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From Securities Regulation Daily, November 9, 2016

Historic election leaves open questions for securities, commodities regulators

By Mark S. Nelson, J.D.

With the 2016 presidential campaign barely in the nation’s rear view mirror, it is possible to begin focusing on a few open questions that could shape the incoming Trump administration’s legislative agenda for financial regulators. Significant Democratic minorities in the House and Senate may impact any financial legislation. Still, the groundwork for a Republican policy shift has already been established in several bills introduced in the 114th Congress.

Early industry reaction. Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, congratulated the president-elect and pledged his organization’s help to further economic and jobs growth. "The number one goal of the Chamber’s political program this cycle was to save the pro-business majority in the Senate. Yesterday voters agreed, and chose pro-business majorities in the Senate and the House to represent them in Washington," said Donohue.

Better Markets’s president and CEO Dennis Kelleher characterized the election result as a "scream" from those who felt economically crushed in the aftermath of the Great Recession. Kelleher also pledged to work with a Trump administration on preventing another financial crisis. "The 2008 financial crash threw tens of millions of hardworking Democrats and Republicans out of their jobs and homes and robbed them of their savings and dreams. Preserving and protecting strong and effective financial reform is essential to prevent that from happening again and to ensuring that finance serves society and is not a threat to it."

Emerging legislative agenda. As for possible legislation in the next Congress, the likely emphasis will be on revising numerous Dodd-Frank Act provisions, while repealing others. The Financial CHOICE Act of 2016 (H.R. 5983), introduced by House Financial Services Committee Chairman Jeb Hensarling (R-Tex), along with a bill (S. 1484) introduced by Senate Banking Committee Chairman Richard Shelby (R-Ala), could provide the narrative for future efforts to revamp or repeal portions of the Dodd-Frank Act.

The appropriations process for FY 2017 also will likely unfold before the end of this year in the form of an omnibus spending bill or several minibus spending bills. For now, a continuing resolution will keep the federal government open until December 9. But lawmakers also may look to provisions from several existing appropriations bills for ideas for riders to be attached to another CR, if needed, that could extend the appropriations process into at least the early days of a Trump administration.

These must-pass spending bills often include numerous, controversial riders, but which do not seriously threaten a presidential veto. The current CR includes a rider that was part of last year’s omnibus legislation and bars the SEC from finalizing any regulations mandating that companies’ disclose their political spending habits.

One open question about the appropriations process is whether other provisions, such as one in the House spending bill barring similar SEC action on universal proxy cards (something the Commission recently proposed), could find their way into upcoming spending legislation. Section 1215 of H.R. 5485 would strip the Commission of authority to "propose, issue, implement, administer, or enforce any requirement" via regulations for a proxy solicitation "using a single ballot or card."

Yet another open question is whether a President Trump could designate a new SEC chair. At present, the Commission has an Independent chair (Mary Jo White), one Democratic commissioner (Kara Stein), and one Republican commissioner (Michael Piwowar). Senator Elizabeth Warren recently asked President Obama to use his authority to designate someone other than White to be chair and in the process shed light on the law that allows the president to make this designation. There also is the question of stalled nominations to fill vacancies at both the SEC and the CFTC, not to mention the CFTC’s long-awaited re-authorization.

Those who observe Congress also will look for signals that a new Congress and Trump administration can work across the political divide. Despite their many differences, members of the 114th Congress did occasionally work together in a bi-partisan manner to pass major financial legislation. A recent example is the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), a law that created a financial path forward for Puerto Rico after its debt obligations reached crisis levels. President Obama signed the bill into law in June.

Companies: U.S. Chamber of Commerce; Better Markets

MainStory: TopStory CommodityFutures CorporateGovernance CorpGovNews DirectorsOfficers DoddFrankAct Enforcement ExchangesMarketRegulation Proxies PublicCompanyReportingDisclosure Swaps

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