House Financial Regulatory Legislation: Banking and Insurance Provisions of the “JOBS and Investor Confidence Act of 2018”

Sullivan & Cromwell LLP - July 30, 2018

On July 17, the U.S. House of Representatives voted 406 to 4 to pass S. 488, the “JOBS and Investor Confidence Act of 2018,” which is “comprised of 32 individual pieces of legislation that have passed the House Financial Services Committee or the House this Congress with broad bipartisan support.”   The House Financial Services Committee characterizes the legislation as “the third and largest installment of ‘Jumpstart Our Business Startups (JOBS) Act’ legislation aimed at helping small businesses, entrepreneurs and investors by reforming our capital markets.”   Although most of the provisions in the legislation are aimed at promoting new capital formation (we have analyzed these provisions in a separate client memorandum), the package includes several other financial regulatory provisions that would:

  • Amend the Dodd-Frank Act to require bank holding companies to submit resolution plans (often referred to as “living wills”) to the Federal Reserve Board and the FDIC every two years, rather than annually, and to require agencies to provide feedback regarding a submitted resolution plan within six months of its submission; 
  • Increase the maximum percentage that a national bank, member bank of the Federal Reserve System, nonmember insured bank, or Federal savings association is permitted to invest in a small business investment company from 5 percent to 15 percent of its capital and surplus;
  • Provide a safe harbor from liability under the Bank Secrecy Act for financial institutions that maintain a customer account at the request of a federal, state, tribal, or local law enforcement agency;
  • Require the Federal Reserve, FDIC, and OCC to implement a risk-adjusted approach to valuing centrally-cleared, exchange-listed derivatives for purposes of determining capital requirements for banking organizations; and
  • Seek to “ensure[] that international insurance standards and agreements are consistent with our domestic insurance system and provide[] greater Congressional oversight and transparency on international insurance standard negotiations.”