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Financial Services Committee Democrats Release COVID-19 Wish List

This week, Democrats on the House Financial Services Committee, led by Chairwoman Maxine Waters (D-CA), unveiled their public policy response to the COVID-19 pandemic. While framed as a goodwill attempt at helping struggling Americans, the partisan legislation contains a number of controversial provisions that have no place in an emergency, short-term relief package. Although these provisions weren’t included in the final version of the Phase III stimulus bill which is expected to be approved by the House today, some Democrats are sure to push to insert these provisions into any future Phase IV or Phase V bill.

Here are some of the more egregious sections in the 269-page Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act (H.R. 6321):           

  • Section 101: give the unbanked access to stimulus funds through a new digital wallet available at Federal Reserve Banks, member banks, and U.S. Postal Service offices.
  • Section 109: direct the Consumer Financial Protection Bureau to extend the GSE QM Patch until January 1, 2022.
  • Section 111: prevent a debt collector from reporting unpaid debts to credit rating agencies, collecting a security interest, and from continuing or starting new litigation.
  • Section 113: require the federal government to make student loan payments during the pandemic and the following six months, as well as forgive up to $10,000 of student loan debt for each borrower.
  • Section 402: impose a temporary ban on stock buybacks for companies who accept government assistance.
  • Section 406: order the Treasury to pay the International Development Association over $3 billion and the African Development Fund nearly $514 million.
  • Section 407 and 408: require large corporate beneficiaries of government assistance to comply with restrictions on executive compensation and dividend payments.

The provisions above would needlessly expand the power of the federal government, interfere with the legitimate operations of certain industries, and spend money on initiatives that could be better allocated to individuals or businesses in need. In fact, the bill seems so heavily influenced by former Obama adviser Rahm Emanuel’s mantra, “never let a good crisis go to waste,” that it can more accurately be described as a wish list.

Instead of all this, lawmakers should look for innovative solutions to fight the COVID-19 pandemic. Just last week, Ranking Member Patrick McHenry (R-NC) and other Republicans on the committee proposed some ideas:

  • Rep. Patrick McHenry’s (R-NC) Relief for Small Businesses Through Micro-Offerings Act would create a new micro-offerings exemption to allow broader access to capital for entrepreneurs and small businesses. This would help support access to loans in the case of a shortage in traditional bank lending.
  • Rep. Bill Huizenga’s (R-MI) SEC Relief to Slow the Spread of Coronavirus Act would remove requirements for in-person meetings and hand-delivery of certain documents required by the Securities and Exchange Commission (SEC). This would lower the amount of in-person contact and slow the spread of the virus.
  • Rep. Blaine Luetkemeyer’s (R-MO) Coronavirus Accounting Relief Act would delay the implementation of the Current Expected Credit Losses (CECL) accounting standard. CECL forces institutions to increase credit losses and decrease lending, and delaying its implementation would free up billions of dollars in credit that financial institutions can lend to consumers and small businesses. 
  • Rep. French Hill’s (R-AR) Touchless Transactions Act would establish contactless payments by removing the mandate that any swipe, dip, or tap transaction at a register require a signature. This would help slow the spread of the virus and is already used in most European countries.

A number of these deregulatory proposals have attracted bipartisan support in the past, including from Chairwoman Waters. As documented by CEI Senior Fellow John Berlau last year, Waters and a number of high-ranking committee Democrats supported a capital markets deregulation package during the 115th Congress and also voted for the deregulatory Jumpstart Our Business Startups (JOBS) Act of 2012 that was signed into law by President Obama.

While these bills would be a step in the right direction, legislators and decision makers at the federal, state, and local level should also work towards getting rid of #NeverNeeded rules and regulations that stand in the way of our ability to address this crisis.