Politics in Action: H.R. 3791, H.R. 3340 and H.R. 2666

STATEMENT OF ADMINISTRATION POLICY

H.R. 3791 – Raise the Consolidated Assets Threshold
under the Small Bank Holding Company Policy Statement

(Rep. Love, R-UT, and four cosponsors)

The Administration strongly opposes H.R. 3791, a bill that seeks to raise the consolidated assets threshold under the Small Bank Holding Company Policy Statement from $1 billion to $5 billion.

The primary purpose of the Small Bank Holding Company Policy Statement (Policy Statement) is to make it easier for small banks to raise capital so they can continue to provide services to their local communities. The Policy Statement also ensures that when small, community institutions are purchased, they are more likely to be purchased by another community institution rather than a larger bank.  Less than one year ago, the Congress reached a compromise to raise the Small Bank Holding Company Policy Statement threshold from $500 million to $1 billion.  That change was intended to ensure that local communities retain access to the banks that best understand their needs and can provide personalized services to residents.  Now, less than one year later, this piece of legislation seeks to raise that threshold again – to $5 billion – in an attempt to allow large banks to evade specific minimum leverage and risk‑based capital requirements.  These limitations were put in place to ensure that banks remain sound and able to serve their customers.  Community banks with $1 to $5 billion in assets already have sufficient access to capital markets and as a group are exhibiting health and resilience.  Raising the threshold to exempt banks with over $1 billion from important minimum leverage and capital requirements would do little more than encourage banks to take on debt, endangering their soundness and potentially depriving their customers of much needed banking services should the bank fail.

Setting the consolidated assets threshold at $1 billion was a bipartisan decision that struck a balance between allowing small banks to access capital to better serve their customers, and ensuring their safety and soundness.  Raising the threshold to $5 billion less than a year later would be an unnecessary and risky change.

If the President were presented with H.R. 3791, his senior advisors would recommend he veto the bill. 

H.R. 3340 – Financial Stability Oversight Council Reform Act

(Rep. Emmer, R-MN, and 15 cosponsors)

The Administration strongly opposes House passage of H.R. 3340, the Financial Stability Oversight Council Reform Act, which seeks to subject the Financial Stability Oversight Council (FSOC) and the Office of Financial Research (OFR) to Congressional appropriations.  The bill also would require the OFR to submit quarterly reports to the Congress regarding its activities and to provide a public notice and comment period of at least 90 days before issuing any report, rule, or regulation.  Subjecting these bodies to Congressional appropriations would hinder their independence and could limit their ability to monitor and address threats to financial stability. 

The Wall Street Reform and Consumer Protection Act (Wall Street Reform) created FSOC to bring independent regulators together with a collective responsibility for monitoring risks across the system, wherever they may arise, and to identify and respond to emerging threats to financial stability. Before FSOC, no single entity was accountable for monitoring and responding to risks to financial stability. Similarly, the OFR plays a unique role in promoting financial stability by identifying and filling in gaps in data and knowledge about the financial system, monitoring financial stability metrics across the system, conducting independent research on financial stability policies and providing FSOC with data and analytical support. 

Wall Street Reform provided FSOC and the OFR with permanent funding through assessments on the largest financial institutions, including bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies supervised by the Federal Reserve Board of Governors.  This funding system ensures that large financial institutions bear the costs of protecting financial stability. Maintaining a funding source independent of political interference allows FSOC and the OFR to function at full capacity and focus on threats to financial stability.  Moreover, funding FSOC and the OFR through appropriations would subject these entities to political gamesmanship that could hinder their ability to conduct independent research, ask questions, and analyze information about industries, firms, or activities — running the risk of ignoring the next threat to financial stability. 

If the President were presented with H.R. 3340, his senior advisors would recommend that he veto the bill. 

H.R. 2666 - No Rate Regulation of Broadband Internet Access Act

(Rep. Kinzinger, R-IL, and 19 cosponsors)

The Administration strongly opposes House passage of H.R. 2666, the No Rate Regulation of Broadband Internet Access Act, which would undermine key provisions in the Federal Communications Commission's (FCC) Open Internet order and harm the Commission's ability to protect consumers while facilitating innovation and economic growth.

For almost a century, our laws have recognized that companies that connect Americans to the world have special obligations not to exploit the gatekeeper power they enjoy over access in and out of our homes and businesses.  The same philosophy should guide any service that is based on the transmission of information, whether a phone call or a packet of data.  The FCC's rules — issued after a lengthy rulemaking process that garnered an unprecedented amount of public input, including comments from four million Americans — recognize that broadband service is of the same importance, and must carry the same obligations as so many of the other vital services do.  These carefully‑designed rules have already been implemented in large part with little or no adverse impact on the telecommunications companies making important investments in our economy.

H.R. 2666 is overly broad and extends far beyond codifying the FCC's forbearance from applying provisions of the Communications Act related to tariffs, rate approval, or other forms of utility regulation. Even as amended, H.R. 2666 would restrict the FCC's ability to take enforcement actions to protect consumers on issues where the FCC has received numerous consumer complaints. The bill also would hamstring the FCC's public interest authority to review transactions.  H.R. 2666 also could limit the Commission's ability to address new practices and adapt its rules for a dynamic, fast-changing online marketplace.

If the President were presented with H.R. 2666, his senior advisors would recommend that he veto the bill. 

Source: The Executive Office of the President, Office of Management and Budget