meddlesome, such as cash flows and lists of shareholders’ ownership interests. The bill would increase the threshold to $10 million and peg it to inflation.

A second bill, introduced by Sens. Heidi Heitkamp (D., N.D.) and Dean Heller (R., Nev.), would raise to 250 from 100 the number of investors venture-capital funds can acquire before triggering SEC registration requirements. Another measure, also introduced by Mr. Heller, would credit stock exchanges for any fees they may have overpaid the Securities and Exchange Commission.

And a fourth bill, by Mr. Heller and Sen. Gary Peters (D., Mich.), would ease certain restrictions concerning the publication of research on exchange-traded funds. The House Financial Services Committee was expected to approve the same bill on Thursday. A fifth bill, sponsored by Sens. Robert Menendez (D., N.J.) and Orrin Hatch (R., Utah), would impose greater oversight on mutual funds based in, and sold to residents of, U.S. territories like Puerto Rico that have previously escaped SEC regulation.

Financial Choice Act: A Long Shot?

As I’ve blogged before, the “Financial Choice Act” is a House bill that would roll back much of Dodd-Frank (and more). Here’s an excerpt from this Bloomberg article:

Now, though, the drive to wipe out or scale back Dodd-Frank has lost momentum. Trump issued an executive order on Feb. 3 for Treasury Secretary Steven Mnuchin to review the law, but the president made no mention of it in his priority-setting speech to Congress on Feb. 28. As with the Republican vow to repeal Obamacare, the sticking point may be finding a replacement for the law on the books. “We need to regulate more simply, cut back on unintended consequences, and see if we can recalibrate this,” says Douglas Elliott, a partner at management consulting firm Oliver Wyman. “That happens to be an extremely hard thing to do.”

Hensarling does already have a bill in the House, the Financial Choice Act, that’s being given long odds. “We think the chances that the bill becomes law are less than 20 percent—maybe as low as 10 percent,” Brian Gardner, Washington analyst at the investment bank Keefe, Bruyette & Woods, wrote to clients on Feb. 16. Even so, the bill offers a glimpse into Republicans’ thinking on how to shape financial regulation.

Peirce, Fairfax Unlikely to Be Renominated as SEC Commissioners

Living inside the Beltway, you learn that being nominated for a high-ranking government job isn’t the same as obtaining that job. I know all sort of folks that were nominated – and then things got hung up in the Senate for months & years. It’s a brutal wait. All your friends – & work colleagues – presume you’re sliding into this nice new job. But then it never happens. The Twilight Zone. So I feel the pain of Hester Peirce and Lisa Fairfax.

Here’s an excerpt from this WSJ article by Dave Michaels:

Both Hester Peirce and Lisa Fairfax, who were nominated last year to fill two vacant slots at the SEC, rejoined an SEC advisory committee they had stepped away from after former President Barack Obama tapped them to join the agency as commissioners. Ms. Peirce, a Republican, and Ms. Fairfax, a Democrat, both won backing from the Senate Banking Committee last year, but their nominations stalled before they could win approval from the full Senate. In particular, both women faced opposition from Senate Democrats who wanted them to endorse a rule that would require public companies to report their political spending.

Their return to roles on the SEC’s Investor Advisory Committee signals neither Ms. Peirce nor Ms. Fairfax expects to be renominated. Staying away from the SEC advisory committee would be the safe move for a policy wonk or lawyer who expects to face another grilling from partisan senators. Instead, both are now free to make statements about policy that could come back to bite them if they were to face a new Senate hearing.

Broc Romanek – still employed (but the day is young)…