June was another busy month on Capitol Hill, with numerous hearings covering a wide range of topics including semi-annual reports from both the CFPB and the Fed. There was also a much-anticipated legislative markup in the Senate Banking Committee on executive compensation in response to the banking crisis.
House Digital Assets Hearing
The Chairs of the House Agriculture and the House Financial Services Committees introduced a sweeping 162 page bill, that includes significant changes to the jurisdiction of the SEC and CFTC and their regulation of the crypto industry.
The Agriculture Committee held its hearing on the draft bill first, covering the CFTC’s responsibility in the crypto ecosystem. The hearing was largely focused on the bitcoin spot market and featured the Chairman of the CFTC, Rostin Benham. The proponents of the bill highlighted the current gap in the bitcoin spot market and the need for legislation to fill that gap, with the CFTC claiming it is only able to go after bad actors after fraud or abuse has been exposed. Committee Democrats highlighted key concerns with the bill, including the gross lack of funding for the CFTC and the fact that the agency is currently unable to oversee a vast new industry.
A week later, the House Financial Services Committee held its hearing on the bill, covering the SEC and its areas of jurisdiction, as well as their draft stablecoin legislation. Committee Democrats highlighted the strength of the US securities laws and how they already apply to crypto firms without the need for these sweeping changes. They also raised concerns about limiting the jurisdiction of the SEC, the world’s premiere investor protection agency, and favoring the CFTC, which has a much smaller staff and budget with much less expertise and virtually no history of investor protection.
Better Markets has published two recent fact sheets examining crypto regulation within the SEC and the CFTC, and stablecoins. Be sure to read the full fact sheet on crypto regulation here and on “un”stablecoins here.
CFPB’s Semi-Annual Report to Congress
In June the Director of the CFPB, Rohit Chopra, delivered the CFPB’s semi-annual report to Congress in both the House and the Senate. Opponents of the CFPB used the hearings to attack the agency and push industry talking points in an attempt to weaken the agency. Democratic leadership in both Committees defended the work of the CFPB and highlighted the agency’s important victories for consumers, including returning $16 billion to victimized consumers. You can be sure that the many involved companies would not have provided that $16 billion in relief if there weren’t serious violations of law that required it.
Federal Reserve’s Semi-Annual Report to Congress
Fed Chair Jerome Powell also gave his semi-annual report to both the House and the Senate in June. While many of the questions related to the Fed’s decision to “pause” interest rate hikes, Democrats on the Committee pressed Chair Powell on the Fed’s maximum employment mandate. While there is always plenty of ground to cover when the Chair of the Fed testifies, Better Markets had Six Key Questions that we believe the American people would have liked to see answered. Those questions focused on how the Fed plans to prevent the next banking crisis, and what concrete action on resolution plans, capital requirements, and the pandemic trading scandal at the Fed were being taken. Be sure to read our fact sheet for the full six key questions to ask the Fed Chair here.
Nominations Hearing for Federal Reserve Board
In June the Senate Banking Committee held a hearing for three nominations to the Federal Reserve Board: Dr. Philp Jefferson to serve as Vice Chair, and Dr. Lisa Cook and Dr. Adriana Kugler to serve as Members of the Board. Better Markets strongly supported the nominations of Dr. Jefferson and Dr. Cook last year, and were proud to do so again. Additionally, we were pleased to see Dr. Kugler nominated to the Board and support her nomination as well. All three nominations are extremely well qualified to serve on the Fed Board. Read more about these nominees here.
Senate Banking Committee Bank Failures Markup
The Senate Banking Committee advanced legislation to address clawbacks for the executives of failed banks. Chairman Sherrod Brown and Ranking Member Tim Scott co-sponsored this legislation to address one of their top priorities following the bank collapses and the banking crisis earlier this year. This legislation will allow but not require the FDIC to claw back the compensation of executives if their bank fails, a key area of concern for the Committee as bank executives received bonuses in the months and years before the collapses. The so-called RECOUP Act received overwhelming support from the Committee and could be the first piece of legislation passed into law in the wake of the banking crisis earlier this year. However, many in the financial industry are expected to aggressively oppose the legislation so enactment is far from certain.