July is a busy month on Capitol Hill. It is the last legislative session before the August recess and many must-pass bills make their way through Committees and the floor. Despite the looming September deadlines, the House Majority used this time to attack ESG policies and push through crypto legislation sponsored by the industry it is purported to regulate. One bright spot, Senate Leader Schumer filed cloture on the 3 pending nominees for the Federal Reserve, setting up a vote as soon as the Senate returns in September.
House Financial Services Anti-ESG Agenda
One of the main targets of the House Majority this Congress is disclosure and investment policies that promote environmental, social, and governance (or ESG) factors. Even though ESG investing is more than 12% of all U.S. assets under management and is steadily climbing in popularity, the House Financial Services Committee dedicated the first two weeks of the July legislative session holding hearings attacking these policies and introducing bills to take away choices from investors.
These hearings kicked off with a hearing on July 12th misleadingly entitled, “Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation.” The House Majority accused the administration and the SEC of injecting politics into the capital markets. Better Markets created a fact sheet to push back on these claims and reveal the truth behind ESG investing, that, not only are investors are continuing to ask for these disclosures so they can make the most informed decisions, but that ESG has been around since 2006 and that ESG investing is here to stay. Be sure to read our full fact sheet that fully explains these issues and ESG investing here.
Immediately following the full Committee hearing, Committee Democrats led by Ranking Member Waters held a roundtable entitled “Empowering Shareholders and the Importance of ESG Disclosures.” The roundtable featured experts and officials to highlight the importance of ESG disclosures and continue to push back against Republican talking points attacking these proposals.
After the full House Financial Services Committee anti-ESG hearing, the subcommittees got to work attacking ESG proposals. Two hearings in both Capital Markets and Oversight & Investigations focused on attacking the proxy advisor process. Proxy advisors allow investors to make informed decisions and vote on corporate policies and leadership. Prior to these hearings, Better Markets put out a press release explaining the important role proxy advisors play as well as highlighting our previous work. You can read the full release and get more information here.
Lastly, banking regulators from the Fed, OCC, FDIC, and NCUA as well as a County Treasurer from Arizona were called to testify in the Financial Institutions Subcommittee. This anti-ESG hearing focused on the banking side, in how these regulators look at climate risk for the banks that they oversee. Again, it is important to point out that the focus on risk from climate is not politically motivated – banking regulators must consider all risks that may threaten the banking system regardless of where they come from, which includes the very real risk from climate. The impact and loss associated with climate related disasters is well documented and growing. Better Markets put out a fact sheet breaking down this issue and fully explaining why climate risk is a necessary risk to evaluate for banking regulators.
Senate Banking Committee Hearing on Bank Mergers
The Senate Banking Subcommittee on Economic Policy held a hearing entitled “Bank Mergers and the Economic Impacts of Consolidation”. Subcommittee Chair Elizabeth Warren highlighted the risks involved within the consolidated banking sector and the need for stronger merger guidelines. Better Markets released an updated fact sheet that shows the merger review process does not protect main street consumers. Our fact sheet explains how the merger review process must be updated to ensure that it is working in the best interests of communities and consumers, and not too-big-to-fail banks. You can read the full fact sheet here.
House Crypto Legislation Moves to Markup
The House Financial Services and Agriculture Committees released their much-anticipated crypto digital asset market structure bill earlier this month and had markups on the legislation at the end of July. Better Markets was quick to comment and sent a letter to the Leadership of both Committees pointing out the key concerns that must be considered by members. The crypto industry-endorsed legislation would strip investors of crucial protections and seeks to make the CFTC, a smaller, lesser funded regulator than the SEC, the industries main regulator. The release and quick markup of this 200+ page legislation comes on the heels of an intense lobbying effort from the industry to receive friendly rules from Congress, despite the fraud, abuse, and lawlessness that are hallmarks of the industry. Be sure to read Better Markets letter of concerns here.
Additionally, the Financial Services Committee marked up stablecoin legislation this month. While bipartisan negotiations on this bill date back to the previous Congress, Chair McHenry went ahead with a bill that did not have support of Ranking Member Waters. During the markup, the Ranking Member organized a walkout to slow the markup down and protest the legislation that was posted. She also ensured that the full bill would be read, a rare occurrence in a Committee markup. While the bill finally passed out of Committee, after several hours of amendment votes, the Ranking Member made her concerns with the “un”stablecoin legislation clear. Better Markets agrees that these are “un”stablecoins, and previously issued a fact sheet that explains how they are risks to investors and consumers. You can read our fact sheet here.
Members of Congress Weigh-In on Election Betting
Reps. John Sarbanes and Jamie Raskin submitted a joint comment letter to the CFTC opposing a proposal that would allow gambling on the outcome of US elections. Both Congressmen have been leaders in defending democracy and strengthening our electoral process. As elected officials, they know what is at stake, and expressed their grave concern with the proposal.
In addition to the letter from Members of Congress, advocacy groups, experts, and private citizens joined Better Markets in objecting to the proposal. Among the many points made in the joint letter is that allowing gambling on elections would create very powerful incentives for bad actors, or even those just looking to make a quick buck, to interfere with our elections and try to sway voters outside of the democratic process.
