That was fast — last week McGuireWoods’ Tax Policy Update reported that House Financial Services Chairman Jeb Hensarling (R-TX) would be putting together a legislative package as a follow-up to the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), the bipartisan regulatory relief bill for small financial institutions enacted in May 2018.

The short wait is over: The House is set to take up the JOBS and Investor Confidence Act (S. 488) this week. Hensarling’s legislation is a compilation of 32 standalone bills with strong bipartisan support. There are measures aimed at improving access to capital; providing relief from Dodd-Frank’s requirements for living wills and stress tests; and simplifying certain disclosure requirements, among other things. A quick summary of all 32 measures in S. 488 is available here.

The “listening sessions” for Tax Cuts 2.0 have begun. Ways and Means Republicans gathered last week to discuss which tax provisions should go into the forthcoming legislative package. Ways and Means Chairman Kevin Brady is pushing hard to release a proposal by July 26 before the House leaves for the August recess — an ambitious timeline given that no major decisions were made at the July 11 meeting.

The tax-writing panel is reportedly considering a provision that would index capital gains to inflation. Additionally, Rep. Carlos Curbelo (R-FL) told reporters that Tax Cuts 2.0 would not address international items like the global intangible low-tax income (GILTI) or the base erosion anti-abuse tax (BEAT). These two international provisions might be addressed in the technical corrections bill that Chairman Brady is planning to introduce after the midterm elections. GOP tax writers are waiting to see what the Treasury will do first via guidances and whether the regulatory fixes will be sufficient.

 

The House and Senate convene today at noon and 3 p.m., respectively.

House

FY 2019 Appropriations. The chamber is gearing up to tackle its second “minibus” spending package for fiscal year 2019. The House Rules Committee is meeting at 5 p.m. today to draft a rule for floor consideration of R. 6147, which contains the spending bills for Financial Services and Interior-Environment. The funding measure would, among other things, provide $11.6 billion for the IRS and $1.66 billion for the SEC. H.R. 6147 could hit the floor as early as Tuesday, July 17.

S. 480. The JOBS and Investor Confidence Act contains a number of provisions aimed at improving access to capital; providing relief from Dodd-Frank’s requirements on living wills and stress tests; and expanding investment for small businesses.

Carbon Tax. Lawmakers will vote on a resolution that expresses the sense of Congress that a carbon tax would be detrimental to the U.S. economy.

Powell Talks Economy. Federal Reserve Chairman Jerome Powell is scheduled to appear before the House Financial Services Committee on Wednesday to deliver his monetary policy report and an update on the state of the economy.

Trade Hearing. The House Ways and Means Committee has a hearing on Wednesday to examine the impact of tariffs on U.S. agricultural and rural communities.

Senate

Vote. The chamber will vote today on the nomination of Scott Stump to be the assistant secretary for career, technical, and adult education at the Department of Education.

FAA Bill. Republicans are looking to circulate an updated version of their FAA reauthorization bill this week. The plan is to identify and eliminate any problematic provisions that might cause a delay before the bill is taken up for consideration.

Kraninger in the Hot Seat. Kathy Kraninger, nominee to be the CFPB director, will come before the Senate Banking Committee on July 19 for her confirmation hearing. Democrats on the panel are expected to grill the nominee on her lack of experience in consumer financial regulation.

Key Hearings and Meetings

Monday, 7/16

  • House Rules Committee. Meeting on H.R. 6147, the spending package for Financial Services and Interior-EPA.
  • SEC. Meeting of the Fixed Income Market Structure Advisory Committee. See the full agenda here.
  • Tuesday, 7/17
  • House Financial Services Committee. Subcommittee hearing on “Examining Capital Regimes for Financial Institutions.
  • Senate Banking Committee. Hearing to examine the Semiannual Monetary Policy Report to the Congress with Federal Reserve Chair Jerome Powell testifying.
  • Financial Stability Oversight Council. Executive meeting to discuss an application to the council from a bank holding company or its successor under section 117 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, an update on the annual reevaluation of the designation of a nonbank financial company, and an update on Federal Reserve stress tests.

Wednesday, 7/18

  • Senate Finance Committee. Hearing to examine trade and commerce at U.S. ports of entry.
  • House Ways and Means Committee. Subcommittee hearing on the “Effects of Tariffs on U.S. Agriculture and Rural Communities.”
  • House Financial Services Committee. Committee hearing on monetary policy and the state of the economy with Federal Reserve Chair Jerome Powell.
  • House Financial Services Committee. Subcommittee hearing on “The Future of Money: Digital Currency.”
  • SEC. Open meeting to discuss: Securities Act Rule 701; Securities Act Form S-8; Rule 3-10 and 3-16 of Regulation S-X; NMS Stock Alternative Trading Systems.

Thursday, 7/19

  • Senate Banking Committee. Hearing for the nominations of Kathy Kraninger to be CFPB director and Kimberly Reed to be president of the Export-Import Bank.
  • House Permanent Select Committee on Intelligence. Hearing on “China’s Threat to American Government and Private Sector Research and Innovation Leadership.”

 

The recent enactment of the Bipartisan Budget Act of 2018 extended and significantly expanded the existing tax credit for carbon sequestration under Section 45Q of the Internal Revenue Code. Although the Section 45Q credit for carbon sequestration has been available since 2008, the limitations and uncertainty associated with the credit greatly limited its effectiveness in spurring investment in eligible carbon capture equipment. As amended, the new Section 45Q represents a serious attempt by Congress to make the credit more attractive by incorporating a number of industry-favorable changes.

Check out McGuireWoods’ legal alert on this issue here.

House Republicans are preparing to hit the campaign trails with another tax-cut package in tow. Ways and Means Chairman Kevin Brady (R-TX) is hoping to provide a public preview of Tax Cuts 2.0 in August; this should give lawmakers enough time to review the package of tax proposals before a floor vote in the fall.

Those who have been tracking Tax Cuts 2.0 already know that the centerpiece of the legislation will focus on making permanent the individual and select business tax cuts enacted in 2017. In addition to permanency, the tax package is also expected to include provisions addressing retirement savings and education benefits. McGuireWoods’ Tax Policy Update team has heard that lawmakers are interested in consolidating some of the education tax benefits. And according to a Ways and Means staffer, the retirement provisions under consideration do not include “Rothification,” whereby the pre-tax benefits of certain retirement plans would be limited or eliminated.

For fans of tax extenders, Tax Cuts 2.0 will likely disappoint, as some lawmakers have already indicated that they would not be included. Although President Trump would like to use the forthcoming tax package to cut the corporate tax rate further down to 20 percent from the current 21 percent, the inclusion of such a proposal is highly improbable – it just wouldn’t make a good sound bite ahead of the midterms.

The Senate convenes today at 3 p.m., and the House returns Tuesday at noon.

President Trump is expected to announce his Supreme Court nominee this evening. On the short list are the following appeals court judges: Amy Coney Barrett (7th Circuit); Brett Kavanaugh (District of Columbia); and Raymond Kethledge (6th Circuit).

Here’s what’s in store for the week on Capitol Hill:

House

Votes. The chamber will take up the following financial services bills:

  • H.R. 6139 – the Improving Investment Research for Small and Emerging Issuers Act would direct the SEC to conduct a study on issues affecting the provision of and reliance upon investment research into small issuers.
  • H.R. 4537 – the International Insurance Standards Act would, among other things, require that insurance standards reflect U.S. policy and that state regulators are involved in international standard setting.
  • H.R. 5793 – the Housing Choice Voucher Mobility Demonstration Act would authorize the HUD secretary to carry out a housing choice voucher mobility demonstration to encourage families receiving such assistance to move to lower-poverty areas and expand access to opportunity areas.
  • H.R. 5749 – the Options Markets Stability Act would require the federal banking agencies to increase the risk-sensitivity of the capital treatment of certain centrally cleared options.
  • H.R. 5877 – the Main Street Growth Act would allow for the registration of venture exchanges.
  • H.R. 5953 – the BUILD Act would provide regulatory relief to charitable organizations that provide housing assistance.
  • H.R. 5970 – the Modernizing Disclosures for Investors Act would direct the SEC to implement rules to simplify the quarterly financial reporting regime.

FY 2019 Appropriations. House appropriators are putting together the next “minibus” spending package for floor action the week of July 16 – it is expected to include the Financial Services bill and the Interior-Environment bill.

Mnuchin Speaks. The House Financial Services Committee welcomes Treasury Secretary Steve Mnuchin on Thursday to receive his update on the international financial system.

Senate

Nomination. The chamber will consider the nomination of Mark Jeremy Bennett to be a U.S. circuit judge (9th Circuit).

Paid Family Leave. The Senate Finance Committee will hold a hearing on Wednesday to examine the importance of paid family leave for working Americans.

Fair Credit Reporting Act. The Senate Banking Committee will hold a hearing Thursday to provide an overview of the U.S. credit bureaus.

Key Hearings

Wednesday, 7/11

  • Senate Finance Committee. Hearing to examine the importance of paid family leave for working families.
  • House Small Business Committee. Hearing on “Innovation Nation: How Small Businesses in the Digital Technology Industry Use Intellectual Property.”
  • House Energy and Commerce Committee. Subcommittee hearing on “Protecting Customer Proprietary Network Information in the Internet Age.”
  • House Financial Services Committee. Markup of a series of bills: Expanding Investment in Small Businesses Act; Enhancing Multi-Class Stock Disclosures Act; Middle-Market IPO Underwriting Fee Act; Promoting Transparent Standards for Corporate Insiders Act; Investment Adviser Regulatory Flexibility Improvement Act; National Senior Investor Initiative Act.

Thursday, 7/12

  • Senate Banking Committee. Hearing on “An Overview of Credit Bureaus and the Fair Credit Reporting Act.”
  • House Financial Services Committee. Full committee hearing on the annual testimony of the secretary of the Treasury on the state of the international financial system.
  • House Financial Services Committee. Subcommittee hearing on “Countering the Financial Networks of Weapons Proliferation.”

On June 28, the Senate Finance Committee held a confirmation hearing for Charles Rettig, nominee to be the next commissioner of the IRS.

A copy of McGuireWoods’ congressional hearing report is available here if you’re interested in reading some of the highlights. Many thanks to our summer intern Derek Wu for covering the hearing.