House Happenings: Update on Financial Services Legislation
The U.S. House of Representatives recently passed seven bills related to banking and financial services. The one that is likely to receive the most media attention will be the Secure and Fair Enforcement Banking Act of 2021 (H.R. 1996). The SAFE Banking Act allows cannabis businesses to have access to banking products and financial services in states where cannabis has been legalized.
Cannabis remains illegal at the federal level. Consequently, under current federal financial laws and regulations, deposits into accounts at national banking institutions related to cannabis sales can be deemed to be proceeds from an unlawful business or transaction. Those deposits can therefore be deemed subject to federal anti-money laundering statutes—and to forfeiture.
Without addressing the legal status of cannabis, the SAFE Banking Act attempts to provide cannabis businesses with access to banking services by prohibiting banking regulators from taking adverse actions against banks that choose to provide services—including loans—to legitimate cannabis businesses. The House overwhelmingly passed the bill by a vote of 321-101.
The House also passed:
- A bill giving service members more protection from private debt-collectors.
- A bill requiring the Department of Housing and Urban Development to discount upfront mortgage insurance premium payments by 25 basis points for FHA single-family first-time homebuyers who complete a HUD-certified housing counseling program.
- A bill requiring the Federal Housing Administration to conduct a review of its policies to identify any regulatory barriers to supporting mortgages under $70,000 and report to Congress within a year with an action plan for removing such barriers.
- Two bills requiring the Securities and Exchange Commission to create task forces or working groups: (i) on issues related to investors over 65 years old and (ii) concerning digital assets; the SEC would be required to report to Congress.
- A bill requiring the SEC to study and report on whether Rule 10b5–1 (17 CFR 240.10b5–1) should be amended: (i) to limit the ability of issuers and issuer insiders to adopt trading plans which allow certain employees of publicly traded companies to sell their shares without violating insider trading prohibitions, (ii) to limit the ability of issuers and issuer insiders to adopt multiple trading plans, (iii) to establish mandatory delays for and limit the frequency of such plans, etc.
Several bills have also advanced from the House Financial Services Committee, including legislation related to diversity and inclusion issues.
For example, the Committee passed the Waters Federal Reserve Racial and Economic Equity Act by a vote of 30 to 23. According to a House press release: “The Act would require the Federal Reserve to carry out its duties in a manner that supports the elimination of racial and ethnic disparities in employment, income, wealth, and access to affordable credit. The Board would be required to report on disparities in labor force trends as well as on plans and activities of the Board to minimize and eliminate these disparities.”
The ESG Disclosure Simplification Act (H.R. 1187) would require issuers to disclose certain environmental, social, and governance (“ESG”) metrics to shareholders, the connection between those metrics and the issuer’s long-term business strategy, and the method by which the issuer determines how ESG metrics impact its long-term strategy.
The Improving Corporate Governance Through Diversity Act (H.R. 1277) would require public companies to annually disclose the self-identified gender, race, ethnicity, and veteran status of their board directors.
Another bill—The Diversity and Inclusion Data Accountability and Transparency Act (H.R. 2123)—would require regulated entities to disclose diversity data, policies, and practices to their respective federal financial regulators.
The Committee also advanced the Comprehensive Debt Collection Improvement Act (H.R. 2547), which is meant to overhaul federal statutes and regulations with respect to debt collection practices. The aim is to broadly strengthen protections for consumers and small businesses.