WASHINGTON – The House Financial Services Committee has scheduled a hearing for April 26 to discuss a new version of the Financial CHOICE Act with municipal securities provisions that mirror a version introduced last session.

Financial Services Committee chair Jeb Hensarling, R-Texas, announced the upcoming hearing Wednesday afternoon along with a discussion draft of his revised act, which is meant to be a replacement for the Dodd-Frank Act. The previous version of the CHOICE Act passed through the Financial Services Committee last year but stalled in the full House. The most recent version, like the last, is expected to face strong opposition from Democrats.

Rep. Jeb Hensarling, R-Texas
"We will work with President Trump to follow through on his promise to dismantle Dodd-Frank,” said House Financial Services Committee chair Jeb Hensarling, R-Texas.

Hensarling, in a release announcing the upcoming hearing, said “Dodd-Frank failed to keep its promises to the American people,” but that he and CHOICE Act supporters “will work with President Trump to follow through on his promise to dismantle Dodd-Frank.”

“That’s not what Wall Street wants, but it is what hardworking Americans need to have a healthier economy with more opportunities so they can achieve financial independence,” Hensarling said in the release.

The 593-page draft bill rarely mentions municipal securities directly, but when it does, it is in recycled material from the previous version. The legislation would still require that the Securities and Exchange Commission’s Office of Municipal Securities begin reporting to the SEC’s Division of Trading and Markets instead of reporting directly to the SEC chair. It would also keep the provision that would reallocate the fines the Municipal Securities Rulemaking Board receives from enforcement actions over violations of its rules to the Department of Treasury.

The revised CHOICE Act additionally keeps a provision from the previous version that makes clear municipal issuers are not required to have a municipal advisor. The provision is tied to a previous bill from Rep. Randy Hultgren, R-Ill., that responded to concerns his office had after hearing that issuers were being told they had to hire MAs under the SEC’s MA Rule.

Another portion of the draft CHOICE Act lays out necessary considerations that agencies like the SEC must take into account when analyzing proposed rulemakings. Among other things, the SEC would have to include: an identification of the need for the regulation and the regulatory objective; an analysis of the adverse impacts regulated entities and other market participants could experience; and a quantitative and qualitative assessment of all anticipated direct and indirect costs and benefits of the regulation. The draft legislation further explains similar requirements for notices of final rulemakings.

The new act would also require the SEC to conduct a regulatory impact analysis on each of its rules within five years of their publication in the Federal Register. There is additionally a requirement that the SEC do a retrospective review of its existing rules within one year of the act’s enactment and then every five years thereafter. The SEC would have a year from the date the legislation is enacted to submit a report detailing a plan to subject the MSRB to the CHOICE Act’s regulatory analysis requirements.

One new addition to the act in this second version is the intended creation of an advisory committee on the SEC’s enforcement policies and practices. The SEC chair would have six months after the legislation is enacted to establish such a committee, which would be tasked with analyzing the commission’s enforcement policies and procedures as well as how closely those procedures are being followed, among other things. The SEC would also have to appoint an enforcement ombudsman within 180 days of the act’s enactment.

Individuals would be allowed under the rule to force the commission to end an SEC administrative action that has been brought and instead have the matter brought as a civil action.

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