Markup of Various Measures

Committee on Banking and Currency

2025-09-16

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Source: Congress.gov

Summary

The committee convened to consider and advance a series of bills aimed at strengthening the banking system, enhancing capital markets efficiency, and protecting the financial system from foreign interference and corruption.[ 00:38:00-00:38:25 ] These legislative proposals covered a broad range of topics, from deterring geopolitical threats and combating financial crime to streamlining regulatory frameworks and supporting community banking institutions.[ 00:38:00-00:38:25 ]

Themes

Deterring Chinese Threats to Taiwan

The "Protect Taiwan Act" (H.R. 1531) was introduced to send a clear message to China that any conflict with Taiwan would result in severe financial and diplomatic consequences. This bill proposes excluding Chinese representatives from key international financial organizations, such as the G20 and the Basel Committee on Banking Supervision, if China poses an immediate threat to Taiwan's security. Supporters emphasized this as a critical deterrent to protect Taiwan's security and America's economic and national interests. The ranking member, while supporting the bill, raised concerns about the current administration's contradictory policies, including tariffs on Taiwan and potential withdrawal from international organizations, which could undermine the bill's intent.

Combating Kleptocracy and Foreign Corruption

The "Kleptocracy Asset Recovery Rewards Program Act" (H.R. 5344) seeks to reauthorize and make permanent a pilot whistleblower program designed to combat foreign government corruption and illicit finance. This program incentivizes whistleblowers to provide information for identifying, seizing, and repatriating stolen public funds linked to foreign governments or their proxies, with rewards paid from the recovered assets, making it self-funding. Speakers highlighted its success in blocking billions in sanctioned Russian assets and the global persistence of corruption.

Preventing Financial Exploitation of Vulnerable Adults

The "Financial Exploitation Prevention Act" (H.R. 2478) aims to equip financial institutions with tools to combat the financial abuse of seniors and individuals with mental or physical impairments. The bill allows mutual funds to temporarily delay transactions if financial exploitation is suspected, providing a window for investigation and notification of authorities, and offers a safe harbor from legal liability for good-faith interventions. While generally supported for protecting vulnerable populations, concerns were raised that deregulation efforts by the current administration might undermine broader financial protections.[ 01:14:47-01:15:17 ]

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Streamlining SEC Authorities from Dodd-Frank

The "Business Owners Protection Act" (H.R. 3484) proposes to terminate unused authorities of the Securities and Exchange Commission (SEC) established by the Dodd-Frank Act.[ 01:21:19-01:21:35 ]

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 Specifically, it targets the SEC's power to limit mandatory arbitration clauses, impose additional obligations on broker-dealers, and establish a uniform fiduciary standard, arguing these powers create regulatory uncertainty and burdens for businesses.[ 01:21:40-01:21:45 ]

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 Opponents argued that these provisions are crucial investor protections, warning that the bill would weaken safeguards, allow conflicts of interest, and make it easier for companies to avoid accountability.

Enhancing Community Bank Deposit Access

The "Community Bank Deposit Access Act" (H.R. 5317) aims to clarify that certain custodial deposits for well-capitalized community banks are not considered brokered deposits, easing regulatory burdens and allowing greater access to diverse funding streams. An amendment was adopted to narrow the bill's focus to community banks, including minority depository institutions (MDIs) and Community Development Financial Institutions (CDFIs), to ensure they can better serve their communities. This measure is seen as vital for the survival and competition of community banks against larger institutions.[ 01:51:53 ]

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Improving FSOC Designation Process

The "Financial Stability Oversight Council Improvement Act" (H.R. 3682) seeks to enhance the consistency and transparency of the FSOC's process for designating non-bank financial companies as systemically important financial institutions (SIFIs). The bill requires FSOC to consult with firms and their primary regulators to consider alternative risk mitigation actions before imposing SIFI designations, aiming for a more predictable and tailored approach. Supporters praised its bipartisan effort to bring transparency and accountability, while acknowledging its importance in maintaining financial stability without weakening emergency powers.

Facilitating Local Deposit Retention

The "Keeping Deposits Local Act" (H.R. 3234) proposes to modernize the treatment of reciprocal deposits to improve liquidity for small and mid-sized banks, increase local lending, and enhance their competitiveness for large accounts. The bill introduces a tiered system to replace the current cap, ensuring the greatest benefit for banks most in need, such as MDIs and CDFIs. An amendment was adopted to narrow the scope by removing the largest tiers, focusing the expansion on community and mid-sized banks, and avoiding disproportionate advantages for mega-banks.

Modernizing Bank Merger Reviews

The "Bank Competition Modernization Act" (H.R. 5262) aims to streamline regulatory reviews for small bank mergers by creating a $10 billion asset threshold, below which federal banking regulators would not need to request a competitive analysis from the Department of Justice. Proponents argue this would reduce burdensome delays for smaller institutions, promote efficiency, and allow them to achieve economies of scale. Critics, however, expressed concern that the bill would further weaken a merger review process already perceived as a "rubber stamp," potentially accelerating consolidation and harming consumers in smaller communities.[ 02:41:37-02:41:39 ]

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[ 02:43:23-02:43:43 ]

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Adjusting Community Bank Capital Requirements

The "Community Bank Lift Act" (H.R. 5276) seeks to adjust the Community Bank Leverage Ratio (CBLR) framework to encourage more community banks to opt into a simpler set of capital requirements. The bill proposes lowering the CBLR range from 8-10% to 6-8% and requires regulators to examine modifications to its definitions and criteria. Supporters believe this would ease regulatory burdens, allow more banks to deploy capital, and support small businesses, while opponents expressed concerns that lowering capital requirements without further study could jeopardize safety and soundness.[ 03:01:57-03:02:06 ]

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Extending Merchant Banking Investment Holds

The "Merchant Banking Modernization Act" (H.R. 5291) proposes to extend the permissible holding period for merchant banking investments from 10 years to 15 years. This change aims to provide greater flexibility for financial holding companies to serve as long-term partners for small businesses, especially in rural areas, by allowing more time for projects to mature and reach profitability. Concerns were raised about potentially increasing risk for financial institutions and the need for more study before a sweeping mandate to extend investment maturity.

Stress Testing Transparency and Climate Risk

The "Stress Testing Accountability and Transparency Act" (H.R. 5270) requires the Federal Reserve to issue regulations establishing clear methodologies and scenarios for annual stress tests and prohibits climate-related stress tests for non-bank financial companies. Proponents argue for greater transparency and accountability in the stress-testing process to prevent arbitrary decisions and ensure regulatory efficiency. Opponents argue that publicizing details could allow banks to "game the test," undermine preparedness, and that prohibiting climate-related tests ignores significant financial risks.

Tone of the Meeting

The meeting exhibited a formal and largely procedural tone, characterized by both bipartisan cooperation on specific bills and significant partisan disagreements on others.[ 00:37:30-00:37:40 ] Many bills, particularly those supporting community banks and combating financial crime, saw calls for bipartisan support, sometimes facilitated by amendments addressing concerns from both sides. However, debates over regulatory burdens, the scope of the Dodd-Frank Act, and the inclusion of climate change in financial risk assessments highlighted clear ideological divides, often leading to sharp exchanges and partisan votes. Despite these differences, parliamentary decorum was generally maintained, with members frequently thanking each other for their work and collaboration.[ 00:44:46-00:44:53 ]

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Participants

Transcript

The committee will come to order.  Without objection, the chair is authorized to declare a recess of the committee at any time.  Without objection, all members will have five legislative days within which to submit additional materials to the chair for inclusion in the record.   Good morning.  We're going to advance a series of bills aimed at strengthening our banking system and making our capital markets more efficient.  We'll also bring up bills that aim to protect our financial system from foreign interference and corruption.  These bills are designed to reinforce the foundations of our financial system and are crucial to ensuring that our economy remains robust.  As Alexander Hamilton said, banks are the nurseries of our national wealth.   Members of this committee know that a strong banking system is the foundation of our economic growth, financial stability, and consumer confidence.  And yet we've heard for 15 years about how the bank regulatory framework needs to be revisited, especially for our community banks.  The bipartisan banking reform law passed by President Trump in 2018 was a good start, but we can and should do more.   That's why the committee will be considering bills to allow banks to access diverse sources of funding, such as through reciprocal and custodial deposits, which allow small and well-managed institutions to grow organically while remaining competitive in the serving of their customers.   We'll also be marking up a bill that improves how the Department of Justice works with the federal banking agencies to analyze bank mergers, in addition to legislation that would modify the community bank leverage ratio in a way that encourages smaller banks to opt into the framework that was established in S2155.  We'll also be considering bills to strengthen our capital markets.   Capital markets are the lifeblood of our economy, providing businesses with the resources they need to innovate and grow.
Capital markets rely on a fundamental concept, trust.  Investors, whether individuals, large institutions, must have trust that their investments are safe.  Today, the committee will consider legislation that seeks to protect our most vulnerable investors by authorizing financial institutions to intervene in the cases of suspected fraud.   By creating a safer environment for investors, we'll strengthen the public trust in our markets.  We will also mark up legislation that works to remove unnecessary authorities granted to the Securities and Exchange Commission pursuant to Dodd-Frank, but have never been activated, creating a regulatory uncertainty for market participants.   By streamlining operations and reducing unnecessary regulatory burdens, we can foster an environment that promotes growth while maintaining the necessary safeguards to protect consumers, investors, and our national and economic security.  Our goal is to create a financial system that fosters economic growth, innovation, and stability while also meeting the evolving needs of U.S.  consumers and businesses.   I look forward to today's discussion on these important bills and hearing from our members on how we can better support our banking system and expand our capital markets.  I yield back.  I now recognize the distinguished ranking member for her opening statement.
Thank you very much, Mr. Chairman.  Believe it or not, just a few short months ago, the United States economy was the strongest in the world.  Then Trump took office.  And in just eight months, inflation has now climbed up to 2.9%, well above the Fed's 2% target.  And unemployment is at the highest level in four years.   Despite a promise to save, quote, black jobs, the unemployment rate for black Americans rose to 7.5% in August, the highest level since October 2021.   Meanwhile, businesses, both large and small, continue to struggle under the weight of hundreds of billions of dollars in tariffs.  Because the administration's cruel immigration raids are stripping companies of hardworking employees who are here legally but fear being racially profiled, businesses now are considering shutting down or slowing production.  American manufacturing?   is being obliterated.  Since April, our nation has lost 42,000 manufacturing jobs.  And that's right, lost, not gained, 42,000 manufacturing jobs on top of what is already a terrible economy.  Donald Trump is making things even worse.  His attempt to eliminate the independence of the Federal Reserve will lead to even higher inflation and jeopardize the savings   and retirement security of millions of Americans.  Trump's attempted takeover is opposed by a bipartisan contingent, including the former chairman of this committee, whose picture is to my left, Jeff Hensherling.  Unfortunately, I'm still waiting for Republicans on this committee to stand up for Congress's own constitutional authority, not the president's, to oversee the Fed.
Instead of addressing the real pain   Facing Main Street, Republicans are advancing legislation that just gives Wall Street a blank check at a time when families are already struggling.  It wasn't enough to eliminate the Consumer Financial Protection Bureau.  Now Republicans are pushing bills that would weaken safeguards like stress tests and make it even easier for the biggest and worst acting banks to get even higher through mergers.   This is an ongoing effort to undermine the Dodd-Frank Act.  Republicans could choose to stop the economic hardship families are experiencing from tariffs, but they refuse to do so.  They could also pass legislation to ensure that the 60,000 families living in emergency housing vouchers are not evicted next month when funding for their housing expires.

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