Congress heads back into session to tackle an increasingly crowded legislative calendar with Syria now sitting atop a pile of unresolved issues. Others include avoiding a government shutdown by September 30th, 2014 appropriations, the Farm Bill and WRDA reauthorization. These items are likely to push non-essential legislation – like tax reform and immigration – further into the background over the next few months.
This Update contains:
- A summary of legislation relevant to private funds that has been introduced in the various Committees;
- A review of actions taken by the SEC during the August recess;
- Links to relevant Congressional hearings taking place this week; and
- Reports recently issued by Third Way, Privcap, Davis Polk and the PEGCC.
THE PRESIDENT
The President spent August talking about a variety of domestic issues, including civil rights, college affordability, affordable care act implementation, and interest on student loans. In recent weeks, Syria has dominated the discussion and foreign policy issues will continue to suck up the oxygen in DC this week.
THE 113TH CONGRESS
Both the Senate and the House return to a busy legislative calendar. The Senate will take up authorizing the use of military force in Syria early in the week, followed by the House if it passes the Senate.
Here is a recap of what has taken place thus far relevant to private funds and links to upcoming hearings:
The Senate
Senate Appropriations Committee
SEC and CFTC Funding – The SAC passed its FY 2014 financial services bill on July 25 by a vote of 16-14. The bill funds the SEC at $1.674 billion ($353 million above FY 2013) and the CFTC at $315 million ($110 million above FY 2013).
Senate Agriculture Committee
CFTC Reauthorization – On July 17, the committee held a lengthy two-panel hearing on CFTC reauthorization. Because the CFTC regulates most swaps and derivatives, this legislation could be a vehicle for technical amendments to Title VII of Dodd-Frank – which regulates swaps. The Committee has also released a list of comment letters received in connection with the reauthorization. The most important legislation in this regard is S. 888, which would provide clarity that end-users of swaps are exempt from margin requirements. There currently is a split between the proposed rules issued by the CFTC (margin not required) and the Prudential Regulators (margin is required). Although S. 888 has attracted an impressive list of sixteen co-sponsors, the bill has thus far not been able to advance.
Senate Banking Committee
The SBC has focused mostly on federal housing finance system (FHA, Freddie Mac, etc.) reform thus far. Other topics they have worked on include regulation of financial holding companies and mitigating systemic risk. The written testimony of SEC Chairman Mary Jo White during the July 30 hearing on mitigating systemic risk provides a concise, comprehensive overview of major regulatory issues the SEC is working on.
The committee passed S. 1376, the FHA Solvency Act of 2013, but has yet to take up legislation that would impact private funds in any material way and is likely to continue to focus on federal housing finance reform at least through the end of the year.
This week the Committee holds hearings on Assessing the Investment Climate and Improving Market Access in Financial Services in India and Essential Elements of Housing Finance Reform.
Senate Finance Committee
The SFC and HWMC have diligently worked together to consider comprehensive tax reform, but this looks increasingly unlikely this Congress. The Committee issued Tax Reform Option Papers on Business Investment and Innovation and Income and Business Entities.
Senate Small Business Committee
The SSBC passed S. 511, the Expanding Access to Capital for Entrepreneurial Leaders (EXCEL) Act by voice vote on June 17. The bill increases the maximum amount of leverage a family of funds can receive from the SBIC from $225 million to $350 million and also requires the SBA to publicize certain information regarding each SBIC that receives leverage from the SBA.
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