▶ 0:31:23Good to see you.
▶ 0:34:47The committee will come to order. Without objection, the chair is authorized to declare recess of the committee at any time. Without objection, all members shall have five legislative days within which to submit additional materials to the chair for inclusion in the record. I now recognize myself for 5 minutes for an opening statement.
▶ 0:35:07Today we'll advance a series of bills aimed at strengthening our economy and supporting small businesses and American At last week's State of the Union address, President Trump spoke about the strength and resilience of the US After years of economic hardship brought on by the Biden administration, marked by one runaway federal spending, historic inflation, rising interest rates, and burdensome regulations, the American people are finally seeing a return to stability,
▶ 0:35:36renewed growth, and policies that put American workers and families first. Prices are coming down. Inflation is cooling. Energy cost has eased. Investors are putting capital back to work with renewed confidence in the strength and stability of the economy. The bills before us today reflect President Trump and Republican shared commitment to promoting pro-growth, America First policies.
▶ 0:36:03We're working to strengthen Main Street, expand access to capital, support American businesses, and ensure that our financial system is the most dynamic in the world. Committee Republicans are dedicated to fighting every day for American families, which is why we are advancing today the Main Street Capital Access Co-led by our Subcommittee on Financial Institutions Chair Andy Barr of Kentucky, this bill simplifies outdated regulatory requirements that have crippled our community banks
▶ 0:36:33and local lenders over the past few decades. Giving them the flexibility they need to get back to lending in our communities throughout the country, ensuring that small businesses and potential home buyers have the financing they need to Expanding access to capital strengthens local economies and keeps opportunity within reach so that businesses can grow and American families can achieve greater financial security.
▶ 0:37:01We will also review the chairman of our subcommittee on oversight and investigation, Dan Meuser's Restoring Secondary Trading Market Act. This important bill amends the Securities Act of 1933 to preempt state blue sky laws for certain off-exchange secondary trading By streamlining the regulatory framework for off-exchange trading, this bill promotes greater uniformity and efficiency in our markets, reduces unnecessary
▶ 0:37:31compliance burdens, and strengthens investors' confidence so that our capital markets remain competitive and effective in supporting economic growth. We're also eager to advance Representative Garbarino's Small Entrepreneurs Empowerment and Development Act, the SEED Act, which also amends the Securities Act of 1933 to allow small issuers to conduct limited micro offerings without being subject to costly disclosure
▶ 0:38:01and filing By easing these regulatory burdens, this bill gives startups and small businesses greater flexibility to raise early-stage capital, empowering them to grow and innovate while preserving strong anti-fraud protections to safeguard investors and maintain confidence in our As we all know, a strong national defense relies on a resilient industrial which is why we're working hard today to advance today
▶ 0:38:32Chairman Davidson's bipartisan Defense Production Act Act to reform and reauthorize the DPA. Updating and extending the DPA ensures the United States has robust supply chains to support domestic manufacturing and reduce reliance on foreign We also have to for consideration today Representative Troy Nehls' Save Our Shrimpers Act, which supports
▶ 0:39:02our domestic shrimping industry and the hardworking men and women in our coastal The bills we're reviewing today address the real challenges by Americans by reducing unnecessary regulatory burdens, expanding access to capital, and reinforcing critical industries. We're working hard to protect the integrity and security of the financial system. I look forward to today's discussion of these important bills that I believe will benefit the American people.
▶ 0:39:32I yield back the balance of my time and recognize the ranking member for her opening statement. Thank you very much, Chairman Hill. Americans are fed up with rising grocery, utility, and housing costs caused by the Trump administration's reckless policies, but instead of changing course, Trump is doubling down.
▶ 0:39:57After the Supreme Court struck down his unlawful of which Americans paid nearly 90% of, he imposed more. Uh while his own Treasury Secretary admits Americans may never get their money back. As if that weren't enough, Last week, Trump unilaterally waged war in Iran, sending gas and energy prices soaring.
▶ 0:40:26And while families struggle at the pump, he's deploying the US Navy and spending taxpayer dollars to protect all tankers bound for, of all places, China. Unfortunately, none of the bills before us today will lower costs for Americans. Instead, they risk driving up prices for families saving for retirement, preparing for college, or just looking to take out a loan. And it doesn't stop there.
▶ 0:40:56These proposals could even raise the cost of everyday items like shrimp. That's right, you heard me. The Republican Party wants to play around with the price of shrimp. Didn't they learn anything from Red Before I discuss the bills that will make life more expensive for Americans, I want to thank the chairman for working with me and my staff on a broadly bipartisan bill to reauthorize the Defense Production Act Production
▶ 0:41:27Act. These are extraordinary authorities that have strengthened our national defense and helped protect Americans during crises like the COVID pandemic. During COVID, DPA helped boost production of personal protective equipment or PPE and vaccines. When hurricanes and supply chains disruptions strained hospitals, it helped restore essential supplies.
▶ 0:41:55And when the United States became too dependent on foreign sources for key materials, the DPA helped rebuild production here at home, from batteries to critical minerals that support both our military and everyday life. That's the DPA protecting national security and public safety.
▶ 0:42:17To make sure the DPA continues to work for the American people, Democrats have worked across the aisle to put forth a stronger, modernized DPA that adds clear guardrails, strengthens oversight, and keeps the law focused on the public good, not as a loophole for political abuse. Now, I hope, Mr.
▶ 0:42:39Chairman, that you would agree that the DPA should never be used to conduct surveillance of Americans or to build autonomous killing Nor should it be used to punish Trump's perceived political enemies. Turning to the deregulatory bills before us, my Republican colleagues claim they support community banks, small businesses, consumers, and investors, but their bills tell a different story.
▶ 0:43:08These proposals gut safeguards, let Wall Street mega banks and their CEOs off the hook, and undermine the Consumer Financial Protection Bureau. They strip away transparency, open the door to risky trading and unregistered stock sales where scams thrive. That's not strengthening our financial system, it's undermining our economy.
▶ 0:43:32Under the Trump administration, enforcement has already rolled back lawsuits against bad actors trying to cheat hardworking people that have been And when oversight weakens and resources get cut, you better believe that the scammers will move in fast.
▶ 0:43:49Meanwhile, small businesses are already being squeezed by rising costs that make worse made worse by Trump's tariffs, but the bills pile on this pain, subjecting small businesses to litigation and scams. Small businesses don't have armies of lawyers to navigate these hidden risks.
▶ 0:44:11That's why we should be passing legislation that keep markets fair so entrepreneurs succeed on hard work, not scams. Committee Democrats continue to fight for Americans and reduce costs and we will always continue pushing for solutions that help small businesses grow. I yield back the balance of my The gentleman yields back.
▶ 0:44:36Like to recognize myself for a point of personal Before we get begin today's markup, I want to take a moment and recognize former Federal Reserve Chairman Alan Greenspan who turns 100 years old this Not only has Alan been a long time friend of mine dating back to our work on economic policy during the Bush 41 but he's been one of the most consequential economic policy makers of our time, serving as the chair of the Federal Reserve from 1987 to 2006.
▶ 0:45:05Alan's tenure was a pivotal moment in our nation's economic history. From the 1987 stock market crash to expansion and the technological transformation of the 1990s, his commitment to fiscal discipline and sound economic stewardship helped produce a budget surplus in the late 1990s, setting a constructive course for future administrations and reinforcing confidence in America's long-term economic outlook.
▶ 0:45:31Alan left a lasting impact in the direction of US monetary policy, guiding the economy through periods of volatility with a steady hand and laying the groundwork for sustained growth and innovation. Chairman Greenspan's 100th birthday marks a century defined by service and a legacy of leadership that helped shape the direction of American economic policy for generations. I hope you all will join me in wishing Chairman Greenspan a very happy 100th birthday.
▶ 0:46:03Yield back. Pursuant to notice, I'll start our markup today, and I call up HR 7688, which is our bipartisan effort to modernize the Defense Production Act, which was introduced by Representative Warren Davidson, who's the chair of our National Security Committee.
▶ 0:46:33The clerk will report the bill, which was distributed in advance. HR 7688 to modernize and reauthorize the Defense Production Act of 1950 and for other purposes. Without objection, the bill is considered read and open to amendment at any point. Representative Davidson has an amendment in the nature of a substitute, copies of which were distributed in advance. The clerk will report that amendment. An amendment in the nature of a substitute to HR 7688 offered by Mr. Davidson of Ohio, designated as Davidson OH 117.
▶ 0:47:05Without objection, the amendment is considered read, will serve as base text for the purposes of amendment. The gentleman from Ohio, Mr. Davidson, you're now recognized for 5 minutes. Uh thank you, Chairman. I do move to strike the last word. I'm proud to sponsor HR 7688, the DPA Modernization Act of 2026. I want to thank my colleagues on both sides of the aisle for their collaborative work to make this a truly bipartisan reality, especially Representatives Huizenga, Nunn, Beatty, and Vargas.
▶ 0:47:34The Defense Production Act, or DPA, has been a long-standing and valuable tool in the United States national security Since it was enacted in 1950, these authorities have enabled the United States to mobilize our industrial during national emergencies. Reauthorizing the DPA is not just about extending existing authorities. Frankly, it's important that we modernize them for the very different, very real threat environment we face today.
▶ 0:48:01The need for a robust and proactive DPA and broader defense industrial base in the United States has only intensified as the geopolitical threats we face loom larger, supply chains reveal themselves to be fragile, and emerging technologies continue to change uh the supply chain landscape.
▶ 0:48:21That being said, as the authorizing committee of jurisdiction, it is our job to assess how existing DPA authorities are implemented and executed to ensure they are operating at peak effectiveness and that they are mobilized uh for efficiency. Ahead of today, the committee has held two hearings focused on DPA.
▶ 0:48:42Uh the last DPA reauthorization occurred in 2018, and since then, the use of DPA authorities has expanded, raising a few important questions for this committee to consider. How do we ensure accountability and transparency in how DPA funds are deployed? How do we better coordinate across agencies and the private sector? And how do we strike the right balance between preparedness and responsible use of federal authorities?
▶ 0:49:07COVID in particular highlighted these changes, and this is the first attempt to reauthorize this uh in the wake of COVID. These are just a few of the guiding questions that shaped our approach to the legislation. So, I'd like to provide an overview uh of a few key updates that we'll be considering First, governance matters. The interagency DPA committee structure that oversees DPA investments should be modernized to meet today's challenges.
▶ 0:49:33A more formalized governance framework with reallocated roles, clearer lines of authority, and a strong congressional reporting obligation would improve transparency while also preserving the agility that makes DPA effective in the first place. Second, the DPA should be about preparedness, not just a reactionary crisis response.
▶ 0:49:57The legislation not only requires clear strategies for national defense priorities, from critical minerals to shipbuilding, it holds DPA agencies accountable for delivering results. At the same time, this bill helps ensure that the DPA's immense powers cannot be abused through ad hoc interventions in consumer markets.
▶ 0:50:19today's supply chains and industrial challenges can require substantial Whether it's related to critical minerals, advanced manufacturing, or innovative technologies, uh however, Congress should institute clear guardrails on equity investments made under Title III. A defined cap on government equity could prevent mission creep and ensure that the DPA remains a targeted instrument, and not a standing industrial policy for day-to-day use.
▶ 0:50:49The government should only enter into an equity position when necessary, and should exit as soon as practical. As an alternative, I would highlight the bill's establishment of a new critical minerals initiative that would draw on off-take agreements to incentivize new production without the need for government control of the My colleagues and I have approached this reauthorization as an opportunity to strengthen and recalibrate this vital tool that underpins our nation's ability to prepare for and respond
▶ 0:51:20uh in times of crisis. In an era of great power competition, ensuring that we call on our industrial base is critical for our success. So, I urge uh all of our colleagues to support this bipartisan bill, uh which would refocus the DPA and uh with purpose and a commitment to national I am encouraged by how collaborative this process has been, and hope it continues to be that way as we get it across the finish line. I yield back. Gentleman yields back.
▶ 0:51:49Uh Seeks recognition. The gentlewoman from California, the ranking member, is recognized to strike the last word.
▶ 0:51:54I move to strike the last word.
▶ 0:51:55Recognized for 5 minutes. The Defense Production Act of 1950 is a 75-year-old law that grants the president the authority to prioritize, allocate, and accelerate the production of industrial resources to meet national defense, security, and emergency needs.
▶ 0:52:16It is a necessary proven act that has allowed the government to pivot before or through emergencies, speeding up the manufacturing and distribution of goods like vaccines and masks in the COVID-19 pandemic.
▶ 0:52:31The law has also been deployed in response to natural disasters like the Hurricane Katrina recovery and to refill stocks of supplies after the United States has distributed to allies like Ukraine. DPA's powers can and have been used for good. In the hands of the wrong leadership, however, it is a heavy authority that has potential for abuse.
▶ 0:52:59The ability to direct the activities of the private sector and to redirect whole industries is one not one to be taken lightly. It is one thing to rate contracts for the manufacture of ventilators in a pandemic or for shipbuilding and storage, directing funds where they are needed most.
▶ 0:53:20It is wholly another to use prioritization or DPA's penalties as a means of forcing companies to bend the knee to a president or his arbitrary will. Recently, the Defense Department has tried to force Anthropic, an AI company, to allow AI to be used to surveil Americans and operate autonomous killing machines.
▶ 0:53:49It has also been reported, however, that Secretary Hasson is using these authorities to pressure uh Anthropic uh because he considers the company too {quote} That is why HR 7688 is a necessary piece of bipartisan legislation that strengthens the law for the next 75 years and rein in abuses of power.
▶ 0:54:16It makes significant improvements to organize the Defense Production Act uh so that agencies are better prepared to respond to emergencies that impact the national defense. It will strengthen congressional oversight of these activities and it will improve ethics, equity, and even fraud risk management It increased caps and encouraged innovation.
▶ 0:54:44In particular, I'm pleased that we have a strong conflict of interest provision that will block DPA funds from benefiting the president or his family. We appreciate the collaboration from Chairman Hill and his staff and the bill's sponsors on developing this important text. Several provisions introduced by our Democratic members are also included in the bill such as a provision by Mr.
▶ 0:55:11Heimes that I want to thank Representatives Beatty and Vargas for their work and leadership as well. And with that, I urge my colleagues to vote for this bill and I yield back the balance of my time. The gentlewoman yields back. Who seeks recognition? Uh the vice chairman of our full committee, the gentleman from Michigan, Mr. Isaacson, you're recognized for 5 minutes.
▶ 0:55:32Well, thank you, Mr. Chairman. As I move to strike the last word, I
▶ 0:55:36You're recognized for 5 minutes. Thank you. Um and I do want to say thank you to my to my friend and colleague Mr. Davidson for his work on this. Uh this is an area that I had responsibility for early in my time here in Congress I know the the effort and the time that you and and your staff have put into this reauthorization. And quite [clears throat] honestly, I'm very glad to see it's moving on a bipartisan basis.
▶ 0:56:07Um that is that's an important step, I believe. Uh the DPA provides the president, but that means all presidents uh with a broad set of authorities to ensure that the US domestic industry and my deep apologies for that. That would be Mrs. Hice calling right now. So, I'll I'll that is a priority. I hope she understands. Uh I don't dare tell her I'm reclaiming my time.
▶ 0:56:37So, um
▶ 0:56:39the uh And dear Lord, I hope this isn't being recorded right now. And Would Would Mrs. Hice like to engage in a colloquy? Uh I'm definitely [laughter] reclaiming my time right now. All right. I So, as I was saying, there is a broad set of authorities that ensure that all presidents have the ability to meet the time and the need and I think it's report important to remember that that priority is national defense requirements.
▶ 0:57:09It was enacted in 1950. I won't go over all the history, but since then Congress has reauthorized DPA provisions on at least 53 separate occasions. Uh early years, the administrations did use DPA to expand missile production and things like that that were tied to national defense. But recently, we saw the prioritizing of baby form baby formula deliveries, which many of us opposed during the Biden administration and I mean some could label that an abuse of power.
▶ 0:57:37But we have seen over the last five years truly how it's been laid bare, especially during the periods of national emergencies such as we had during the COVID pandemic and the ranking member alluded to the ventilator situation and that was one of those things that was exposed. We everything from paper masks to ventilators to pharmaceuticals, we were overly dependent.
▶ 0:58:00And there was discussion of Motor Company having to go into the of manufacturing and fortunately they did that on a voluntary basis and we didn't have to deal with that. So I want to say thank you to them for that. But that's the type of thing that that tool has traditionally been used. During the field hearing that Mr.
▶ 0:58:24Davidson had had during August, we discussed how COVID-19 pandemic exposed this reactive posture. And that reactiveness during a national emergency often creates a delayed and chaotic Today's bill is going to help modernize the DPA allowing all presidents to be proactive and bolster our domestic capabilities. It's important to note that some DPA provisions haven't been updated in over 70 years.
▶ 0:58:52The DPA Modernization of Act of 2026 provides clarity, recognition and prevents abuses that have occurred in prior administrations. The bill cuts red tape by allowing regulations to be revised or waived for the procurement of critical technologies and critical minerals, which is especially timely as the United States moves to onshore our own supply chains and counter China's manipulation of critical minerals and rare earths.
▶ 0:59:19The bill places important guardrails on government acquisition authority by capping federal ownerships at 15% ensuring that private sector is given an opportunity to compete and that is one of the I know one of the guideposts that Mr. Davidson has had. That is one that I share with him.
▶ 0:59:37And lastly, HR 7688 provides the DPA as a strategic tool by requiring industrial base assessments and plans to address certain national defense contingencies including steps to ensure supply chain resilience. So Mr. Chairman, I believe that the bill before we before us today is a very very good first step and letting the DPA expire would be a costly strategic mistake. So I urge all members to support the bill. Yield back the balance of my time and I will be calling Mrs. Hinson back immediately.
▶ 1:00:07Thank you. I yield back. Gentleman yields back. Who seeks recognition? Mr. Nunn of Iowa, you're recognized. Thank you very much, Mr. Chairman. I appreciate everybody coming together to discuss the Defense Production Act and that it falls under this very committee is very very important. I'm proud to co-lead the DPA Modernization Act of 2026.
▶ 1:00:32Congress created the DPA for one purpose and one purpose alone, securing and financing our national defense. However, the last 6 years the DPA has produced only one allocation order and one loan.
▶ 1:00:47When Lockheed Martin needed surge capacity for Javelin missiles after Russia invaded Ukraine, the DPA moved too slowly to prove Yet the previous administration spent more DPA dollars on heat pumps than This bill would help fix that. I'm proud to have championed three provisions in this bill and have been glad to work across the aisle with good partners in making this a success.
▶ 1:01:16The first is the FORCE Act which I introduced with Representative Himes. In the book Freedom Forge, it tells the story of how America won World War II, not just on the battlefield, but on the factory floor. William Knudsen, straight out of General Motors, oversaw converting America's uh warfields to a war production At Ford's Willow Run plant, Charles Sorensen turned an empty field into a factory production, producing one B-24 Liberator bomber
▶ 1:01:47every 63 minutes. Now, neither man was a government employee. They were private sector experts, and they answered the call save the free world. And that's exactly what this Force Act intends to do. We saw that we do not have on the bench the ability to cover down on every challenge we have, but we do have partners who are ready in the private sector to stand shoulder to shoulder with us. When COVID hit, the government scrambled to find people who understood supply chains and logistics.
▶ 1:02:17As a result, we improvised back then. We cannot improvise if it comes to a conflict with a near-peer adversary like The Force Act rebuilds what Freedom Forge described, a national defense executive reserve of engineers, logisticians, supply chain experts who volunteer, who train with us in advance, who are ready and on standby in our federal agencies when they are needed most to defend our nation at a time of a national security.
▶ 1:02:46Let's build the bench before the game even gets started. The second effort we're leading is the Arsenal Act. Today, the Defense Production Advisory Committee members in the Department of Energy cannot find enough uh in real time to uh excuse me, the Defense Production Advisory Committee members at the Department of Energy cannot find out in real time what the Department of War already funds.
▶ 1:03:12My bill would create a live dashboard, instantly visible to every member of the DPA advisory board action to be able to action things across the government. This means no more duplications, no more silos, just full transparency and full This improves on capabilities we have already in existence and makes them far more effective moving forward.
▶ 1:03:37Third, I co-led the CLEAR Act, which strengthens the DPA committee's structure and coordinating because of a strategic tool it's only as good as those who are wielding that strategy. This bill also strengthens our critical mineral process at a time when we need it most by launching a critical mineral resilience initiative. The initiative fast-tracks permitting for domestic mineral projections and creates price floors and off-take agreements to the Ameri- to make America production viable.
▶ 1:04:06Just last month, President Trump invoked the DPA to protect glyphosate, the crop protection tool Iowa farmers put on millions of acres every growing season because we simply lack enough domestic protection here. We need to be able to protect it. Iowa's farmers should not depend on Beijing to know whether they're able to plant corn crop this year. We cannot defend this country on supply chains we do not control.
▶ 1:04:32The DPA moves too slowly under current and the authorities are divergent in their purposes. Our ability to track, to streamline and provide clarity are muddled. And if asked today at the Department of Energy or the Department of War or any of our other agencies where they've been able to succeed and track this, they would return a blank sheet of This is no longer accessible. This is no longer successful in today's modern era.
▶ 1:05:03These three in tandem with the DPA provide us a pathway forward. And these three additions to the DPA will help fix the challenges that I've highlighted. I urge my colleagues on both sides of the aisle to come together and pass this. Thank you, Mr. Chair. I yield my time. Gentleman yields back. Seeks I have an amendment. Seeing no other speakers, I'll recognize myself for 5 minutes.
▶ 1:05:32I want to thank Warren Davidson, the chairman of our Committee on National Security, our vice chairman, Mr. Huizenga, Mr. Nunn, our ranking member on the subcommittee, Ms. Beatty, Mr. Vargas, all for their collaborative good work in a bipartisan way to modernize the Defense Production Act.
▶ 1:05:55Since 1950, you've heard it noted that it's been reauthorized 50-plus times, but it's become a hodgepodge of statutory language. Uh we've we found in collaborating together across both sides of the aisle there's some real reforms that would make it more accountable, and I think those are really well uh outlined in this bill.
▶ 1:06:20Our approach is that the Defense Production Act is not merely a tool, but it's a vital national defense imperative, one that has to be sharper, faster, and more focused on its core This bipartisan bill reflects that both on financial accountability, the direction of the Defense Department, how it's utilized, how the accountability following its utilization is monitored. And I want to commend Mr.
▶ 1:06:47Davidson for holding hearings both in Washington and out at Wright-Patterson Air Force Base in Ohio, along with numerous meetings with stakeholders and specialists in order to try to get this draft bill right. The result is the bill will be I think the DPA will be less scattershot and a lot more strategic, less ad hoc and more accountable, meeting real defense needs.
▶ 1:07:15The executive will be required to formulate plans and deliver on them. We will incentivize the creation of new mines and critical minerals and refineries to diversify diversify our supply chains away from a dependency on hostile players such as China. And we will establish real interagency leadership and real-time monitoring of the DPA activities.
▶ 1:07:42Modernization also means reorganizing the statute as itself. As I noted in a few seconds ago, the current law is confusing and in some cases outdated even for those who try to implement it and use it on a day-to-day Mr.
▶ 1:07:57Davidson's bill provides a clearer framework that will improve implementation and even basic In an era of strategic competition, our adversaries are moving with urgency as they advance new technologies, ramp up production capacity, and pour resources into their own strengthening of their own defense industries.
▶ 1:08:20The United States must not only match but exceed that urgency to reinforce the position as the world's leading defender of freedom. This bill is a product that exemplifies agreement on both sides of the aisle on how best to accomplish that.
▶ 1:08:37The reauthorization and update of DPA will strengthen resilience in critical sectors such as critical minerals, helping to create a constellation of new processing facilities here at home and importantly in allied nations. It will expedite the procurement It will enhance the efficiency and coordination of both the DPA committee and the DPA fund.
▶ 1:09:04In other words, the behind-the-scenes administrative functions of putting defense production powers into action. And it will make the DPA more accountable for achieving real strategic from as I noted, critical minerals, which is today's big issue on defense supply chain, to public health response, to shipbuilding.
▶ 1:09:30In recent years with the pandemic and Russia's illegal full-scale invasion of Ukraine, supply chain disruptions have clearly exposed the fragility in America's productive capacity, impacting our ability to adapt quickly and maintaining continuity across those essential supply sectors. We cannot wait for the next crisis to expose more gaps.
▶ 1:09:56The enhancements to DPA that we're considering today are long overdue, and I applaud my colleagues on both sides of the aisle for their diligent work to make this proposed set of changes a reality. I urge all my colleagues to support the DPA Modernization Act of and I yield back the balance of my time. Who seeks Do you all seek recognition on the ANS? Seeing none, we'll move to amendments. Anybody wish to offer an amendment to the ANS? Ranking member is recognized. Mr.
▶ 1:10:26I have an amendment at the desk. Uh we will pause uh and wait for the amendment to be distributed. Hi, how's it going?
▶ 1:10:55Thank you so much. Mr. Chairman. gentleman or I reserve a point of order. The gentleman has reserved a The gentleman has reserved a point of order. Thank you. Clerk will report the amendment.
▶ 1:11:27An amendment to the amendment Excuse me. An amendment to HR 7688 offered by Ms. Waters of California designated as Waters 142. Without objection, the amendment is considered read and I now recognize the ranking member to describe her amendment. Thank you very much, Mr.
▶ 1:11:47This amendment would prevent the Defense Production Act from being used for any presidentially declared emergencies related to domestic federal elections. President Trump was busy last week between threatening a private company and starting a war with Iran. It is also reported that he is working on a plan to take over American elections.
▶ 1:12:15The Washington Post and other media reported that the Trump administration is circulating a 17-page draft executive order that claims that China interfered in the 2020 election. It's silly enough that this grown man is still upset about his loss.
▶ 1:12:36In that draft order, Trump refers to the Defense Production Act authorities three times attempting to build a case for being able to suggest voting machines are invalid. This is outrageous and would undermine the confidence of the American people to exercise their right to vote.
▶ 1:12:59To make it clear to the president that this is unacceptable, this amendment says that DPA funds may not be used to address federal elections. And so, I am pleased about the bipartisan work that we're doing on DPA. I'm pleased about the bill that we have before us and the work that has gone into it.
▶ 1:13:26Uh but I think that uh it is very important for us to that our national elections cannot be interfered with by the president of the United States angry uh because he feels that he's was undermined in some way. And so, this is a huge possibility that the president would attempt to use the DPA uh to deal with federal elections.
▶ 1:13:56We know that the president does not like uh well, uh mail voting. We know that the president wants additional identification. We don't know what all that identification will be that he would require, but the president is actively working to federalize elections. This is scary.
▶ 1:14:20This is possibly unconstitutional and I think that the members of this committee know and understand uh that this is a real threat uh to um our elections.
▶ 1:14:33And even though we have worked so well on uh this DPA bill, I just believe that it's important that we take action to stop the president from using DPA uh to federalize elections or interfere with the election in the way that he is promising to do. With that, I yield back the balance of my time. Gentlewoman yields Gentlewoman yields back. Who seeks recognition on Ms. Waters' amendment? Mr. Chairman, I withdraw my point of
▶ 1:15:03Before Excuse me, one second. Does the gentleman from Indiana insist on his point of order? Withdrawn. Gentleman withdraws point of order. Uh who seeks recognition? Mr. Davidson of Ohio, the uh chairman of our national Thank you, Mr. Chairman. I I do oppose this amendment. Uh the vast majority of the DPA Modernization Act has been public for around 9 months now. The majority has worked in good faith with the minority members to craft a strong bipartisan product.
▶ 1:15:30Uh this is the first that we've uh even heard of the minority's interest in constraining the DPA's use in elections, and we have not had any time to consider all the implications of her amendment or it to make sure it's properly focused. It would uh be irresponsible, therefore, to adopt adopt uh her amendment. Uh what we can say with certainty already though is it has some flaws. For instance, we do need to fortify our election infrastructure and guard against foreign attacks such as cyber intrusion from Russia or China.
▶ 1:15:59The minority amendment would make it impossible to use DPA to do things like that that are essential for national security and election integrity. In other words, the minority's amendment would directly undermine election integrity in the United States. it's simply contrary to the objectives of the DPA uh to prevent it from protecting critical infrastructure. So, you know, I think think that is a real threat here.
▶ 1:16:23And um outside the scope of this amendment, I do hope that we can work in a bipartisan way to make sure we have election integrity, and that would mitigate any need for any emergency action to be taken uh if we bolster our own laws. Uh so, I hope that becomes bipartisan. So, again, I oppose this amendment, and I urge all of our colleagues to vote no. I yield back. Gentlewoman yields back. Uh who seeks recognition on Ms. Waters' amendment? There's no further debate. The question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. I.
▶ 1:16:52All those opposed signify by saying nay. Nay. The chair The nays have it. Nays have it and the amendment is not adopted. We requested a The gentlewoman requests a recorded vote. All those in favor of a recorded vote raise your hands. A sufficient number having raised their hands, a record vote is so ordered. But pursuant to subsection C5 of rule 3 of the committee rules, further proceedings on the amendment are postponed.
▶ 1:17:19We'll now move to the next amendment to uh Mr. Davidson's A&S. The gentleman from California. Thank you, Mr. Chair. The uh amendment is at the desk of the Uh we'll pause while it's distributed. Gentleman from Indiana. Uh I request a point of order. Gentleman requests a point of order.
▶ 1:18:19Clerk, will you report the amendment? An amendment to the amendment in the nature of a substitute to H.R. 7688 offered by Mr. Lacardo of California designated as Lacardo 090. Without objection, the amendment is considered read and I now I the gentleman from California to describe his amendment. You're recognized for 5 minutes. Thank you, Mr. Chair. I move to strike the last word.
▶ 1:18:43I appreciate very much the very good bipartisan work that has resulted in the crafting of this reauthorization of the Defense Production Act. Like our national defense, AI safety should not be a partisan issue. According to a recent Gallup survey, by a ratio of 8 to 1, US adults believe government should maintain rules for AI safety, even if it means to developing AI capabilities more slowly.
▶ 1:19:07That's 79% of Republicans and 89% of Democrats urge AI safety over other goals. Agentic misalignment is not yet a household term, but it soon will be. In Silicon Valley, where I live, it's on the mind of every AI researcher and engineer with whom I talk, including those who work at the largest Even the most optimistic among them warn of the potential misuse of AI to produce very dystopian in outcomes.
▶ 1:19:39A $380 billion dollar has warned the Pentagon and the public of the potential misuse of its product for mass surveillance of US citizens and for autonomous killing machines that could exceed human constraint. They seek reasonable guardrails. They believe so strongly in those guardrails that they're willing to walk away from a lucrative government contract without In full disclosure, I am a Claude subscriber, but I can't claim to have used it to create any homicidal bots.
▶ 1:20:10Regardless, when the company that designs and builds the jet fighter is telling us when to use the brakes, we should listen. Instead of listening, the Pentagon's bureaucrats and lawyers believe they know better. They can fly the plane without brakes. Instead of listening, they're threatening. They told Anthropic that if they sought guardrails, they'd blacklist the company as a supply chain threat, preventing any other government agency from buying their software.
▶ 1:20:41Ironically, the Pentagon also invoked a Defense Production Act and threatened to deploy Anthropic software without paying the company a dime for the next 6 months. So, let's be clear. The people who built a very complex technological tool seek guardrails to protect the American public from its And they're not simply being ignored by the government. The government has a right to ignore them. They're not simply being passed over for another company. The Pentagon certainly has a right to do that.
▶ 1:21:11They're being punished for seeking The Pentagon's response publicly has been, "Don't worry your pretty little heads. When we deploy AI tools, we'll follow the law." There's only one problem with the Pentagon's approach. There is no law. The law is years behind the technology.
▶ 1:21:33The American public eagerly awaits this Congress or this administration to enact laws providing reasonable safeguards for AI use. But nobody should hold their breath. The same American public has waited 30 years for Congress to enact a simple data privacy statute that every industrialized nation on the planet has enacted. The same American public has waited three decades for online protections for children.
▶ 1:22:00Lacking even modest changes to Section 230 the Communications Decency Act since 1996. The only response from the majority in Congress or this administration has been to propose moratorium of state laws that might provide AI guardrails without any federal AI safety law to supplant those state rules.
▶ 1:22:21Nonetheless, the Pentagon persists in saying, "Don't worry, we'll follow the To Secretary Hagel, I say, "Please forgive the American public for demanding a more sober approach to AI." Let's also be clear about the power granted to the federal government by the Defense Production Act. It gives the Pentagon a uniquely daunting power to commandeer the private sector to serve national security. We should all be very wary of abuse of this very expansive authority.
▶ 1:22:50The Supreme Court expressed its wariness in 1952 when it struck down President Truman's assertion of presidential authority to seize Youngstown steel mills during the Korean War. This very committee has expressed its own wariness by its changes to this very reauthorization bill by narrowing the scope the title one authorities uh to declared national emergencies. That is the right thing to do.
▶ 1:23:14If we believe in capitalism, then we should agree that we must constrain the federal government's potential to abuse its power to dictate prices, production, or the paths of supply chains. But there's another concern. We cannot deploy and build AI in a climate of fear if it's to be trustworthy. And we certainly cannot have honest conversations with the AI about AI if people and companies are afraid to speak. And we cannot protect the American public.
▶ 1:23:44This amendment offers a very narrow essential Thank you. I yield. I thank the gentleman. Does the gentleman from Indiana insist on his point of order? I withdraw my point of order. Is there any further debate on this amendment? Gentleman from Ohio. thank you, Mr. Chairman. You're recognized to strike the last word.
▶ 1:24:04I do strike the last word and I do oppose the gentleman's amendment uh in a DPA regulations of long codified common sense limits to the government's ability to compel the private sector. For instance, a private sector entity may reject a DPA order if it doesn't actually provide a good or service. There are limitations there. And I think the gentleman's right to be concerned about artificial intelligence.
▶ 1:24:28There's one of the um big pushbacks to, you know, just a sentence or two kind of granting blanket immunity to artificial intelligence companies last year. And when we got a a clean vote on that in the Senate, it was rejected 99 to 1. So, I am hopeful that there's bipartisan collaboration on artificial intelligence, and we do need a federal standard there.
▶ 1:24:53Um I But, we shouldn't try to We haven't even figured out what to do on artificial intelligence as a body. So, the idea that we're going to figure that out and jam it into this amendment, I think is Um but, I would love to work on this. I I recently authored an op-ed highlighting that in the movie I, Robot, they at least had three laws. You know, we haven't passed anything. I like that Elon Musk has highlighted that AI should be maximally truth-seeking.
▶ 1:25:22And so, I think this is a timely debate for an artificial intelligence bill, but I do think it's kind of out of place on this bill uh that it has remained bipartisan and is intended to become law. And I think it would become a diversion from otherwise very collaborative process. Uh and so, for those reasons, I oppose it, but want to continue working on the substance of the gentleman's concern. And would love to work with with you on that, Mr. LaHood. I yield back, Chairman. Yeah.
▶ 1:25:52Gentleman yields back. Uh the chair recognizes the gentleman from Illinois. Uh thank you, Mr. Chairman. I want to support Mr. LaHood's amendment, and I want to pick up on something that my friend from Ohio just raised cuz I want to support this on both moral and literary grounds. Isaac Asimov probably thought more about robots and how to fit robots into a into an ethical framework than darn near And I want to just remind everybody of those three laws that Mr.
▶ 1:26:21Davidson mentioned, um which were essential to making sure that robots don't destroy us. The first law, a robot may not injure a human being or through inaction cause a human being to come to harm. The second law, a robot must obey orders given by a human except when such orders uh conflict with the first law. And number three, a robot must protect its own existence except if this conflicts with the first or second law. Now, this this all sounds very literary, I guess.
▶ 1:26:50But, the whole idea is that if you don't have those protections, then we lose control. And we are now sitting here with the Department of Defense led by Major Hegseth who would like to use robots to kill human beings. Who would like to be in a position of directing robots to kill human beings. Who would like to take a human out of the loop and would like to destroy those robotic agents um that would satisfy the first two laws.
▶ 1:27:17Now, we we are not rich with AI companies who seem particularly compelled by ethics. We got a whole lot of AI algorithms out there who will happily tell you how to commit suicide, who will happily tell you how to produce explosives, who will happily tell you how to launder money.
▶ 1:27:35Um and there was a story recently happily told somebody how to hack into their their robot vacuum cleaner to access the controls over 9,000 robot vacuum cleaners operating as far away from Germany and pick up video feed from those agents.
▶ 1:27:50The fact that we have one AI company who is who is trying to be somewhat more ethical than the others and the Department of Defense is stepping all over them is both immoral and um ignorant of the finer works of Isaac Asimov and Will Smith.
▶ 1:28:13On that basis, I would encourage support of Mr. Liccardo's amendment and I yield Who seeks recognition? Uh Dr. Foster, you're recognized for 5 minutes or less. Uh thank you. I'd like to speak in support of this amendment and and associate myself with every one of the words of Mr. Liccardo's uh description of this amendment why it's important.
▶ 1:28:40Um you know, I'm a a physicist and there are many many echoes of of where AI is today and where we were at the birth of the the nuclear age and the atomic bomb. during World War II when it became clear that the atomic bomb was feasible, we saw the greatest agglomeration of talent come together to save the world the free world um in the Manhattan we had at
▶ 1:29:10that time a declaration of we had an exigent threat and we had a declaration of war which we don't have Which may or may not be relevant to this discussion, but you know, at the end of the that um the brilliant set of physicists had to make a decision of what they would continue to work on and what they would not.
▶ 1:29:30Many, including the the gentleman who started the laboratory where I worked for 25 years, Fermi National Accelerator Lab, uh Bob Wilson was a key player in the Manhattan Project and when the war was over, he turned in his his security clearance and never touched anything um and again.
▶ 1:29:49uh believed that the threat was so real that they would they pushed hard, you know, like and Edward Teller is one who um pushed very hard to develop not only nuclear weapons, but thermonuclear weapons, hydrogen bombs and that was very um that was you know, very very inside the physics community. And then but great debates were had.
▶ 1:30:10You know, the Bulletin of the Atomic Scientists was born at that time to try to have the discussion of what we should be working on because the truth of the matter is technically there's a very small number of really brilliant people who are crucial in this technology, no different than the um what happened in the Manhattan Project.
▶ 1:30:30And you're not going to get those people to come and work in the United States in a company in the United States if they know that the fruits of their efforts can be seized uh to uh for projects that they believe um will put our world, their families, the American public at risk. And those risks are not only external um uh from competitors and uh they're also internal from the risk of surveillance.
▶ 1:31:00And so I think it's interesting and important that in all the time we've had the Defense Production Act. Um it has never been used to threaten the company that a company founded by one of these people. Many of them Many of the scientists went off and funded and founded companies to work on on the peaceful use of the atom or on on military uses of the atom.
▶ 1:31:22But they never felt that that their company would be um be a become a target if they made a decision that they would only work say on peaceful uses of the atom. And so this is really what this amendment's about.
▶ 1:31:36Yeah, the the best and brightest who come to come to these companies will only come there if if they're they have the assurance that that their best efforts will be um towards the uh towards the betterment of mankind.
▶ 1:31:53Uh that's worked very well in the case of of nuclear energy and the Defense Production Act coexisting for that time and I think we should we should apply those principles here explicitly in the case of artificial intelligence because of the the recent fights that we've heard about. That's why I support this amendment. I urge my colleagues to support it as well. Yield back. Gentlewoman yields back. Seeks recognition Strike the last word. Recognize Strike the last word. I move to strike the last word.
▶ 1:32:22Recognized for 5 minutes. As I mentioned earlier, the Defense Production Act can be used to force private companies to take certain actions, making it a very heavy authority. When used in response to a national emergency, like a pandemic, this can benefit all Americans. Unfortunately, as recent examples demonstrate, when used as an arbitrary tool to force companies to bend the knee, it is also a power that can be abused.
▶ 1:32:52The headlines about the Pentagon, President Trump, and the American artificial intelligence uh Anduril, should disturb everyone. It should be necess- unnecessary to need to remind the Trump administration, that Congress and the American people will not tolerate surveillance of Americans. Let me repeat, surveillance of the American people.
▶ 1:33:18It should be unnecessary to tell them that fully autonomous weapons that use AI, not people, to make decisions about who to kill, are also unacceptable, putting America's warfighters and civilians at But on top of these troubling issues, we find the Defense Production Act raised as a weapon to punish American companies with whom the administration
▶ 1:33:49sees as political foes, rather than as a tool to facilitate collaboration and innovation to benefit America's national defense. This is a completely inappropriate use of DPA.
▶ 1:34:03Representative La Hood's amendment would prevent any president from using DPA to punish firms for trying to mitigate risk of human harm, particularly when those harmed are members of the American public. This is a reasonable addition to the bill and one that all members should embrace.
▶ 1:34:27I support this bill and I ask other members on this committee on both sides of the aisle to support this Gentlewoman yields back. Who seeks recognition on the La Hood amendment? Seeing no other speakers, I'll recognize my sorry, Mr. Barr from Kentucky. You're recognized to strike the last word. I move to strike the last word.
▶ 1:34:47Recognized for 5 minutes. I want to yield my time to the gentleman from I thank the gentleman. Chairman, I think it's appropriate to address specifically some of the concerns here with artificial intelligence. When you look for example air defense works today, shooting down a missile in the sky, no one can make that many targeting decisions that fast and they make it using the benefit of machine learning to even select the target and to deconflict targets so that
▶ 1:35:17you don't shoot two or three missiles at the same thing and you try to take, you know, you're wasting resources. The machine learning is able to be applied to that in a defensive technique and you could easily see how that would pivot to say, well, we're not just going to shoot a missile down out of the sky, we're going to find where they were shooting it from and engage in targeting. And the Pentagon in this particular case that's continually sort of passively being referenced or directly at times in the debate said we will comply with all laws.
▶ 1:35:49but the company in this case said, no, no, we want to apply our own company policies. Well, is your company policy supposed to Trump law? And when you've sold this to the United should the United States then be able to use it for all lawful purposes, or is it all going to be licensed and restricted? And those are the kinds of debates we're having. And when the normal market's functioning, you don't even need to invoke the Defense Production Act.
▶ 1:36:17You know, so this is for extraordinary use breaking case of emergency, reason we have the DPA. I do think we're way early on on regulating AI, and it's going to be hard for this body to function in a way that keeps up with the pace of the market and the technology in artificial intelligence. So, I do hope we can have a maybe a bipartisan working group or task force to talk about AI. We've done that as a body, but there are a whole range of things that we ought to be doing to get momentum behind passing this.
▶ 1:36:46And you know, I hope this kind of serves as an impetus to to build that, but I do think that it would be a diversion from the focus of the of this bill, and I again encourage everyone to oppose the amendment. I yield. Yield back. Gentleman from Kentucky yields back. Recognize myself for 5 I think this has been a good discussion. I appreciate the gentleman from California raising this issue, and I appreciate the comments that share of the subcommittee has made.
▶ 1:37:16So, let's kind of take these things one one step at a time. Let's first of all focus on this issue of um the retaliation issue. You know, the the DPA regulations have long codified common sense limits on the government's ability to compel the private sector. So, for instance, the private sector entity may reject as Chairman Davidson noted a few minutes ago, a DPA order if it doesn't actually provide a good or service.
▶ 1:37:47Company may reject a DPA order if the government doesn't regularly uh meet established terms of So, the idea is the DPA should be trying to manage scarcity. At the same time, we ought to be, I think, concerned in this committee uh of undercutting all government authority. Uh Mr. Davidson just made that point. Uh both the government agencies are held to a legal standard by Congress.
▶ 1:38:15And those government agencies, in turn, are required to hold their uh contractees to a legal standard. It's especially challenging when it comes to managing risk. Meeting national defense requirements, especially during an emergency, will always entail procurement for uses that someone may have issue with. But that doesn't mean that it's the government attempting to be retaliatory or punitive.
▶ 1:38:43For example, in 2020, President Biden uh President Trump invoked the DPA to allocate resources for the protection of a personal protective equipment during the COVID pandemic as it broke out. Should a company have been allowed to veto the government's order?
▶ 1:39:00Such by arguing that the DPA could divert PPE from another urgent medical If the company had expressed concerns and the government insisted on its allocation, would that have been I think the argument is is no. Secondly, we're talking about this particular case of Anthropic, where from what I've read and all I know about it, I've read in the press. I have no detailed knowledge of this situation.
▶ 1:39:28We're trying to amend our general DPA oversight bill for a specific case, uh a specific company, where the details around it are largely unclear, at least to this committee at this moment. What we do know is the DPA was not invoked by the president. On the contrary, the president simply ordered that all federal agencies cease the use of Anthropic's AI.
▶ 1:39:53And as early as this morning, one of the president's cabinet secretaries was uh it's because they had a contract to provide the service and the uh proposal by Anthropic is outside that contract bound as described by uh our chairman, Mr. Davidson. But even if the president had ordered Anthropic to accept DOD's uh to contract, that would not have constituted, you know, retaliation.
▶ 1:40:20So, uh let me also go out to 30,000 ft. This committee has issued a joint resolution on AI. And Dr. Foster and I both served uh in the last Congress on uh the minority leader, Mr. Jeffries, and the speaker, Mr. Johnson's AI task force. And we do recognize the point that that that Casten made, I thought, which is a human in the loop in the current environment is important.
▶ 1:40:51And I think members on both sides of the aisle have spoken about that today. And that we want um AI uh software AI agents to be at the direction of, you know, human engagement. And that's an important component. Um in our resolution that we voted out of this committee unanimously, HR H. Res.
▶ 1:41:151007 that Bryan Steil offered at our last markup, where regulatory agencies should expand knowledge of governance and regulatory best practices related to AI. I mean, this is the nature of our resolution that we voted on on a bipartisan basis here just a few weeks ago. So, I'm like uh Davidson. I like the debate. I think we agree that a human should be in the loop.
▶ 1:41:42But, I think that in this context, in the DPA modernization, that I cannot support the gentleman's amendment, but I hope he will continue to work with the chair of the subcommittee, Mr. Davidson, and that uh good work like Dr.
▶ 1:41:57Foster and I did on the AI subcommittee can be used to guide America's oversight through its Congress of how artificial intelligence is used not only in in in the intelligence and defense industries, but right here, relevantly, at the Financial Services Committee. So, I believe the gentleman's amendment would undermine the crucial accountability issue and invite endless second-guessing at various scenarios where we need speed and agility to safeguard our national security.
▶ 1:42:26So, I urge a no vote, and I yield back the balance of my time. Is there any further debate? Uh if not, uh then the question now occurs on Mr. LaCar amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed signify by saying nay. Nay. The pin and chair the nays have it. The nays have it. The amendment is not adopted. Request a recorded vote. The gentleman from uh has requested a recorded vote. All those in favor a recorded vote, raise your hands.
▶ 1:42:53A sufficient number having raised their hand, a recorded vote is so ordered pursuant to subsection C5 of rule three of the committee rules. Further proceedings on amendment are postponed. We'll now move to the next amendment on Mr. Davidson's amendment in the nature of a substitute. Uh the gentleman from Kentucky. Mr. Chairman, I have an amendment at the
▶ 1:43:16has an amendment at the desk. We'll pause while it is distributed.
▶ 1:43:31Mr. Chairman, I reserve point of order. Or is it too early? Point of order is reserved on your own member's bill. If that's fine, we'll do
▶ 1:44:16He he he Clerk will report the amendment.
▶ 1:44:43An amendment to the amendment in the nature of a substitute to HR 7688 offered by Mr. Barr of Kentucky designated as Barr 137. Without objection, the amendment's considered read and the gentleman from Kentucky is now recognized for 5 minutes to describe his amendment. Thank you, Mr. Chairman.
▶ 1:45:00I rise to offer an amendment to the underlying bill and the amendment, which draws from language in legislation I've offered in this Congress titled Securing Reliable Power for Advanced Technologies Act, would, if adopted, strengthen the Defense Production Act's national security framework by addressing the growing energy reliability crisis that threatens America's economic and technological leadership. The reality we must confront is simple.
▶ 1:45:30Prosperity is energy intensive. Winning the AI race will be energy Nvidia CEO Jensen Huang, who as a boy attended Oneida Baptist Institute in Clay County, Kentucky, in Eastern Kentucky, in the coal fields of Eastern Kentucky, said that China could win the AI race and is only {quote} nanoseconds behind {end quote} the United States and advancing fast.
▶ 1:45:57America's ability to outpace China in [clears throat] artificial intelligence will not hinge only on chips and code, but on the energy supply that powers them. China's AI build-out is backed by guaranteed stable baseload generation, ensuring their hyperscale data centers run at full capacity without Every week, China permits two coal-fired power plants to keep up with this soaring The United States, on the other hand, has created
▶ 1:46:27for itself a self-inflicted energy crisis. As a result of Obama and Biden era policies, the United States has prematurely retired 290 coal-fired power plants over the last 16 years. Our country's energy demand is at the highest in our nation's history and is projected to increase 50% by 2050.
▶ 1:46:51According to the US Department of Energy, data center demand is likely to double or even triple by 2028 as AI adoption, industrial electrification, and manufacturing expansion converge. Goldman Sachs estimates that data center power demand may rise by 160% by 2030, driven in large part by AI workloads. McKinsey predicts that data centers could consume nearly 12% of all US electricity by 2030.
▶ 1:47:17Without policy changes, the US is set to lose an additional 104 gigawatts of firm base load generation capacity by 2030 while only adding 22 gigawatts in that same same time frame. Our country's energy demand is at the highest and yet our desire, our will to put on new energy production capacity is not there. We're set to lose 104 gigawatts as I said. This shortage was not inevitable.
▶ 1:47:44It's the direct result of Washington repeatedly moving the goalpost on the very source of power that keep our grid stable and imposing new rules. Well, when the federal government changes its the terms in midstream, it doesn't just create uncertainty. It imposes real financial losses. It strands capital and discourages further investment into dependable base load generation our grid relies on. Over time that instability has forced plants offline and chilled new base load development precisely when we needed it the most.
▶ 1:48:11This instability has not been limited to fossil fuels across the energy spectrum from nuclear to renewables. Regulatory whiplash has undermined long-term investment and grid reliability. Nearly 10 gigawatts of nuclear capacity has been retired over the past decade with additional closures looming often driven by shifting policy frameworks and market distortions rather than technical failure. When Washington sends inco- inconsistent signals across all generation types, the result is the same.
▶ 1:48:39Fewer reliable sources coming online as demand demand accelerates. Fortunately, the Trump administration is committed to restoring American energy dominance and eliminating burdensome unfunded mandates that hamstrung energy producers for far too long. To fully realize that commitment, Congress must reinforce it with durable policy reforms that provide stability. That that that allows for long-term investment. As I've discussed before in this committee, we need to depoliticize the financial system and modernize permitting.
▶ 1:49:07But we also need to ensure energy investments are protected from sudden federal actions that undermine their viability. This amendment would create a new energy security trust fund within the Defense Production Act to prevent major power plant investments from being derailed by abrupt federal regulatory changes.
▶ 1:49:22By creating a self-funded trust fund, which would be managed independently to prevent political interference, this amendment would provide targeted compensation to power plants when new federal statutes or finalized rules materially impair the facility's ability to operate, reimbursing them for a percentage of lost revenue, basically political risk insurance. Enrollees pay premiums, enrollment fees, creating a market-based risk pool that ensures energy energy producers are not punished when Washington moves the goal posts.
▶ 1:49:51Compensation is triggered when qualifying federal action clearly and directly causes at least a 10% sustained reduction in output for 180 days, ensuring that the program is disciplined and tied to real economic harm. I've run out of time. I've got just a just a few more points I'd like to make.
▶ 1:50:08Gentlemen, Mr. Gosar back will I'm sure have some help on that. Who seeks Mr. Casten. Move to strike the last word. Uh so, want to thank Mr. Barr for raising this and I'd spoken with him about the floor what about this on the And um I strongly oppose this legislation because it uh it essentially misunderstands the entire structure of US energy markets. And I I say that respectfully.
▶ 1:50:37no one in this country has built a coal plant since the deregulatory trends of the 1990s because coal plants are lousy When we deregulated our power sector in the '90s, we immediately built 200,000 MW of combined cycle gas turbines over the next 20 years because it was the cheapest form of generation. Lots of those investors lost their shirts because markets ultimately drove the price down and they didn't make the money they thought they were going to make.
▶ 1:51:03That was the result of regulation, but it was the result of regulation that embraced markets. We're now seeing surges of construction. 2,000 gigawatts of generation are in the queue right now. 2,000 Yeah, gigawatts. So, 2,000,000 megawatts of generation are in the queue. 85 of those megawatts are fossil fuel.
▶ 1:51:23The balance are solar, wind, and That's being built because people who are willing to risk private capital are saying, "Given the choice, I want to build an asset that has no marginal operating cost because that asset will run regardless of where power prices The coal industry is not collapsing because we got woke. And if we got woke, we got woke when we fell in love with markets in the '90s. The coal industry is collapsing because we embraced competition.
▶ 1:51:52So, if we are going to argue, as Mr. Barr is saying, that when we lose market share for assets that can't compete, we're going to give them insurance, what we're basically saying is we hate Now, I would also point out that the coal plants that have been built in this country since the '90s have almost exclusively been built inside regulate regulated vertically integrated power remember, I'm a guy who spent 20 years building power plants.
▶ 1:52:21When the when the when the boiler MACT rules were passed that tightened emission standards for coal-fired boilers, the Ohio PSC was expressly asking the regulated utilities in Ohio not to accelerate their compliance because under the rate law, they had been guaranteed a return on that investment capital.
▶ 1:52:42And if they had retired those plants early, then they would have been forced to bring forward all the unamortized capital and lead to a gigantic price increase for Ohio consumers because they would have had to get the money back that they were guaranteed under the Ohio rate law.
▶ 1:53:00So, in other words, they already have an insurance premium if you're sitting in a regulated market because we have centuries of of of ruling that says if you're a regulated utility, your regulator says I will guarantee you rate recovery, cost recovery in exchange for you meeting an obligation to serve.
▶ 1:53:17And then they force the retirement of that asset, the regulator is obliged to give that money back because otherwise it's a takings violation under the We We'd spend a lot more time going into the um this regulatory history, but I say this as a guy who was competing against those because we sat there saying I have a cheaper asset. I can more I can provide power to Ohio customers at a lower cost. And we couldn't get in there because the market was filled because of these distortions to markets.
▶ 1:53:45So, if we are going to accept this provision, we're not protecting people from regulatory interference. We're protecting people from a trend in our history that I am frankly proud of. That over time we have gradually injected more and more competition into our energy markets. We have attracted more and more people. First, the folks who were deploying combined cycles, the yes, even the Enron's who also went bankrupt, the Reliant.
▶ 1:54:14Those companies who were building those assets in the 90s. Um many of those assets are still running. Companies may have gone bankrupt, but those assets are now keeping the lights on. They were built by the private sector. The new assets that are being built, the solar, the wind, these are overwhelmingly being built by the private sector. to accept this amendment, to put this in is to say that we want to slow down that transition.
▶ 1:54:40We want to go back to a world that didn't embrace competition, that didn't put consumers first, was anti-market, was centrally planned government monopolies. If you're into that thing, there are countries that are into it, but I'm proud not to live in a country that prides itself on that. Thank you, and I yield back. Gentleman yields back, seeks recognition. Gentleman from Ohio. Uh thank you, Mr. Chairman. Um, look, I've I've appreciate that Mr. Barr has worked hard on this. I've enjoyed collaborating with him.
▶ 1:55:09I enjoying the the discussion and dialogue. And of course, Mr. Casten's had an extensive background in energy. you know, I'd point out that a lot of the energy sector, including wind and solar, maybe maybe in particular wind and solar, but certainly a lot of the energy sector isn't really market. It's all subsidized. And I think what Mr. Barr is getting after is, you know, one team comes in and favors these subsidies over those subsidies. And they want to turn the other guy's subsidies off.
▶ 1:55:38And maybe we should just get rid of all the subsidies, but we're not doing that. We're selectively getting rid of the previous subsidies. So, I think the spirit of Mr. Barr's amendment is to let's agree that we should have an all of the above policy and at least raise the stakes so that it is less like ping pong and is at least more committed to an all of the above energy strategy. I look forward to the debate and I would yield the balance of my time to Mr.
▶ 1:56:00I appreciate the chairman's great work on this uh reauthorization of the Defense Production Act. Appreciate the dialogue. Appreciate your indulgence in allowing me to to offer this amendment, which I will withdraw, Mr. Chairman, and I'll explain why in just a minute, but I I I do appreciate uh my friend from Illinois's uh engaging in the conversation at least while we have different perspectives. Let me address the gentleman's uh concern for markets. Uh, because uh the distortions in the market are government created.
▶ 1:56:30Uh, it's just simply not true that private capital is is is moving to wind and solar because there there is some kind of market demand for wind and solar powered AI data centers. The reality is intermittent and unreliable power sources like wind and solar cannot deliver the firm base load dispatchable power that is required for data center dominance and AI dominance.
▶ 1:56:57That's why China, in contrast to the uh you know, fantasy world of of wind and solar-powered AI data centers, China is guaranteeing, right now, base load power for their AI uh race, approving roughly two coal plants a week. We we we fiddle in this country while Rome is burning.
▶ 1:57:21We fiddle because the United States is debating permitting, debating wind and And we're retiring firm generation every single week in this country. This This country has retired 290 coal-fired power plants since 2000 2009, when China is racing forward with base load power. China installed 48 gigawatts of new coal-fired generation capacity and approved 67 gigawatts of further coal capacity in 2024.
▶ 1:57:49The CEO of a major investor-owned utility, I asked the question to the CEO recently. Is it really true that coal just can't compete in the marketplace? And his answer was simple. He said, "No. Coal Coal can compete, coal should compete, coal is needed for us to supply the firm power, the dispatchable power for all the data centers that are coming online. But we've rejected capitalism.
▶ 1:58:18We haven't embraced capitalism, we've rejected capitalism with government intervention to artificially and prematurely retire our coal fleet in this country, which is essential to deliver the firm base load power that we need. So, the distortion in the market is not what I'm proposing. The distortion in the market is 16 years of bad policy that has forced us to lose our competitiveness.
▶ 1:58:42And so, um energy producers in the next few decades are going to be investing trillions of dollars, uh but we need to invest it in reliable power, reliable sources of power. This is a race that will shape the global economic and military dominance of the future. And we also need to keep the lights on in our hospitals, in our factories, in our businesses, in our homes. This amendment would remove the uneconomic disincentives to invest in and finance the firm base load power supply that our country needs to win the AI race.
▶ 1:59:12Um it's a it's a concept I've been working on with the Trump administration. I've spoken with uh Secretary Bergum, the chairman of the um of the energy dominance council, Secretary Wright, and Secretary Lutnick. This is work that is ongoing. It will be refined. We're waiting on TA from the Department of Energy and the Department of Commerce. Uh but in the interest, in the interest, Mr.
▶ 1:59:33Chairman, of producing a bipartisan product, um and to continue to refine uh the details of the administration's proposal, uh I will withdraw uh this amendment, and I appreciate uh Mr. Chairman, your time and consideration. I look forward to continuing to work with you to address this key national security concern. I I thank the gentleman. I thank the gentleman for the good discussion today, and the gentleman yields back. Uh who seeks uh Let's say we don't seek any recognition.
▶ 2:00:02Let's see. We We still talk, but he's withdrawn the amendment. Are we still talking about it? I'll ask uh The gentleman from Illinois if he has still an amendment. One second, Sam. I want to also clean up uh the gentleman from Ohio's uh in for the script purposes, you had a uh point of order. Do you withdraw
▶ 2:00:22I I do I do withdraw the point of order.
▶ 2:00:24I thank the gentleman for that. Uh just a moment. Let me pause for a second. I think the gentleman's withdrawn the amendment, so we'll move on to the next Is there another amendment on the Mr. Davidson's amendment in the nature of a There are further amendments without objection, the previous question will substitute ordered and recorded votes on the pending amendments have been postponed.
▶ 2:00:54Once the votes are taken, the committee will immediately vote on the adoption of the amendment in the nature of a substitute. And then we'll consider the question to report the measure. We'll now move to our next bill. Pursuant to notice, I call up HR 6955, the Main Street Capital Access Act, which I introduced. Clerk will report the bill, which was distributed in advance.
▶ 2:01:22HR 6955 to make improvements to the federal banking laws and for other Without objection, the bill is considered read and open to amendment at any point. I've got an amendment at the desk in the nature nature of a substitute, copies of which were also distributed in advance. Clerk will report that amendment. An amendment in the nature of a substitute to HR 6955, offered by Mr. Hill of Arkansas, designated as Hill AR067. Without objection, the amendment is considered read will serve as base text for the purposes of amendment.
▶ 2:01:52I now recognize myself for 5 minutes. I urge my colleagues to support HR 6955, the Main Street Capital Access Act. And I want to commend uh Chairman Barr for his leadership and steady hand over many years, but particularly in this crafting and advancing uh this very balanced uh bill.
▶ 2:02:17Since becoming the chairman of the full committee, I've made it a priority to restore restore the strength and vitality of our community banks across our country. Community banks are not relics of the They are foundational to our financial system and indispensable to our economy.
▶ 2:02:36Our community banks finance small businesses, support family-owned farms, provide mortgages in rural communities, and serve as trusted institutions on Main Street in towns across our country. It's our duty to ensure that these community banks are not squeezed by laws and regulations that were written for the largest, most complex institutions. The United States banking system is unique now in the global economy.
▶ 2:03:05That uniqueness stems from the diversity, dynamic uh size and scope of the industry. We do not rely on a simple small handful of mega banks like you see in Europe, like you see in Australia, like you see in Canada. We have a diverse banking system that has banks of all sizes to meet the needs of small, medium-size, and large businesses across the country.
▶ 2:03:34That And those different kinds of banks provide a distinct role in fueling economic growth at all elements and sizes of our economy. That diversity is a strategic advantage and promotes resilience, and local accountability.
▶ 2:03:52But for too long, our regulatory framework, put in place particularly after the 2008 financial crisis, has failed to adequately distinguish between globally systemically important institutions and the more straightforward, less complex local community bank model.
▶ 2:04:11While well-intentioned, the cumulative weight of post-crisis regulation has disproportionately burdened those smaller, local, regional institutions, public or private, that had nothing to do with the events of 2008. In 2008, I was running one of those institutions as the CEO, and I can tell you the reaction was a a overreaction for many of us in that community banking space.
▶ 2:04:41The result has been consolidation, declining de novo formation, and reduced access to capital in rural and underserved areas. This legislation takes an important first step at reversing those trends. First, it addresses the sharp decline in de novo formations. Today, chartering a new bank has become unnecessarily complex and a very expensive process.
▶ 2:05:03By improving transparency, clarifying supervisory expectations, and streamlining streamlining review procedures, this bill promotes responsible new bank formation, especially in communities that lack adequate access to financial services. Second, it modernizes regulatory thresholds to reflect economic reality. Risk should be driven should drive regulation, not arbitrary nor numbers frozen in time.
▶ 2:05:30Static asset thresholds do not account for inflation or economic growth, and over time, they effectively force institutions into more burdensome regulatory regimes without any corresponding increase in risk. Just like everybody complained about being pushed into a higher tax bracket when tax brackets are not indexed. By indexing the thresholds, we can ensure regulatory treatment keeps pace with the economy rather than penalizing institutions for just growing alongside of it.
▶ 2:06:00The Main Street Capital Access Act also makes significant improvements in bank supervision and examination, such as removing reputation risk from supervising supervision and requires regulators to rethink the exam rating system to ensure each component is based on articulate, clear, reviewable reviewable criteria. We also address the 1994 Regal Act by having a fair appeals process.
▶ 2:06:27We charter new territory by advancing reforms on bank resolution framework, and in my view, this bill improves financial stability, protects taxpayers, encourages greater competition, strengthens consumer confidence in the banking system. It's a bipartisan piece of legislation and is a product of extensive work and consensus building within our committee.
▶ 2:06:50As the chair of the committee and as a former banker who understands firsthand the vital role of our banks, I hope everyone can support this measure and I yield back the balance of my time. Who seeks recognition? The ranking member is recognized. I'm going to just act the last word.
▶ 2:07:06for 5 minutes. Thank you, Mr. Chairman. We all care about community banks and credit unions, and I was pleased when you and I were able to work out an agreement to include a bipartisan package of 12 provisions in a housing package to support these community That package recently passed the House with an overwhelming bipartisan vote of to 9.
▶ 2:07:33However, I'm disappointed that shortly after that, we are now considering this vague deregulatory package made up of 30 Republican bills and just a few Democratic bills. And instead of focusing on helping our community banks and credit unions, there's a wide range of sweeping deregulatory provisions which would benefit not only mega banks, but also undermine the Consumer Financial Protection Bureau.
▶ 2:08:04Indeed, this so-called Main Street Capital Access Act appears to be the most sweeping form of bank deregulation since before the 2008 global financial crisis.
▶ 2:08:19In the nearly two decades since that crisis, we've learned a great deal about how to maintain resilience financial system in the face of many obstacles, including through the But this package ignores those lessons and will not only significantly roll back safeguards and oversight of the largest banks, but also undermine consumer protections and anti-demonstration
▶ 2:08:50demo- discrimination measures. Importantly, while the nation grapples with an affordability crisis and surge in financial scams and fraud costing consumers tens of billions of dollars.
▶ 2:09:06This package would hamper the CFPB's ability to issue any new rules undercutting the very agency Congress to combat financial abuses and empower consumers to protect their finances.
▶ 2:09:22At a time when the Trump administration has largely shut down the CFPB and this committee has failed to fulfill our duty to have acting direct director vote testify.
▶ 2:09:39The last thing we should be doing is undermining the CFPB any Furthermore, this bill ignores the lessons from the failure of Silicon Valley Bank and other regional banks which failed a few years after Congress rolled back enhanced prudential standards on these banks. Instead, this bill lets even more of these regional banks escape critical safeguards that promote safety and soundness.
▶ 2:10:09The so-called Main Street Capital Access Act falls well short of what we know can be done on a bipartisan basis to preserve, and enhance access to banking services for Main Street communities.
▶ 2:10:25Unlike our package of community bank reforms included in the housing bill, fully nine of the provisions in this package were opposed by all Democratic members of this committee and another seven provisions were opposed by most Democrats.
▶ 2:10:44So, instead of rolling back progress to pursue deregulation that enables unnecessary risk-taking, speculation, and weakens our financial system, we should work together to strengthen community banks, credit unions, and consumer protection, as well as promote access to affordable financial products and services.
▶ 2:11:09And so, I urge members to oppose this bill, and I yield back. The gentlewoman yields back. Uh who seeks recognition? The chair of the Financial Institutions Subcommittee, Barr, you're recognized to strike the last word. Thank you. I I move to strike the last word, and I want to start by applauding Chairman Hill for his leadership on this critical legislation.
▶ 2:11:33Uh the Main Street Capital Access Act is exactly the kind of targeted reform needed to advance this committee's goal of making community banking great again. Community banks represent the financial backbone of this country. They finance farms, factories, family businesses, and first-time home buyers. These institutions don't just serve communities, they are part of them. They are the engines of the American dream.
▶ 2:11:58Uh they are the uh they are the the nurseries of the national wealth, as one of our founding fathers have so famously said. But, here's the hard truth. Washington has not been treating them that way. For years, federal regulators have been writing rules as if every bank in America is a trillion-dollar global institution, and then acting surprised when community banks disappear. That's the result of a regulatory culture that forgot who the system is supposed to serve.
▶ 2:12:26The Main Street Capital Access Act is about changing that. The goal is simple. Regulation should follow risk, not size, not zip code, not political fashion. A $500 million community bank in rural Kentucky should not be regulated under the same framework built for a Wall Street G-SIB. Community banks in Kentucky face burdensome capital rules and a supervisory framework designed for Wall Street. That means higher costs, fewer loans, and more forced consolidation.
▶ 2:12:54And this hurts the American consumer by reducing access to credit and opportunities for small business growth. We intend to rectify this issue via this community bank package. The Main Street Capital Access Act opens the door for new bank formation, improving transparency in the chartering process, making applications more predictable, and ensuring rural and underserved communities can once again see new institutions form instead of watching their local banks disappear.
▶ 2:13:22We are also restoring proportionality to regulation, updating capital leverage, and enhanced prudential standards so that they actually reflect a bank's risk profile, not just an arbitrary asset threshold. That means less money spent on regulatory gymnastics and more money available for loans in the community. We are also bringing fairness and due process back to supervision. Banks should not be governed by unpublished examiner preferences. They should be governed by clear rules, risk-based testing, and transparent standards.
▶ 2:13:52You should know what you're being judged on before you're judged. That's how a system governed by law is supposed to The act also addresses the structural problems that are driving consolidation. The act requires regulators to justify their actions and create clarity and predictability in the merger process so that healthy banks can grow and troubled banks can find partners before they fail.
▶ 2:14:16And the act ensures that when banks do fail, community banks aren't shut out of the resolution process by Finally, this legislation recognizes reality. Innovation is happening whether Washington likes it or not. The question is whether it happens inside the banking system where it's supervised and safe or outside it where it isn't. These bills let banks partner, modernize, and compete. For states like Kentucky and Texas and Arkansas, this is personal.
▶ 2:14:45Community banks are the financial infrastructure of rural America. When they thrive, small towns thrive. When they're regulated out of existence, capital dries up and opportunity for local ownership disappears. The Main Street Capital Access Act is a critical step toward restoring the financial backbone of this country. Mr. Chairman, I'd also like to request unanimous consent to enter into the record letters of support, many, supporting and endorsing HR 6955 from the following organizations.
▶ 2:15:14The Kentucky Bankers Association, the Independent Community Bankers of America, 44 community banking associations, the American Bankers Association, Arkansas Community Bankers Association, the Bank Policy Institute, the Community Financial Services Bank in the great Commonwealth of Kentucky, Opportunity Finance Network, which is a network of 500 CDFIs across the country, the CDFI Coalition, the Community Development Bankers Association, the National Bankers Association, the Real Estate Roundtable, US Chamber of Commerce and the American Business Without objection.
▶ 2:15:45Uh and uh to conclude, uh Mr. Chairman, I I want to just point out to my good friend the ranking member, uh her opposition to this legislation is opposition to the Opportunity Finance Network. It is opposition to the CDFIs of this country. It is opposition to the National Bankers Association, the Those institutions support this bill. The CDFIs, the minority-owned banks, support this bill.
▶ 2:16:14And I would encourage all members of the other side of the aisle to join us in bipartisan support of this legislation. With that, I yield Gentleman yields back, seeks What would you like? Mr. Chairman. The ranking member of the ranking [clears throat] member of the Financial Institutions Subcommittee, Mr. Foster, you're recognized. Yeah, I I'd just like to thank the chair for all of his work with us on this. We've been negotiating really hard and it came very close. You know, there's a bunch of of good things that we support.
▶ 2:16:45Many of these went got strong bipartisan support many of the individual provisions here and many others has generously offered to modify in ways that you know, as a package probably could make them uh acceptable to us, but in the end we could not get across the finish line here. And so I I won't be sup- porting this here. However, I you know, I will direct my staff to continue working and negotiating as this moves towards the floor.
▶ 2:17:14If it succeeds in the house and dies in the Senate, which is you know, very common around here. This is a lot of the things in this package are things that I I think we should pick up and continue to work on in the next Congress if I asked to. These are good things. We share an you know, an honest affection for the the small community banks that are so important.
▶ 2:17:35And I know the business I started on depended on on bank support and very understanding bank support, especially in our early days and that's a pretty unique. And and so um I just want to again express my thanks to the chairman and his staff for all the negotiations and my regret that we didn't weren't able to get this done. Will the gentleman yield? Uh yes. I just want to thank the gentleman for his constructive work with uh Chairman Barr and myself and our our staff.
▶ 2:18:03Appreciate your willingness to work through these issues. You certainly have our word that between now and and taking the Main Street Capital Access Act to the floor, we will continue to work with you and we appreciate your uh engagement in making sure we get the best package that we can uh through the House and I yield back to the gentleman. And and I yield back. Gentleman yields back. Who seeks recognition? The gentleman from Texas, the chairman of the Small Business Committee. Roger Williams, you recognize the strike the last word.
▶ 2:18:35Recognized for 5 minutes. Across the country, community banks are the institutions that know their customers and communities this the best. They help to finance small businesses, farms, home buyers, and local development. But too often they are forced to navigate a regulatory structure that makes it harder to form new banks, grow responsibility, and compete. This package, the Main Street America Capital Access Act, takes a practical approach and reinforces the idea that regulation should be risk-based and tailored to the size of the institution.
▶ 2:19:05It promotes a greater transparency and accountability in supervision, and it works to ensure that local institutions have the tools they need to serve their communities effectively. H.R. 6955 encourages new bank formation, modernizes outdated thresholds, improves merger clarity, strengthens funding flexibility, and supports responsible innovation, all the while preserving safety and soundness. Two provisions in this package are rendered as uh originated as bills that I introduced.
▶ 2:19:32One provides a greater flexibility for long-term investment in growing businesses. The other enhances transparency and accountability in the merger process. So, both are aimed at expanding access to capital and promoting a more competitive banking system. The Main Street Capital Access Act is about making sure financial policy supports businesses and gives them the opportunity to thrive and to succeed. I want to I you, Chairman Hill, for your leadership and then including some of my efforts in this package and I urge all my colleagues to support HR 6955.
▶ 2:20:03With that, I yield the balance of my time. Gentleman yields back. Who seeks The gentleman from Nebraska, Mr. Flood, who's the chairman of our housing and insurance subcommittee. You're recognized to strike the last word. Thank you Mr. Chairman. Many of us in this committee have spoken about the perils of a concentrated banking system where the largest institutions just get larger, regional institutions consolidate, and community banks slowly fade away.
▶ 2:20:30I represent a state that is on a foundation of community banks that are lending to farmers and small business people uh to professionals, and I need this system to remain robust. Since Dodd-Frank, we have seen a 37% decrease in the number of commercial banks in the United States. The reality is that we are rapidly moving towards a new world that I don't think anybody in this room supports.
▶ 2:20:56Where our banking system is more concentrated and less The Main Street Capital Access Act is legislation that would go a long way towards preventing that outcome by right-sizing the regulation for our community banks. Within this bill, there are important reforms to the exam process for small banks, the process for the formation of de novo banks, the community bank leverage ratio, stress testing, and so much more.
▶ 2:21:23This legislation also makes key reforms to the way the FDIC considers bids for a failing financial institution. It includes the least cost exception act, which I lead with ranking member Foster. As it stands currently, the FDIC must pursue the least cost resolution in the event of a bank failure.
▶ 2:21:43The least cost resolution requires the FDIC to take action that is the least costly to the deposit insurance fund of all of its available options in the event of an insured depository institution being at risk of default. There are situations where there is a compelling public policy case for the FDIC to choose an option that is not necessarily the least costly to the DIF.
▶ 2:22:10Specifically, this would allow regulators of the FDIC to select an alternative method to handle failing financial institutions if, and this is important, the FDIC and the Federal Reserve Board of Governors, in consultation with Treasury, determine that the potential cost to the deposit insurance fund are outweighed by the benefits of living limiting further concentration in the US banking system. So, let's think of it this way.
▶ 2:22:38In the event of a bank failure, we need to provide the FDIC with the flexibility to evaluate bids from smaller institutions, as long as there are guardrails in place to limit any additional cost to the deposit insurance fund. Allow me a moment to describe some of the guardrails in this legislation. Number one, a competing bid to the least-cost option of resolution must be the least costly of all the alternatives, and it must exceed the cost of liquidating the troubled depository institution.
▶ 2:23:08Number two, the FDIC will be tasked with completing a rulemaking on the maximum cost an alternative bid that can pose that can pose to the deposit insurance fund. Once that threshold is set, a bid cannot be selected if it goes above the threshold set by that rulemaking. And finally, if a bid that is not the lowest cost bid is selected, the smaller institution must agree upon a plan to pay the difference between the cost of the bids back to the FDIC.
▶ 2:23:37All of those provisions taken together make the least-cost exception act a well-rounded and balanced piece of legislation. I feel that all of the provisions of the Main Street Capital Access will help level that playing field for community banks and strengthen the communities they serve. I urge my colleagues to support the Main Street Capital Access Act and I yield back to the chair. Gentleman yields back. Who seeks Gentleman from Wisconsin, Mr. Fitzgerald, you're recognized.
▶ 2:24:08Thank you, Chairman. I rise in support of the Main Street Capital Access Act and want to highlight provisions based on the legislation that I've introduced to promote bank competition and regulatory clarity. First, uh the Halting Uncertain Methods and Practices Act brings greater objectivity and transparency to the CAMELS rating system.
▶ 2:24:27CAMELS rating drive critical supervisory outcomes from merger approvals to deposit insurance Yet today, those ratings can rely heavily on subjective examiner judgment. Section 301 directs regulators to establish clear, articulable, and reviewable criteria for each CAMELS component and to ensure composite ratings reflect an institution's actual financial condition and risk profile.
▶ 2:24:55That strengthens supervision by grounding it in objective standards, not weakening it. Second, the Bank Competition Modernization Act modernizes merger review for community bank institutions. If a merger results in an institution under 10 billion in assets, regulators would no longer be required to solicit a competitive analysis from the Department of Justice.
▶ 2:25:17These smaller transactions rarely pose competitive concerns, yet they can be subjected to lengthy delays during the merger review process by overlapping Safety and soundness, or Community Reinvestment Act reviews remain fully intact. This simply aligns the analysis with the economic reality and will promote efficiency so communities can maintain access to a local based lender by promoting mergers among community banks.
▶ 2:25:48Finally, the Merger Agreement Approvals Clarity and Predictability Act, section 602 of the bill promotes transparency and accountability in merger approvals. It directs the GAO to study how regulators use commitments and conditions in merger reviews, and whether those practices align with statutory requirements. Congress should understand whether extra statutory considerations are creeping into what should be a disciplined, predictable review process.
▶ 2:26:16These provisions reinforce fairness, clarity, and accountability in supervision of merger review while preserving strong prudential oversight. I urge my colleagues to support the Main Street Capital Access Act. Thank you, and I yield back to you. Gentleman yields back. Who seeks recognition? Uh Ranking member. Uh Mr. Chairman, I have an amendment at the desk.
▶ 2:26:38just a moment. Is anybody else seek uh recognition on the underlying ANS? Seeing none, we will entertain
▶ 2:26:46Number 150. And the gentlewoman has an amendment at the desk. We'll pause while it's distributed. Uh the number is 150. Gentleman from Georgia. Gentleman from Georgia reserves a point of order.
▶ 2:28:27All small businesses.
▶ 2:28:55The clerk will report. An amendment to the amendment in the nature of a substitute to HR 6955 offered by Ms. Waters of California designated as Waters 150. Without objection, the amendment's considered read and the gentlewoman from California is now recognized for 5 minutes to describe her amendment.
▶ 2:29:11Uh thank you so very much, uh My amendment is an amendment uh that would authorize $4 billion in additional grant uh capital uh rather capital grants and other support to increase affordable lending in underserved communities. Uh Mr.
▶ 2:29:34Chairman and members, um if we face the facts of what is happening in this country, whether we're talking about urban areas or rural areas, small businesses are Not only businesses of color, business women businesses, and rural businesses in particular, really do need the support of the CDFIs.
▶ 2:30:02It is very important that we understand the role that CDFIs play in helping communities that are overlooked, who cannot get loans from big businesses. The big businesses do not want struggling small businesses, rural or urban, in their banks. They don't have time to deal with small businesses. They don't think they make enough money off of small businesses.
▶ 2:30:31And so, during COVID, we understood what was going on, and we did something meaningful, where we worked with the then uh Treasury Secretary and uh Nancy Pelosi, myself and uh Ms.
▶ 2:30:50Velázquez, we worked after the big banks had created their own panels and and literally took care of their um And that helped the small businesses so much to remain open, to be able to help them these small businesses during COVID, so that they can maintain, they can pay their personnel, they can keep their
▶ 2:31:20doors open. So, CDFIs played an important role. CDFIs can continue to do that. They can continue to pay play an important role. Many of us represent communities in rural and urban areas that need help. This bill does not put a new dime into CDFIs. It talks about having help CDFIs.
▶ 2:31:46It talks about a bond guarantee program that most CDIs CDFIs don't even use. Why don't we understand what the need is and how our small businesses cannot go to the big banks and get any help. We need to expand CDFIs so that they can leverage that money and provide substantial support uh to these communities that are denied.
▶ 2:32:15That's simply what this is all about. This is about not simply paying lip service to CDFIs and talking about what all was done for CDFIs in this bill. No, this is about This amendment is about doing something real that is really supportive of CDFIs and their ability to support small, minority, women-owned businesses, etc.
▶ 2:32:43And so, I would ask the members of this committee to do and that is to support small, minority, women-owned businesses in rural and urban areas so that they can expand their business, so they can get up-to-date with the computer needs that they have, so that they can be able to provide the services that are denied by the big banks who think they own this committee and think they
▶ 2:33:13own this Congress. Let's do something substantive for small businesses. Thank you very much. I yield back the balance of my
▶ 2:33:22The ranking member yields back who seeks recognition. The gentleman from Kentucky, Mr. Barr, the chair of the Financial Services Thank you. I I I appreciate my friend and colleagues intent and with this amendment and and she has been a a a very uh well-intentioned advocate for CDFIs over the years and I appreciate that because I agree CDFIs play an important role in expanding access to credit and uh support underserved communities.
▶ 2:33:51Um but it is precisely for that reason that we included in our legislation provisions into the ANS to strengthen transparency at the CDFI Fund by requiring annual testimony and further improve the CDFI Bond Guarantee Program so that smaller CDFIs can participate. Um I encourage uh my colleague to take a look at page 13 of our bill, section 903, subsection A. There is in fact in our base text an authorization of appropriation.
▶ 2:34:20We're not an appropriations committee, we can't appropriate, but we can authorize and we do it here. We authorize $4 billion uh to the Emergency uh to the Emergency Capital Investment Fund for CDFIs. Additionally, CDFIs are already treated as financial institutions and they benefit from the provisions in this bill uh that right-size regulation allow banks and credit unions to get back to focusing on their customers.
▶ 2:34:44Uh it is it it is critical nonetheless that we we obviously get our fiscal house in order and this amendment would increase expense for the American taxpayers, that's why I oppose the amendment and urge my colleagues to do the same, but I I I again, I I would remind the gentle lady from California that it is the Opportunity Network uh the Opportunity Finance Network, the CDFI uh advocacy groups, they are supporting the bill.
▶ 2:35:13They support the Main Street Capital Access Act because we are helping see it up CDFI. So, it just doesn't make sense that we would throw the baby out with the bathwater and oppose the bill uh even if even if the general lady's amendment fails. And I I do encourage my my colleagues to oppose this amendment and support the underlying bill. I yield back. Will the gentleman yield?
▶ 2:35:36I I'll yield. I'll yield. Thank you so very much. Of course, CDFIs would support the bill. They're desperate. They would support anything that helps them any small way. Uh they're appreciative, but you know what the advocates want? You know what they're pressing us for? More capital so that they can make loans to these small businesses that are so desperate to stay open.
▶ 2:36:01Let me tell you, with this crisis that we're in with this crisis that we're in, small businesses are hurting. And we can do more. And yes, the advocates would say thank you for any little thing that we do, but let's do something substantive. Let's put $4 billion into this bill. We can do this, and it will accomplish what I think you would like to see accomplished.
▶ 2:36:27It certainly would accomplish what I and others would like to see accomplished, and that's all. Don't think that because the advocates are supporting that they're happy and they think this is a great job we're doing with CDFIs. They appreciate any little thing that can be done, but let's be serious about what we can do, and let's make some substantive addition to the capital that they need so desperately in order to lend in communities that are ignored.
▶ 2:36:57Can't walk in the doors of the big banks. Please, I would ask for an I vote on my Woman yields back to the gentleman.
▶ 2:37:07yield back. I yield back. Gentleman yields back. Uh who seeks uh recognition on the Waters amendment? Everybody seek recognition on the Waters Mr. Chairman. Gentlewoman.
▶ 2:37:35Um I would request um the ability to correct uh that was said uh by the gentleman relative to the amount of money in the bill. I think it's important, if I may, say that he indicated there was 4 billion in the bill. It's not. That's what I'm asking for.
▶ 2:37:57Yeah, we Well, the gentlelady yields. Yeah, I misspoke. I mean I mean it was in years. It was in years. Well, let me let me do this. Let me recognize myself for 5 minutes.
▶ 2:38:06Thank you. Uh you made your point. I'm going to yield some time to Mr. Barr to respond. Yeah, yeah, I I obviously misspoke. I meant
▶ 2:38:14I can't hear you.
▶ 2:38:17I can't hear you. Speak up. I misspoke. Well, my my my point is
▶ 2:38:21My I I reclaim my time. My point is the same, which is that my the point the underlying point is the same, which is that the reason why the CDFIs support the bill is because of the relief that we offer to them, the fact that we are helping CDFIs, and the fact that we are going to empower them to do more lending into the community than they than they can do right now.
▶ 2:38:44And and that's why you should that's why I would urge you and others on the committee to support this bipartisan legislation, which helps all kinds of community financial institutions, CDFIs included. Yield back. Gentleman yields back to me, and I'd I'd like to thank the for that exchange and for that clarification. And I just would I would add the point that this committee on a bipartisan basis has been supportive of CDFIs.
▶ 2:39:09They I think the committee expressed in a letter on a strong bipartisan basis the support of making the new market tax credit a program a permanent in the one big beautiful bill. I think in the one big beautiful bill the opportunity zones being made an important component of last year's tax measure is a gateway for greater use of in some of our most troubled economic And I agree with uh I really
▶ 2:39:40both the ranking member and the the chairman of the subcommittee in the sense that sure CDFIs support the bill because it is you know a net benefit to them. They're always eager for more. I think we've balanced that effectively in the bill so I would urge a no vote on the gentlewoman's amendment. I yield back the balance of my time. Is there no further debate on the Uh all those in favor of Ms. Waters' amendment say I. I. All those opposed say nay. Nay. In the opinion of the chair the nays have it. The nays have it.
▶ 2:40:09The amendment is not I have four amendments. Uh I will move to the next amendment. Uh A recorded vote is requested on the uh I will Okay, thank you.
▶ 2:40:25be gracious on that. Uh Recorded vote is requested. All those in favor of recorded vote raise your hands. Sufficient number having raised their hands. A recorded vote is ordered pursuant to subsection C5 of rule three. The committee rules further proceedings on the amendment are postponed. We'll now move to the next amendment. I have an amendment at the desk number
▶ 2:40:45The ranking member has an amendment at the desk. We'll follow it as it is uh Mr. Chairman, may I come up with you? Mr. Chairman. Gentlewoman from Reserve a point of order. Gentlewoman from Kentucky reserves a point of order.
▶ 2:41:42Clerk will The clerk will report the amendment, please. An amendment to the amendment in the nature of a substitute to HR 6955 offered by Ms. Waters of California designated as Waters 148. Without objection, the amendment's considered read, and I now recognize the gentlewoman from California to describe her amendment. Uh thank you so very much, Mr. Chairman.
▶ 2:42:04Now, look, instead of focusing on supporting uh our community banks and credit I'm deeply disappointed in the majority's attempt to add a handful of provisions that would undermine the Consumer Financial Protection Bureau's ability to help consumers and their ability to regulate and supervise these mega banks like Wells Fargo, uh which has repeatedly broken the law and harmed millions of consumers.
▶ 2:42:33So, my amendment would eliminate the bill's various rollbacks of consumer protections. It would also fully fund uh the Consumer Financial Protection Bureau and ensure they immediately resume their work to undermine and supervise mega banks that community lenders compete with. Let me be more specific. My amendment removes any proposed changes involving important consumer protection laws.
▶ 2:43:01This includes limiting the application of the Home Mortgage Disclosure Act, which would which helps curb discriminatory mortgage lending practices, or the Truth in Lending Act, which ensures consumers understand the terms of any financing they agree to. My amendment also removes the CFPB from section 201 of the bill, or the so-called Taylor Act.
▶ 2:43:28This dangerous section contains sweeping and harmful reforms that would require the CFPB, as well as banking regulators, to tailor all regulations for all their entities.
▶ 2:43:43However, because this section requires any new rule to be tailored, and not just to types of institution, but every individual institution, any unique company out of thousands of banks, credit unions, or non-bank financial companies would have a basis to sue and block any new rule from being implemented.
▶ 2:44:05Section 205 would render the CFPB powerless if they ever tried to issue or update a rule for the benefit of consumers. So, instead of rolling back consumer protections, we need the CFPB back on the beat and fully funded.
▶ 2:44:23So, my amendment would also restore the CFPB's funding cap from the Federal Reserve to its original 12% level and requires the agency to resume supervision of the mega banks that community banks compete with at the same frequency and with same number of staff as in 2024.
▶ 2:44:47These changes would help ensure the CFPB can resume the kind of work that earned it bipartisan praise in the past from four out of five Americans and resulted in $21 billion going back to more than 205 million home Mr.
▶ 2:45:08Chairman, I want to tell you uh that and too many Republicans have been focused on trying to destroy the CFPB for too long. We have fought hard. We have some support from the courts. Uh but they are destroying the infrastructure of the CFPB, making it unworkable. Are you smiling? That's what you want. Uh but we need to fight that.
▶ 2:45:37We need to fight that because the CFPB is there to protect consumers. Prior to us and Dodd-Frank organizing it, consumers had nowhere to go. They could not tell about rip-offs and fraud and being undermined uh by all kind of big corporations and companies.
▶ 2:45:57Uh and so we on this committee have the power, if we have the will, to do something about straighten out the efforts to undermine and to deny and to destroy the CFPB. This is what this is all about. Now, I know Trump may not want you to do it, but I know you're independent. I know that Trump cannot make you do something that's not in the best interest of the consumers of this country. So, I appeal to you.
▶ 2:46:27Maybe you have forgotten your power. I don't know what it's all about, but I make this amendment cuz I think I want to give you an opportunity to do what is right for consumers. With that, I yield back the balance of my time. The gentlewoman yields back. Does the gentleman insist on his point of order? No, I can withdraw the point of order. You you You withdraw the point of order. Would the gentleman like to be recognized? I would. The gentleman's recognized to strike the last
▶ 2:46:54Thank you. I strike the last word and um well, it wouldn't be a markup in the House Financial Services Committee if we didn't have a debate about the CFPB, right? I'm going to miss miss our our exchanges that we have about the CFPB, but but actually I think uh I I think your your last point about Congress reclaiming its power is a good one. I wholeheartedly agree.
▶ 2:47:17And that's exactly why I think we ought to on a bipartisan basis in the interest of advancing separation of powers and this institution we should uh adopt the TABSA Act. A bill I've been working on for 13, now 14 years in this to reclaim Congress's appropriations authority, our power to purse over the We have these debates. I talked about enjoying these back and forth because we for 14 years the ranking member and I have been debating about this.
▶ 2:47:47And when we've moved from the Obama administration to the Trump administration to the Biden administration and back to the Trump administration, it's been whiplash. It It This agency has become a become a political football instead of a professional independent agency that does exactly what the ranking member and Senator Dodd and and Chairman Frank wanted, which was a professional independent agency that is not political, but actually does the job, the mission uh of promoting healthy
▶ 2:48:17consumer credit Uh but the the gentlelady's amendment is exactly what gut this whole bill. The whole point of our legislation is to prevent the bureau's overreach, that the kind of overreach that we saw in the pre- previous administration that that crippled our community banks and credit unions, that that hurt consumers by basically banning in-demand financial products like overdraft for example.
▶ 2:48:46Uh the junk fee agenda harmed consumers that Mr. Chopra was advocating for. So, this amendment would remove common sense updates to thresholds and remove the CFPB from requirements to tailor the regulations, establish an independent supervisory appeals process, provide a disclaimer on guidance, and remove reputational risk from their supervision of financial institutions. There's no policy basis for taking out the CFPB as opposed to other regulatory agencies that oversee our financial institutions.
▶ 2:49:14I would also point out that the amendment moves in the exact opposite direction in terms of streamlining supervision by requiring the exact same number of staff as the CFPB used during the end of the Biden administration. We need to get our fiscal house in order. This amendment would prevent more efficient supervision that saves American taxpayers' resources.
▶ 2:49:32And And I'll just conclude with the point that I was making at the outset, which is that if we really want to prevent this whiplash that we that members on both sides of the aisle have witnessed, that the American people have witnessed over the years, where you have uh wild swings in uh in the the political posture or the policy trajectory of the agency, we need to reform the agency. We we we we need to defeat this amendment.
▶ 2:49:58We need to recalibrate where the bureau is going so that there's not overreach. That's why we embed these reforms in in this Main Street Capital Access bill. Doesn't do away with the bureau. Doesn't abolish the bureau. It's not the parade of horribles that the ranking member is suggesting. We're just simply trying to get a tailoring of regulations and where the bureau Will the gentleman Let me just finish the point. I will, but let me just finish one more point.
▶ 2:50:23And so, after we do this, after we do the Main Street Capital Access Act, let let's come together and think about ways to professionalize the agency. Not abolish it, professionalize it so that we don't have these wild swings from one administration to the next and we can have durable policy and certainty and predictability in our consumer credit markets that will that will protect consumers and also allow our community banks our community financial institutions to do what they do best and provide in demand services and products to
▶ 2:50:53the American people and I and I will yield to the ranking member now. Thank you very much. Um yes, a lot of attention has been put on the Consumer Financial Protection Bureau from the opposite side of the aisle. Never liked it, never supported, didn't like the fact that we did everything to protect them exactly from what has been tried to happen to undermine them etc. etc.
▶ 2:51:19Now, just think if you put that kind of attention on the big banks instead of allowing them to continue to harm our consumers rather than allowing them to continue to harm our consumers Reclaiming my time. This is I only have 20 minutes. Reclaiming my Reclaiming my time. I understand the general lady's point. I understand the general lady's point. The problem is trickle down regulation.
▶ 2:51:42When when they said that this was only for the big banks maybe that was their intent but maybe it wasn't but it it certainly in practice that's not been the case. This agency has harassed the smallest institutions in this country through their proxies in the FDIC. This This This is a problem. Yield back. Gentleman yields back. Who seeks I have another amendment. Uh is there any other debate on that amendment?
▶ 2:52:13Do you want Do you want time? Do you want him to yield you some time? Oh, yes. I accept. Uh uh the chair recognizes the gentleman from Illinois. Uh thank you. I yield my time to the ranking member. I think you very much uh Mr. Casten.
▶ 2:52:37Um the question is when will you invite the CFPB acting director Vo to testify? Uh it looks as if you took pleasure in grilling a former director Chopra, but when will we follow the law and hold the current agency accountable? Well, thank the ranking member for the question and you can be assured that uh it's still my intent to have the acting director testify at some point in the future. We have to find the right time to do that.
▶ 2:53:06And I go back to what I said when we talked about this at the beginning of the Congress. It was my hope that the the administration would name a a director that could be confirmed by the Senate. Uh and that I was initially waiting for that, but uh I'll be working with uh OMB and the CFPB on on a time that the acting director can appear. I'll yield back to the gentlewoman.
▶ 2:53:27Well, I thank you very much, but I'd like to just reiterate the appoint that the big banks are fined time and time again about the ways that they undermine the consumers of this country. But they don't care about the fines. It's just a cost of doing business.
▶ 2:53:50And we don't really use the power of this committee to be able to make those big banks do what is expected of them and all of the assistance they get in being able to operate.
▶ 2:54:07gentlewoman yield? Yes, I yield
▶ 2:54:08Thank you. Thank you for yielding cuz I think uh you're making a a a a good point in so far as the larger institutions can afford it. Uh Dodd-Frank really gave the big banks an advantage because there was there here we have an agency that imposes enormous amounts of cost and time and compliance on institutions and big uh can handle it. A large regional banks uh they don't like it, but they can they can handle it more than community banks.
▶ 2:54:37It's community banks and smaller banks that have to deal with the trickle-down regulation of the CFPB that we're trying to fix in this bill. That's exactly what we're trying to Is we're trying to give a little bit of tailoring and a little relief to the smaller banks who can't afford Reclaiming my time. Let's just agree that we can work together on dealing with the problems of the big banks.
▶ 2:55:07That this committee is going to put some time and effort into looking at all of the claims, all of the um dissatisfaction with the way the big banks operate. If we go into our communities and ask them what they feel about the big banks that they're getting services from, they'll have more complaints that we have not dealt with.
▶ 2:55:35Will you work with me on an idea that we need to spend time on the big banks?
▶ 2:55:40Well, I think that the CFPB needs to be reformed for all because uh whether they're big or small, there's whether you're a customer of a large bank or a small bank, a lot of these for example, an overdraft product is something that the American people need a
▶ 2:55:53my time. You're not
▶ 2:55:55want that. And big banks
▶ 2:55:56reclaiming my time. You're not going to throw the small banks into this. I want you to know that the chairman of this committee works with small banks. He's not going to allow you to do that. Not just I'm not agreeing to it. And so, no, don't try to throw the small banks into this. I'm talking about the big boys. I'm talking about the big banks. I'm talking about the ones who get away with paying these humongous fines over and over and over again.
▶ 2:56:23It's time for you who care about financial services, who care about banks to say yes, let's always work for our Let's work for CDFIs, but it's time that we put some effort on the big boys, on the big banks who are the real problems, who close their doors to small businesses and to the average person that want to get a loan.
▶ 2:56:47It's time for us to say open up the opportunities for these smaller banks to be able to get the kind of loans that will ensure they succeed. And so, I say to you thank you for what you do on small banks. You still have a lot to do on CDFIs, but join with me in going after the big boys and the big banks cuz I know you're not afraid of them. I know how tough you are. I know when you get started on something, you don't let up.
▶ 2:57:17So, I want to work with you on big banks. Do you agree? I'm I'm grateful for all of the banks of all sizes that they are they help promote American competitive. We need them all. We need them all. I yield
▶ 2:57:29Gentlemen, time has expired. Is there further debate on Mrs. Waters' Hearing no further debate, we'll The question now occurs on her amendment. All those in favor of the amendment shall say I. All those opposed say nay. Nay, the amendment chair the nays have it. The nays have it. The amendment is not adopted. Recorded vote is requested.
▶ 2:57:52A recorded vote is requested. All those in favor of a recorded vote raise your hand. A sufficient number having raised their hand, a recorded vote is ordered pursuant to subsection C5 of rule three of the committee rules. Further proceeding on that amendment are postponed. We'll now move to the next amendment. Who seeks recognition? The gentlewoman from California. I have an amendment at the desk. It's number 149. We'll pause while the clerk looks for and gentleman from Kentucky?
▶ 2:58:22Appreciate that Gentleman reserve a point of order. Reserve a point of order. Gentleman from Kentucky reserves a point of order on the Waters Amendment 149. Stand by.
▶ 2:59:47Clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 6955 offered by Ms. Waters of California designated as Waters 149. Without objection, the amendment's considered read and the gentlewoman from California is now recognized for 5 minutes to describe her amendment. Thank you very much, Mr. Chairman.
▶ 3:00:07I appreciate that we have a few reforms that are responsive to the sudden failure of Silicon Valley Bank and other regional banks nearly 3 years ago. However, there's much more that should be done to help ensure community banks can compete with the big bank banks for business deposits. And more needs to be done to hold culpable the CEOs of failing banks accountable.
▶ 3:00:38So, my amendment would add my bill HR the Employee Paycheck and Small Business Protection Act that includes a maximum cap of 10 million rather to a bipartisan bill in the Senate. However, unlike the Senate bill, my bill takes a data-driven approach.
▶ 3:01:02And I think the chairman prefers allowing the FDIC and NCUA to either maintain the current 250,000 threshold or raise it as high as 10 million or any number in between based on research and weighing the costs and the benefits of such a change.
▶ 3:01:22The amendment also emergency tools by allowing the FDIC and to establish an emergency transactional account guarantee or ETG program to guarantee all deposits in transactional accounts in a future crisis for up to 9 Any extension beyond 9 months would require congressional approval.
▶ 3:01:49As we saw with the collapse of Silicon Valley Bank, when banks fail abruptly, small businesses are left scrambling to figure out how they're going to pay their hard-working employees if they lose any money while other businesses quickly transfer their funds from trusted community banks to mega banks.
▶ 3:02:13With smaller banks such as the First National of Lindsay, small businesses lose funds through no fault of their own simply because their bank is too small to qualify for emergency protection. This is not fair to small businesses or their workers, and it threatens to undermine community banks and credit unions while concentrating even more in the mega banks.
▶ 3:02:41The simple truth is small businesses need reliable banking services, and they should be able to work with local financial institutions in their communities. Even Treasury Secretary Bentsen and Vice President Vance agree. So, instead of rolling back any scrutiny of bank management as section 301 of this bill would do, we need to strengthen accountability for their actions.
▶ 3:03:09My amendment includes another bill of mine, the Failed Bank Executives Accountability and Consequences Act. This provision would expand authority with respect to clawing back compensation, imposing fines, and banning future work in the industry for bank executives that negligently contribute to their bank's failure. A similar bill passed the Senate Banking Committee by a vote of 21 to 2.
▶ 3:03:38The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank make clear that it is past time for legislation aimed at strengthening the safety and soundness of our banking system and enhancing bank executive And so, I urge members to support my amendments, and I yield back. The gentlewoman yields back.
▶ 3:04:05Does the gentleman from Kentucky uh reserve continue to reserve his point of order? I can withdraw. Gentleman withdraws. Who seeks recognition on the Waters amendment? Gentleman from Kentucky. Uh thank you, Mr. Chairman. I I do oppose the amendment, and and let me just say I'm speaking for myself, not not the chairman, not any other member of the committee, but just for myself. I I I look forward to working with the ranking member on and other members uh on this e-tag idea.
▶ 3:04:29I think that uh further deliberation, and and and uh and I'd I'd I'd like to see see us uh make some progress on that idea in but I oppose the amendment uh which goes well beyond just an e-tag program. And [clears throat] this bill is about reducing uh the regulatory burden for our Main Street community banks. Tackling broader deposit insurance reform through this bill is inappropriate uh before we have concluded our actual review of the data and the issue.
▶ 3:04:58Uh and I think uh this e-tag idea can be taken up separately uh after we we do this important work. The committee has taken a data-driven approach to this issue and will continue to do so. The committee has been examining proposals for broader reform to the deposit insurance framework, and will ensure that robust conversations occur before making decisions that could greatly impact the banking system, uh especially when it comes to assessments.
▶ 3:05:23And and and what And and we really need to understand uh what increasing the limit of deposit insurance would mean in terms of cost uh to the system and to ultimately to customers. The committee sent a letter to the FDIC in December asking for more data to help inform our review. A key concern raised by that letter was that the data reported by banks on call reports is insufficient to target any proposals that would raise the insurance limit for specific account types.
▶ 3:05:51It is important that we are thoughtful about any additional coverage, including the costs that that may impose on financial institutions, especially community banks, uh through higher diff assessments. So, because uh we we we need to be very careful about those diff assessments, uh I encourage my colleagues to oppose the amendment. And I'll just add um that as we as we heard from Chairman Powell in the 118th Congress, this executive compensation issue that the ranking member has raised was not at the heart of the failure of Silicon Valley Bank.
▶ 3:06:21Uh all this amendment would do is uh that that part of the amendment uh would incentivize executives to leave the banking industry altogether or migrate to the largest institutions with the least likelihood of failure. We need we need uh talent uh to uh remain in some of these uh regional banks. We don't The last thing we need is uh you know, another Silicon Valley Bank mismanagement uh issue.
▶ 3:06:48We want We want strong management at these banks. Uh and for these reason reasons, I urge my colleagues to oppose this amendment.
▶ 3:06:57Will the gentleman yield? I will yield. I thank the gentleman. I also want to thank the ranking member for uh raising her concerns that she's expressed for quite some time on deposit insurance reform. She's been uh uh quite consistent on that in each of our in our meetings.
▶ 3:07:11And I want to thank you, Chairman Barr, for the round tables that you've held, for the outreach that you've done, and for our very good deposit insurance hearing uh last fall where we heard from uh both small institutions like CDFIs, and we heard from credit unions in your round table. We heard a superb presentation by the Texas Bankers Association on the big picture.
▶ 3:07:33And it's why we've advanced on a bipartisan basis our custodial deposits and reciprocal deposits proposals because we know that helps our smallest institutions have a diverse uh depository support. And we'll continue to work on that. I do agree with the chairman's comments about uh the data analysis that we got some support from and now confirmed Chair Travis Hill over at the FDIC.
▶ 3:08:01And it is important on not only ascertaining that right potential level of deposit insurance, but also the impact on DIF premiums and the impact on banks because that is a a key component that's sort of just accepted as we're going to work it out. And I think by being data-driven as we consider these proposals, we do need to be data-driven.
▶ 3:08:24And finally, uh both uh the ranking member and the chairman have talked about and you just referenced it uh the e-tag type program. And so, I'm committed to continue to work with both sides of the aisle on the importance of uh how our deposit insurance system works. Thank you for raising it. Thanks for the good discussion. And I yield back to Chairman Barr. I yield back. Gentleman yields back. Uh is there further uh debate on the Ms. Waters amendment?
▶ 3:08:52Uh if there's no further debate, the question now occurs on Ms. Waters' amendment. All those in favor of the amendment shall signify by saying I. I. All those opposed signify by saying nay. Nay. In the opinion of the chair, the nays have it. The nays have it. And the amendment is the amendment is uh not let's remove to the next amendment. Who seeks recognition for an amendment to Mr. Sherman of California? I have an amendment at the desk.
▶ 3:09:21Mr. Sherman has amendment at the desk. We'll pause while that's distributed.
▶ 3:09:52Okay, Mr. Chairman. Should I speak? Gentleman from Kentucky. I reserve a point of order. Point of order is Clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 6955 offered by Mr. Sherman of California designated as Sherma 125.
▶ 3:10:18Sherma 125 without objection the amendment is considered read and the gentleman from California is now recognized for 5 minutes to describe his amendment. I'm glad the chairman recognized Congressman Sherman. both credit unions and community banks play a very important role in our economy and will play it a more important role in the future.
▶ 3:10:39Section 101 of the Main Street Capital Act provides for a 3-year phase-in for de novo financial institutions that meet uh federal capital requirements and it lowers the community bank leverage ratio for rural community banks to 7.5%. This uh provision is designed to help the creation of new community banks.
▶ 3:11:05I think that's a good idea, but I think we also need to do something similar to promote the creation of new credit unions. Credit unions play an important role in our system. Um they face unique challenges uh when a de novo institution is in creation.
▶ 3:11:23Startup credit unions face significant hurdles in building liquidity and the capital base necessary to serve their If we want to community financial institutions serving our communities, the regulatory environment should be structured to give them a realistic path to viability. If we're going to help de novo banks, we should be helping de novo credit unions. Uh the process is different, but both play an important role. In the last 5 years, there were 44 de novo banks chartered.
▶ 3:11:51That's too small, but there were only 19 de novo credit unions, and that's way too small. Uh and so this amendment is designed to assure a level playing field. With that, I would yield to the to to Congressman Barr to see if he has any I I appreciate my good friend yielding. Appreciate Congressman Sherman for raising the issue. I appreciate his acknowledgement that we do have a dearth of de novo charters for community banks.
▶ 3:12:20I acknowledge and agree with the gentleman that uh that uh credit unions play an important role in the in our in the diversity of our financial ecosystem, and I'm happy to continue to work with you and your staff to address credit union issues, whether that's evaluating legislative proposals or potential hearings. I would emphasize that the Main Street Act does include already meaningful relief and right-sizing for credit unions in addition to community banks and all financial institutions.
▶ 3:12:45In fact, uh our bill uh directs the NCUA to issue both an annual report on federal and state credit union charter applications and a separate report on barriers to de novo credit union formation in rural areas. It also includes provisions that would require the NCUA to tailor new regulations to an institution size and risk profile, provide certain credit unions examination relief, and establish an independent supervisory appeals process for credit unions.
▶ 3:13:12I think uh the great work of our staff through the great work of our staff, I've been informed that I think there's 14 separate uh regulatory relief provisions embedded in our legislation that that would benefit credit unions. And and so I would urge urge all members to to to take note of that. Nonetheless, I look forward to working together to address these issues facing credit unions. And I'll yield back. I thank the gentleman for including provisions that help both community banks and credit unions on a host of fronts.
▶ 3:13:40And I uh thank the gentleman for his commitment to work with me on the issue of uh credit unions that are seeking a de novo charter and the level of capital that they will be required to have in their first 3 years. Uh I look forward to ensuring that credit union priorities are addressed in this committee. As I mentioned before, the goal is to create a level playing field between de novo banks and de novo credit unions. Um I look forward to working with the gentleman on this.
▶ 3:14:11Uh until we work out the language, I will have to oppose uh this bill, but I look forward to uh working with my Republican colleagues to increase uh community uh financial institutions, both credit unions and banks. And uh uh I'm uh confident that this bill will be improved before it reaches the floor. Uh with that, I withdraw the amendment. Gentleman withdraws the amendment. Uh for For what purpose does the gentlewoman from California stand?
▶ 3:14:38to uh strike the last word. That was Are you going to speak on this with this amendment? It's been withdrawn.
▶ 3:14:43amendment. It's been withdrawn. He was
▶ 3:14:47Is there additional amendments to the ANS? Gentleman from Illinois. The gentleman from Illinois has an amendment at the desk. We'll pause while it's distributed.
▶ 3:15:28I've got to be in the chair. Someone's got to be in the chair. I reserve a point
▶ 3:15:58of order. Uh for what is the Okay. Okay, the point of order has been reserved. The clerk will report the amendment.
▶ 3:16:25Amendment to the amendment in the nature of a substitute to HR 6955 offered by Mr. Casten of Illinois, designated as Casten 100. Without objection, the amendment is considered read. The gentleman uh from Illinois is recognized on his amendment. Thank you, Mr. Chair.
▶ 3:16:42Um so, section 404 of the current bill would require US banking regulators to provide information about their interactions with global entities, and I certainly share my colleague's commitment to restoring transparency and accountability among financial regulators, especially as relates to engagement with with hostile or potentially hostile foreign actors.
▶ 3:17:01To that end, I believe that this administration owes the same level of disclosure to the public and to Congress over its handling of Venezuelan oil My amendment would direct the Federal Reserve to provide detailed information on the US Treasury-run account that is allegedly holding billions of dollars in revenues from the sale of Venezuelan oil and directing payments to the Venezuelan government. Now, I say allegedly because we have no actual proof that that's happening.
▶ 3:17:26Um I don't see any New Yorkers in the room, but in the words of former Knicks announcer Marv Albert, let's go to the January, President Trump announced that he had a plan to sell up to 50 million barrels of Venezuelan oil. He subsequently issued an executive order that directed the Treasury Secretary to hold and safeguard the proceeds from the oil sales as well as to facilitate transactions of those funds as directed by the Secretary of Also in January later, Secretary Rubio confirmed that $500 million in proceeds from the first sale of Venezuelan oil
▶ 3:17:56bypassed the United States, bypassed Venezuela, and was funneled through a bank account in Qatar without providing any transparency over those how those funds would be spent and used by the interim Venezuelan government. Secretary Rubio also claimed that the Treasury Department, emphasize Treasury Department, has an has a written agreement with the Venezuelan government to review monthly budget requests from this bank account in Qatar.
▶ 3:18:20In February, Secretary Bescent testifying before this committee, said that he was unaware or perhaps unwilling to detail where, how, or under what authority the Treasury Department was controlling those Venezuelan oil He was also unaware of any authority to channel those funds through foreign bank He was also unaware of any written agreement with the Venezuelan government and said that contravening what Secretary Rubio had said, there actually was no audit agreement, so no audit controls over the flow of funds
▶ 3:18:51in order to ensure that the Venezuelan government is not using that revenue to pay off Maduro's allies, including militia groups, drug cartels, maintain control of Venezuela, or going to other shady characters. Energy Secretary Chris Wright said that those funds aren't going to Qatar anymore, and they're being deposited in a US account that's being managed by the Treasury Department. This is the account that you recall the Treasury Secretary said that he wasn't aware of and had not been responsible for setting up. Um, and then it's owned by Venezuela's national oil company.
▶ 3:19:20We still at this point have no response from them on what authority the Treasury Secretary was acting under um or what accounts um in in the Treasury Department are managing those funds. Where are they flowing? Wright said that Venezuelan oil sales so far have totaled $1 billion and in the next few weeks will bring in another $5 billion. Wright claimed that the Venezuelan government should expect up to $1.5 billion a month in revenues and that they will choose how to spend the money.
▶ 3:19:50He said that Venezuela's bought US medical supplies and wants to make investments to repair their their electric grid. Terrific. Where's the There are 91 separate Treasury accounts that we as Congress have approved to manage these funds. Secretary of Treasury sat here and said I have no idea what account these are in and I don't can't tell you what the authority is, but oh by the way it's going to cutter and I don't know where that is either and I don't have an audited agreement. It's great that they're telling us this money's out Trust but verify.
▶ 3:20:20So, I have some real concerns about how quickly the administration is moving to take the sovereign assets of another country, move them into accounts, shuffle them around. We have no idea where it's going. They're not giving any visibility in to Congress on how they are handling the sale of this oil, the custody of the funds, the disbursement of those funds. This is not a small arrangement. This is not a routine arrangement.
▶ 3:20:42This is billions of dollars from a country that's under heavy US sanctions related to terrorism, drug trafficking, anti-democratic actions, human rights violations, and corruption. There is no independent auditor right now tracking that money as far as we have been advised, no public accounting, no timeline for when they might regain of those sovereign assets. And as I pointed out to Secretary Wright, there are $200 billion of creditors, the largest of which is the Chinese, who presumably believe that they have a senior claim to those assets if this is a fraudulent conveyance.
▶ 3:21:11So, in the name of transparency, in the name of oversight, um to ensure that we are not basically providing money laundering for shady actors. We need to add this amendment to this bill and make sure we add this clarity. Um, so that's the reason for it. I hope we can all agree that those are worthwhile goals and I hope you all share my my deep concern with the unwillingness of this administration to provide any clarity on how billions of dollars are moving around, um, that is all subject to the jurisdiction of this committee. Thank you and I yield back.
▶ 3:21:41Gentleman's time is expired. I withdraw my point of order and recognize myself for 5 minutes, um, to oppose the amendment. I love the gentleman's reference to Marv Albert. I'm a basketball fan. I know the gentleman's from the Chicagoland area. And so he must be, I would assume, a Michael Jordan fan.
▶ 3:22:01What Marv Albert also said was, "A spectacular move by Michael Jordan." Uh, that's all great, but Michael Jordan has nothing to do with community banks and neither does this amendment. And that's why I oppose it. Um, the amendment doesn't do anything to ensure that community banks can thrive and continue to serve local communities.
▶ 3:22:21And we should not seek to use this important community financial institution legislation to make foreign policy decisions that go far beyond enhanced reporting requirements about federal prudential regulators or interactions with international global governance bodies. It's an important topic. Venezuela is an important topic. Uh, it's an important topic for the Foreign Affairs Committee. It's an important topic for the National Security Subcommittee here.
▶ 3:22:44Um, and and for our oversight of uh, the Treasury Department, but it doesn't belong in this bill, just like Michael Jordan has nothing to do with this bill and Marv Albert has nothing to do with this bill. The Venezuela issue has nothing to do with this bill and for that reason I oppose the amendment. And I yield back. Is there further debate on the amendments? The uh, the gentlelady from California, the ranking member. I move to strike the last word. Gentlelady moves to strike word. The gentlelady is recognized for 5 minutes. I would like to thank our colleague, Mr.
▶ 3:23:14Casten, for his good work to seek out answers from the Secretary of the Treasury on behalf of the American people and to demand greater transparency from this administration and visibility into its opaque dealings concerning Venezuelan This common sense amendment would require the Fed to report on any activities they have carried out as Treasury's fiscal agent relating to
▶ 3:23:46Americans deserve to know more about these transactions and whether or not they have been carried out lawfully. I urge members to support this amendment and I yield back. The gentle lady yields back. Is there further debate on the amendment? If there's no further debate, the question now occurs on the amendment. All those in favor of the amendment shall signify by saying I. All those opposed shall signify by saying nay.
▶ 3:24:14In the opinion of the chair, the nays have I request a recorded vote. The gentleman requests a recorded vote. A recorded vote is requested. All those in favor of a recorded vote, raise your hand. A sufficient number having raised their hand, a recorded vote is ordered pursuant to subsection C5 of rule three of the committee rules. Further proceedings on the amendment are postponed. We will now move on to the next amendment. Are there any other amendments?
▶ 3:24:46Seeing no further amendments, without objection, the previous question on the substitute is ordered and recorded votes on the pending amendment have been postponed. Once those votes are taken, the committee will immediately vote on the adoption of the amendment in the nature of a substitute and then will consider the question to report the We will now move on to the next bill. Do we have any No more bills. No, we're done. Marv Albert. Spectacular move by Michael Jordan. Oh, okay.
▶ 3:25:19Watch out, your constituents won't like the the the Knicks reference. Okay, pursuant to notice, I call up HR 2071, the Save Our Shrimpers Act of 2026, which was introduced by Representative Neals.
▶ 3:25:48The clerk will report the bill, which was distributed in advance. HR 2071, to prohibit federal funds from being made available to international financial institutions for other for the purposes of financing foreign shrimp farms and for other
▶ 3:26:01Without objection, the bill is considered read and open to amendment at any point. Representative Davidson has an amendment in the nature of a substitute, copies of which have been distributed in advance. Uh I I'm offering that amendment on his behalf. The clerk will report the An amendment in the nature of a substitute to HR 2071, offered by Mr. Uh without objection, the amendment is considered read and will serve as base text for purposes of the amendment. The from Ohio is not here.
▶ 3:26:31Um I'm going to recognize myself for 5 minutes on the amendment. Uh I would like to express my support support for HR 2071, a bill offered by our colleague from Texas, Mr. Neals. The bill requires the US executive directors at the international financial institutions to oppose loans that promote new or expanded shrimp aquaculture that are aimed at the US market. In the 1980s, domestic shrimp production accounted for 50% of US consumption.
▶ 3:27:01While shrimp has become more popular, there are fewer American shrimpers and tighter margins today than there were four decades ago despite a substantially larger market. The growth has been captured by imports, which now account for over 90% of domestic consumption. These imports, however, do not always operate on a level playing field. In 2023, an anti-dumping inquiry by the Commerce Department found that Thai and Vietnamese shrimp were being dumped into the US market.
▶ 3:27:25Under current law, our executive directors at the International Financial Institutions are already required to oppose financial support to bolster foreign commodities that cause substantial harm to American suppliers. HR 2071 codifies a policy of opposition to foreign shrimp projects with appropriate waiver and sunset provisions. I urge my colleagues to support this measure and I yield back. Does anyone else uh seek recognition on the ANS? Hearing up the the gentlelady from uh California is recognized.
▶ 3:27:54to strike the last word. Gentlelady is recognized for 5 minutes.
▶ 3:27:56Thank you. Communities in Louisiana, Texas, Florida, Georgia, and other US states have deep historic connections to the shrimping industry. They have raised concerns that projects funded by International Financial Institutions have increased shrimp uh supply and driven down the price of shrimp I'm very supportive of American workers, including the shrimpers here, who do not have any concerns with taking protective actions to
▶ 3:28:26support shrimpers and their families. That said, I don't I really don't know how this bill would fix the larger problem that that industry faces. Furthermore, the Treasury Department can already act as described in the bill. For example, in January, the US Executive Director at the Asian Development Bank voted against a Thai shrimp farm project.
▶ 3:28:48And so, nonetheless, nonetheless, given the harm from significant overply oversupply to American shrimping communities, I encourage members to support this bill and the communities that it aims to serve. I yield back. Yield back. The gentlelady yields. The gentlelady yields back. Does anyone wish to offer an amendment to the ANS? Seeing none, there being no further discussion or amendments to the bill, the question now occurs on the adoption of the amendment in the nature of a substitute.
▶ 3:29:18All in favor shall signify by saying I. I. Those opposed shall signify by saying nay. In the opinion of the chair, the ayes have it and the amendment is The question now occurs on ordering the bill as amended to be reported to the house with favorable recommendation. Those in favor shall signify by saying I. I. Those opposed shall signify by saying nay. In the opinion of the chair, the the ayes have it. Uh I request a recorded vote. A recorded vote is requested.
▶ 3:29:47All those in favor of a recorded vote, raise your hand. A sufficient number having raised their hand, a recorded vote is ordered pursuant to subsection C5 of rule 3 of the committee of the commit committee rules, the vote on this question is postponed. We will now move on to the next bill. Do we have another bill?
▶ 3:30:09Okay, pursuant to notice, I call up HR 4171, the Small Entrepreneurs Empowerment and Development or SEED Act of 2025 introduced by Representative Garbarino. The clerk will report the bill which was distributed in advance. HR 4171 to amend the Securities Act of 1933 to provide small issuers with a micro offering exemption free of mandated disclosures or offering filings, but subject to the anti-fraud provisions of the federal securities laws and
▶ 3:30:39for other purposes.
▶ 3:30:39With that without objection, the bill is considered read and open to amendment at any point. Representative Garbarino has an amendment in the nature of a substitute, copies which have been distributed in advance. The clerk will report the amendment. An amendment in the nature of a substitute to H.R. 4171
▶ 3:30:54Without objection, the amendment is considered read and will serve as base text for purposes of the amendment. I recognize myself for 5 minutes on behalf of Mr. Garbarino. I want to thank Congressman Garbarino for introducing the Small Business Entrepreneurship Empowerment and Development or SEED Act, a critical bill which will help emerging issuers make offerings without being crippled by unnecessary burdensome regulations. We often hear concerns about companies staying private longer, but the reality is simple.
▶ 3:31:21A company cannot stay private longer if it never exists in the first place. By creating a micro offering exemption, the SEED Act removes the complex, costly filings that prevent startups from becoming more than ideal. While maintaining strict federal anti-fraud protections and bad actor disqualifications to protect investors, this bill clears another pathway for capital formation. The SEED Act will help build a robust pipeline of companies that can eventually grow enough to enter our public markets.
▶ 3:31:48We must remember that there is no IPO without successful seed capital. I urge my colleagues to support H.R. 4171 and empower the next generation of American innovators. I yield back. Does anyone else seek recognition on the The ranking member is recognized. I move to strike the last word. The gentlewoman is recognized for 5 minutes. Uh thank you very much.
▶ 3:32:11While we all share the goal of helping entrepreneurs access capital, I cannot support a bill that is a recipe for fraud. H.R. 4171 creates a micro fraud exemption that would allow fraudsters to raise money from the public and tie the hands of both the states and the SEC to stop them.
▶ 3:32:33The SEED Act would allow anyone to raise up to $500,000 with zero required disclosures about the nature of the offering, no requirements to disclose the prospects of the business, nor any requirements showing the financial state of the business.
▶ 3:32:51Under this bill, the SEC would importantly state regulators would not be notified, even though they are our frontline cops on the financial markets beat. Notification is not the same as disclosures. Notification basically tells the regulators of that the business is legitimate and there are real people behind it.
▶ 3:33:15These type of notifications allow our state governments and the SEC to support legitimate businesses and to able to investigate if there are concerns and issuer is fraudulent. Because of the lack of these basic safeguards, the North Korean Securities Administrators Association came out yesterday in strong opposition to this bill.
▶ 3:33:41No one cares more about capital formation than our state securities overseers. Federal securities laws are built on a simple premise, transparency. But this bill bypasses that for smallest offerings, even though these are precisely the ones that should have publicly available basic information.
▶ 3:34:05While large institutional investors have the resources to conduct their own due diligence into their investments, retail investors do not. Under this bill, retirees, nurses, and firefighters would have no way of knowing if they are investing in a legitimate startup or a scam.
▶ 3:34:24While the proponents of this bill point to the fact that federal anti-fraud position will apply, let's be clear, anti-fraud protections only allow an investor to sue after their money has been stolen, something which most investors simply cannot afford uh to do. Importantly, this bill undermines the very state regulators who could seek compensation for any harmed investors.
▶ 3:34:54We already have numerous pathways for small businesses to raise capital such as regulation, crowdfunding, crowdfunding, and regulation A, which provide streamline, scaled-back disclosure requirements. These existing exemptions strike a careful balance between capital formation and investor protection. H.R. 4171 throws that balance out the window.
▶ 3:35:20This bill was part of a package in the 118th Congress that forced unanimous Democrat Democratic opposition. I opposed the bill back then and urged members to continue to oppose it now. I yield back the balance of my time.
▶ 3:35:36yields back and we're going to suspend for a moment. does anyone else seek recognition on the
▶ 3:36:06ANS? No one is here, so hearing hearing none, we will move to amendments. Does anyone wish to an amendment? You have an amendment? Yeah. Um I have an amendment. We will pause while the amendment is Do we do we have an amendment? I'll reserve a point of order on the
▶ 3:37:16Point of order has been reserved. The clerk will report the amendment. An amendment to the amendment in the nature of substitute to HR 4171 offered by Ms. Waters of California designated as AMD 01. Without objection, the amendment is considered read. The gentlewoman from California is recognized on her Thank you very much.
▶ 3:37:39Uh while I understand the intent of the Seed Act, I'm frankly not comfortable with the very limited protections it leaves in place for investors. The Seed Act would allow small stock sales of up to $500,000 with zero information given to investors about how the money will be used, the prospects of the business, nor anything about the financial state uh of the business.
▶ 3:38:06Given this lack of transparency and the fact that the only way a micro fraud victim can recover funds is to sue, I believe additional protections are necessary. That is why I'm offering this amendment to require the SEC to create a report 1 year after the bill's enactment that documents all investor complaints made about these stock sales and to indicate which actions
▶ 3:38:36the commission took to address those complaints. Additionally, the report would also cover all investigated complaints and remedial measures taken in action in relationship to rule 506, regulation crowdfunding, and regulation A tier two offerings.
▶ 3:38:56My amendment solves the bill's disclosure problem by providing transparency into the number of complaints the SEC receives from investors and puts the SEC on the record about what they did or didn't do to address these complaints. I simply urge all members to support my amendment and yield back the balance of my time. Uh withdraw my point of order.
▶ 3:39:25And I recognize myself uh for 5 minutes to oppose the amendment. Uh this amendment effectively nullifies the purpose of the bill by my by making the micro offering exemption too expensive to use. Um the amendment sends a clear message to American entrepreneurs, your idea ideas are only welcome if you can afford an army of lawyers. Our existing anti-fraud home framework is well equipped to deter bad actors. We don't need to bury entrepreneurs in costly paperwork.
▶ 3:39:53I urge my colleagues to reject this amendment to ensure that HR 4171 can offer a viable path to capital for small issuers. I yield back. does is there further debate on the amendment that I see that the author of of the legislation has arrived. does the off does the author of the legislation seek recognition?
▶ 3:40:24No. No. if there is no further debate, the question now occurs on the amendment. All those in favor of the amendment from the gentle lady from California shall signify by saying I. I. All those opposed shall signify by saying nay. Nay. In the opinion of the chair, the nays have it. The nays have it and the amendment is not adopted. A recorded vote is requested. A recorded vote is requested. All those in favor of a recorded vote raise your hand.
▶ 3:40:54A sufficient number having raised their hand, a recorded vote is ordered pursuant to subsection C5 of rule 3 of the committee rules. Further proceedings on the amendment are postponed. We will now move on to the next amendment. Is there another amendment? Other amendments? Seeing no further amendments, without objection the previous question on the substitute is ordered and recorded votes on the pending amendments have been postponed.
▶ 3:41:23Once those votes are taken, the committee will immediately vote on the adoption of the amendment in the nature of a substitute and then will consider the question to report the Are there any other bills? We're going to recess. Okay. Okay. So, pursuant to the previous order, the chair declares the committee in recess subject to the call of the chair. We will reconvene immediately after votes. The committee stands in recess.
▶ 5:01:12The committee will come to order following our recess. Pursuant to notice, I call up HR 7127, restoring the Secondary Trading Market Act, which was introduced by Representative Meuser. Clerk will report the bill, which was distributed in advance.
▶ 5:01:28HR 7127 to amend the Securities Act of 1933 to exempt the off-exchange secondary trading from state regulation where such trading is with respect to securities of an issuer that makes publicly available certain [clears throat] current information and for other purposes. Without objection, the bill is considered read and open to amendment at any point. Representative Meuser has an amendment in the nature of a substitute, copies of which have also been distributed in advance. Clerk will report that amendment.
▶ 5:01:58An amendment in the nature of a substitute to HR 7127 offered by Mr. Meuser of Pennsylvania, designated as Meuser PA 035. Without objection, amendment is considered read, will serve as base text for purposes of amendment. The gentleman from Pennsylvania, Mr. Meuser, who chairs our Oversight and Investigations Subcommittee, is recognized for 5 Thank you, Mr. Chairman. I move to strike the last word. You're recognized for 5 minutes.
▶ 5:02:22My bill, HR 7127, the Restoring Secondary Trading Markets Act, ensures our capital markets work the way Congress intended them to. Right now, when investors buy and sell securities on the secondary market, in other words, when they trade with each other after the stock has already been issued, those transactions can still be subject to up to 50 different state [snorts] regulatory regimes, even when the company is already meeting federal disclosure That's not investor protection, that's duplication, confusion, and very
▶ 5:02:52often unnecessary costs, and it has real consequences. It discourages stockbrokers from making markets, reducing liquidity, and makes it harder for small and mid-size companies to attract investment, particularly in states and regions that don't benefit from large national exchanges. H.R. 7127 fixes that problem in a narrow and targeted way.
▶ 5:03:13It says that if a company is already meeting federal disclosure standards under existing SEC rules, states should not be able to layer on conflicting or duplicative requirements just for secondary trading. That approach is consistent with what SEC commissioners, including Commissioner Hester Peirce, have been saying for years. Secondary market liquidity is essential to capital formation, and excessive [snorts] or overlapping regulation is one of the biggest barriers preventing small businesses from accessing investment capital.
▶ 5:03:43Commissioner Peirce has been clear that when secondary markets don't function properly, investors pull back, capital formation suffers, and small companies lose access to growth opportunities. This bill directly addresses that concern. This bill does three important things. First, it creates a clear national standard for secondary trading when federal disclosure rules are already being met.
▶ 5:04:04Second, it improves liquidity and access to capital, especially for small and mid-size companies that rely on secondary markets because they aren't listed on major exchanges. And third, it helps states by strengthening local capital formation. When investors can trade more freely and confidently, they're more willing to invest in growing businesses in their own So, just as important as what this bill does not do, uh just as important as what this bill does not do, it does not eliminate state anti-fraud authority.
▶ 5:04:34States retain full enforcement power. It does not weaken disclosure requirements. Issuers must still provide current publicly available information. And it does not deregulate public markets or reduce SEC oversight in any way. At a time when we're talking about expanding as access to capital, helping small businesses grow, and strengthening state and local economies, this is a common-sense step. It's now, it's responsible, and it strengthens, not weakens, our capital markets.
▶ 5:05:03I do urge my colleagues to support the bill, and I yield back. Gentleman yields back. Who seeks uh recognition on Mr. Meuser's A&S? The ranking member. Uh I move to strike the last word. Gentlewoman is recognized for 5 minutes. Mr. Chairman, uh let's be clear about what this actually does.
▶ 5:05:28It dismantles a 100-year-old safety net for retail investors by preempting state blue sky laws for off-chain exchange secondary We're essentially telling state legislators to stand down and let the scammers hold each other accountable.
▶ 5:05:47Unlike the federal securities regulators, which focus on whether a company is registered with the SEC and check the right boxes on their disclosure forms, state regulators conduct what are known as merit reviews. These reviews allow state regulators to look under the hood and ask, "Is this a fair deal?" If a state regulator sees a predatory scheme, they can block that security from being sold in their state.
▶ 5:06:17This bill cuts investor protections for regulation A and securities that are primarily traded off exchange, all of which are susceptible to pump-and-dump schemes. Without blue sky laws, investors are left both more susceptible to fraud and with little means to get their money back.
▶ 5:06:41Yeah, I know. I'm familiar. When a retiree in your district gets scammed, they don't call the SEC. They call their state securities commissioners. They're closer to the victims, more agile, and they can act faster than a large federal agency like the SEC.
▶ 5:06:57By stripping states of their oversight of over-the-counter secondary trading, we're effectively telling local investors, "You're on your own until the fraud gets big enough to catch the SEC's very limited attention." This bill was part of a package last Congress that faced unanimous Democratic opposition. I again ask my colleagues to vote no on this legislation, and I yield the balance of my time.
▶ 5:07:26Chairwoman yields back to see if anyone seeks recognition on Mr. Meuser's A&S. Seeing none, I'll recognize myself for 5 minutes. Let me say that I support Chairman Meuser's bill. I think this is a common-sense streamlining of regulatory burden for securities that meet the test in this and I would encourage members to support his bill. I also want to take a moment to thank members on both sides of the aisle for the markup today, for the debate, for the discussion.
▶ 5:07:56I want to particularly thank um Mr. Davidson for his bipartisan work on our Defense Production Act uh bill, and I want to thank Chairman Barr and and uh Democratic members that worked very, very hard on uh Main Street Capital Access. I think it's important to recognize and the the ranking member made some key points about uh deficiencies from her point of view in the in the Main Street Capital Access bill, and of course I respect uh her and and her opinions.
▶ 5:08:26But I I really do believe that this idea of tailoring for less less complex institutions is really an important theme. We've taken hours of testimony on it. We've tried to reflect reflect that in a bipartisan a way through the work of the committee. And of the 34 individual bills that are in the Main Street Capital Access package, 3/4 of did receive Democratic votes, and half of them have Democratic co-sponsors.
▶ 5:08:56But I you know, I take what she said uh seriously that she can't support all of it. But I do want those who study the work we do here in Congress to recognize that we tried to select uh policies that while they don't have full bipartisanship support, they do demonstrate that members on both sides of the aisle uh supported 3/4 of the effort in that package.
▶ 5:09:21Further, in addition to that, over the past few days, we've made substantive changes to the remaining 25% of the bills that only Republicans supported. Uh and when we marked them up when we marked them up as standalone measures.
▶ 5:09:36For example, we revised the Taylor Act, a bill that originally required the regulators to tailor regulations by taking into account the risk profile and business model of institutions going back 15 years, as well as all new But based on Democratic feedback from the minority, uh they didn't want to reopen past post-Dodd-Frank rulemaking. So, the Taylor Act was rewritten to just be prospective, to look at only future rule making.
▶ 5:10:05And that's an example of that we took Democratic comment on. A second one is the Humps Act, which previously gave the regulators the discretion to revise or eliminate the management component in the CAMELS supervisory rating framework. With revisions to the Humps Act in the amendment in the nature of a substitute, uh the regulators can now only revise the M, the management rating in that CAMELS framework.
▶ 5:10:33These are changes to the Main Street bill that were made in good faith in response to Democratic feedback. And again, these are changes that we agreed to on top of the fact that 75% of the bills had some form of bipartisan support. So, we look forward to, as I committed with Dr. Foster today, we look forward to continuing to work with our colleagues as we prepare Main Street Capital Access uh to uh come to the uh House floor.
▶ 5:11:01The other thing I want to uh reference is uh some opening comments you made uh Ranking Member that I think fit in with the same theme of me trying to wrap up this uh Main Street Capital Access Act. You referenced that we had 12 bipartisan bills in the Housing for the for 21st Century uh Act, and they're good bills. They're bills we both strongly support. They're the anchor of this Main Street Capital Access approach.
▶ 5:11:28Uh and uh I would hope that you would join me in encouraging the Senate during their 2 weeks of debate to consider adding those 12 back bills back to their debate that they have in the Senate. Uh I think that would strengthen the housing package in the Senate. And as we made the point here in the House, community banking is what supplies that housing.
▶ 5:11:5460% of all one-to-four family construction activity is conducted by banks under $10 billion. So, that's why I think it's important to link those. I would hope Madam Ranking Member, you might consider uh supporting that uh effort in the Senate. So, I think we've done some good work today. I'm grateful for the members and the participation uh that has led to And I look forward to our continued work There being no further I yield back. Uh there being no further uh dis- I have an amendment.
▶ 5:12:24Oh, you do? Okay. we have an amendment uh yet again another amendment. 2127 Uh, what's the number? 7127 7 7127 This is We'll pause while Ms.
▶ 5:12:37Waters amendment's Mr. Chairman Could I reserve a point of order Mr.
▶ 5:13:06Gentleman from Oklahoma reserves a point of order, thank you.
▶ 5:13:39Clerk will report the amendment. An amendment to the amendment in the nature of a substitute to HR 7127 offered by Ms. Waters of California designated as AMD 01 H7127. Without objection amendment's considered read and the gentlewoman from California is now recognized to describe her amendment. Uh thank you Mr. Chairman.
▶ 5:13:59Uh HR 7127 would create a gap in protection for investors trading in regulation A and securities that trade in [clears throat] our over-the-counter markets. In order to address this issue, I'm offering an amendment stating the bill's preemption does not apply to any entity that has previously been found to have committed a violation of federal or state securities laws and regulations.
▶ 5:14:28My amendment is common sense in that it prevents anyone with a track record of violating our securities laws from being able to take advantage of the bill's state preemption. In doing so, we ensure that we're not handing scammers a clear path to rip off our constituents. I urge all members to support this amendment and I yield back the balance of my time. The gentlewoman yields back. Who seeks recognition on the Waters amendment?
▶ 5:14:58Uh does the gentleman from Oklahoma insist on your point of order? Mr. Chairman, I wish to withdraw my point of
▶ 5:15:03withdraws his point of order. Who seeks recognition on uh the underlying amendment? Mr. Meuser. Mr. Meuser, you're recog- you're recognized to strike the last word. Uh thank you, Mr. Chairman. Um I oppose this amendment. This legislation uh that I proposed is intended to improve capital access, market function, uh certainty. Uh this amendment proposes an additional layer of regulation that is unnecessary, imprecise, and cumbersome.
▶ 5:15:33Adding a separate statutory disqualification to this bill in my view serves no purpose. This amendment would cover persons who unintentionally commit technical violations without any fraudulent intent. So, I urge my colleagues to reject this amendment and I yield back. The gentleman yields back. Is there further discussion on the Waters There being no further discussion on uh on the amendment, all those in favor of the amendment shall signify by saying I.
▶ 5:16:02All those opposed signify as by saying nay. Nay, and the Chair is unsure if the nays have it. The nays have it. The amendment is not adopted. The gentlewoman has requested a recorded vote. All those in favor of a recorded vote, raise your hands. A sufficient number having raised your hand, a recorded vote is ordered pursuant to subsection C5 of rule 3 of the committee rules. Further proceedings of the amendment are postponed. We now move to the next amendment on the Muser ANS. Is there an additional amendment?
▶ 5:16:30Seeing that there no further amendments without objection, the previous question on the substitute is ordered and recorded votes on the pending amendments have been postponed. Once those votes are taken, the committee will immediately vote on the adoption amendment in the nature of a substitute and then will consider the question on reporting the measure. Pursuant to the previous order, the chair declares the committee in recess subject to the call of the chair. We will reconvene at 3:15 to take votes. Committee stands in recess.
▶ 5:35:56The committee will reconvene. Pursuant to the chair's previous order, we'll now take postponed votes on the pending amendments to HR 7688. The question is on the amendment offered by ranking member Waters. This is Waters 142. The clerk will open the vote.
▶ 5:36:55Who are we missing anyway? Who are we missing?
▶ 5:37:25The key was to be Give us a second, sir. Let me check
▶ 5:41:28Is there any member who hasn't voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 16 and the nays are 25. A majority having voted against the amendment, the amendment is not agreed to. Question now occurs on the amendment offered by Representative Lacardo. This is LaCar 090. Clerk will open the vote.
▶ 5:42:13Is there any member who hasn't voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 16 and the nays are 25. A majority having voted against the amendment, the amendment is not agreed to. Question now occurs on adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. All those opposed signify by saying nay.
▶ 5:42:42In the opinion of the chair, the eyes have it. The eyes have it and the amendment in the nature of a substitute is adopted. And the question now occurs on ordering the bill as amended reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed signify by saying nay. In the chair, the eyes have it. Mr. Davidson. You recorded Mr. Davidson has requested a recorded vote.
▶ 5:43:12All those in favor of a recorded vote raise your hands. A sufficient number having raised their hand, a recorded vote is so ordered. We'll now take that vote on ordering the bill as amended favorably reported. The clerk will open the vote.
▶ 5:43:45Is there any member who has not voted or would like to change their vote? The clerk will close the vote and Mr. Chairman, on this vote the eyes are 41 and the nays are zero. A majority having voted in favor of HR 7688 as amended, the bill is ordered favorably reported to the house. Without objection, a motion to reconsider is laid on the table. We'll now take the postponed votes on the pending amendments to HR 6955.
▶ 5:44:14The question is on the second amendment offered by ranking member Waters. This is Waters 150. The clerk will open the vote.
▶ 5:44:54Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 16 and the nays are 25. A majority having voted against the amendment, the amendment is not agreed to. The question now occurs on the third amendment offered by Ranking Member Waters. This is Waters 148. Clerk will open the vote.
▶ 5:45:39Is there any member who has not voted? Or would like to change their vote? The clerk will close the vote and Mr. Chairman, on this vote the eyes are 16 and the nays are 25.
▶ 5:45:53A majority having voted against the amendment, the amendment is not agreed to. Question now occurs on the amendment offered by Representative Casten. This is Casten 100. The clerk will open the
▶ 5:46:27No, her. A majority of The clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 16 and the nays are 26. A majority having voted against the amendment, the amendment is not agreed to. The question now occurs on adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. All those opposed who by saying nay.
▶ 5:46:57In the opinion of the eyes have it. The eyes have it and the amendment in the nature of a substitute is adopted. Question now occurs on ordering the bill as amended reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed signify by saying nay. In the opinion of the eyes have it. Mr. Chairman. Mr. Barr. Mr. Barr requests a recorded vote. All those in favor of recorded vote raise your hand.
▶ 5:47:26Is sufficient number having raised their hand a recorded vote is so ordered. We'll now take that vote on ordering the bill as amended favorably The clerk will open the vote.
▶ 5:48:07Good. Point it down at There you go. Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 26 and the nays are 16. A majority having voted in favor of HR 6955 as amended the bill is ordered favorably reported to the house.
▶ 5:48:31Without objection a motion to reconsider is laid on the We'll now take the vote pending on ordering HR 2071 as amended favorably reported. Members will vote electronically. The clerk will open the Call this the
▶ 5:48:55It's a really small bill. Never eat the tails. Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr.
▶ 5:49:25Chairman, on this vote the eyes are 42 and the nays are one. A majority having voted in favor of HR 2071 as amended, the bill is ordered favorably reported to the house without objection. A motion to reconsider is laid on the We'll now take the postponed votes on the pending amendments to HR 4171. The question is on the amendment offered by ranking member Waters. This is amendment one. Clerk will open vote.
▶ 5:50:08Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the eyes are 17 and the nays are 26. A majority having voted against the amendment, the amendment is not agreed to. The question now occurs on the adoption of the amendment in the nature of a substitute. All those in favor shall signify by saying I. I. All those opposed signify by saying nay. In the opinion of the chair, the eyes have it. The eyes have it.
▶ 5:50:36And the amendment in the nature of a substitute is adopted. Question now occurs on ordering the bill as amended reported to the house with a favorable recommendation. Those in favor shall signify by saying I. I. All those opposed signify by saying nay. In the opinion of the chair the eyes have it. gentleman from New York. I request a recorded vote.
▶ 5:50:57The gentleman from New York requests a recorded vote. All those in favor recorded vote raise your hands. A sufficient number having raised their hand a recorded vote is awarded. We'll now take the vote on ordering the bill as amended favorably reported. The clerk will open the vote.
▶ 5:51:35Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman on this vote the eyes are 26 and the nays are 17. A majority having voted in favor of HR 4171 as amended the bill's ordered favorably reported to the house. Without objection the motion to reconsider is laid on the table. We'll now take proposed postponed votes on pending amendments to HR 7127.
▶ 5:52:05The question is on the amendment offered by ranking member Waters. This is amendment one. The clerk will open the vote. Aim it a little
▶ 5:52:35lower towards There you go. Is there any member who has not voted or would like to change their vote? Clerk will close the vote and report. Mr. Chairman, on this vote the ayes are 17 and the nays are 26. A majority having voted against the amendment, the amendment is not agreed to. Question now occurs on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye. Aye. All those opposed signify by saying nay.
▶ 5:53:06Opinion of the chair, the ayes have it. The ayes have it and the amendment in the nature of a substitute is adopted. Question now occurs on ordering the bill as amended reported to the house with a favorable recommendation. Those in favor signify by saying aye. Aye. All those opposed signify by saying nay. Opinion of the chair, the ayes have it. Uh Representative Meuser. I request a recorded vote and
▶ 5:53:27Indeed you do. The gentleman requests a recorded vote. All those in favor of a recorded vote raise your hands. A sufficient number having raised their hands, a recorded vote is so ordered. We will now take that vote on ordering the bill as amended favorably reported. The clerk will open the vote.
▶ 5:54:05Is there any member who has not voted or would like to change their vote? The clerk will close the vote and Mr. Chairman, on this vote the ayes are 26 and the nays are 17. A majority having voted in favor of H.R. 7127 as amended, the bill's ordered favorably reported to the house. Without objection, a motion to reconsider is laid on the table.
▶ 5:54:28Without objection, the staff are authorized to make necessary and conforming changes to the bills considered today and pursuant to House Rule 11, Clause 2L, I give notice that all members will have the requisite number of days to file supplemental minority additional or dissenting views. There being no further business, the committee stands adjourned.