This bill would exempt non-bank financial institutions (like mutual funds) that aren’t under the supervision of the Federal Reserve from the Dodd-Frank Act’s stress-testing requirements. It would also allow the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to require financial firms under their jurisdiction with more than $10 billion in assets to undergo periodic tests to analyze their financial stability under adverse economic conditions.
What is House Bill H.R. 4566?
Cost of House Bill H.R. 4566
In-Depth: Writing in support of Rep. Bruce Poliquin’s (R-ME) bill, the Investment Company Institute said this legislation sensibly tailors Dodd-Frank stress tests:
“This bill provides a modest but important update to the Dodd-Frank Act that would avoid inappropriate application of bank-oriented stress testing requirements to mutual funds, other registered investment companies, and their investment advisers. One important lesson from the financial crisis is that banks needs to be able to meet their obligations and depositors and others without government support. Testing a bank’s ability to maintain sufficient capital in stressed conditions, as contemplated by the Dodd-Frank Act, therefore is appropriate. In contrast, such testing is ill-suited to registered funds, which do not guarantee investment returns or even the return of principal to their investors. And applying these requirements to funds would simply raise costs for fund shareholders.”
Some Democrats opposed this bill in committee, writing in its committee report:
“[This bill] would unwisely eliminate a commonsense tool that gives financial companies and regulators an opportunity to identify and correct problems before they could lead to another financial crisis. Specifically, the bill, as amended, would eliminate the Federal Reserve’s discretion under Dodd Frank to stress test any nonbank financial company that the Financial Stability Oversight Council may be in the process of designating as systemically important.”
This legislation passed the House Financial Services Committee on a 47-8 vote.
- House Financial Services Committee Press Release
- CBO Cost Estimate
- Investment Company Institute (In Favor)
Summary by Eric Revell(Photo Credit: gopixa / iStock)
Alleviating Stress Test Burdens to Help Investors Act
To amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to provide relief to nonbanks from certain stress test requirements under such Act.
- Not enactedThe President has not signed this bill
- The senate has not voted
Committee on Banking, Housing, and Urban Affairs
- senate Committees
- The house Passed March 20th, 2018Roll Call Vote 395 Yea / 19 Nay
Committee on Financial ServicesIntroducedDecember 6th, 2017
- house Committees