House Financial Services Commt: Vote No on Dereg Detritus

May 19, 2025

 

The Honorable French Hill, Chair
The Honorable Maxine Waters, Ranking Member
Honorable Members
House Financial Services Committee
Washington, DC 20515

 

Re: Committee Markup of Various Bills May 20, 21

 

Dear Committee members,

On behalf of more than 500,000 members and supporters of Public Citizen, we provide the following comment for the House Financial Services Committee markup scheduled for May 20, 21, 2025.

Alone, this largely sulfurous detritus of deregulatory bills undermines investor safeguards, violates the integrity of securities markets, and/or removes guardrails for the banking industry. A responsible committee should reject most of these measures. But worse, Trump now guts the agencies responsible  for financial markets oversight. Deregulating the markets after eliminating the cops compounds irresponsibility.

We address the bills in the order listed in the committee’s markup announcement memorandum, with the exception of the handful addressing the issue of accredited investors, which we consider as a group.

 

H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act, allows certain plans (known as 403(b) retirement plans that generally apply to teachers, nurses etc.) to invest in unregistered insurance contracts and collective investment trusts (CITs). We believe investors in these plans shouldn’t be exposed to such lightly overseen products; plenty of safe investment alternatives abound. We oppose this bill.

 

H.R. 1190, the Expanding Access to Capital for Rural Job Creators Act, requires the Advocate for Small Business Capital Formation within the Securities and Exchange Commission (SEC) to report on issues encountered by small rural businesses. Rural America deserves better investment consideration. We support this bill.

 

H.R. 1469, the Senior Security Act of 2025,  establishes the Senior Investor Taskforce within the SEC. This panel must report on issues germane to investors above the age of 65 and calls on the Government Accountability Office to study this demographic. Financial predators target seniors disproportionately and the agency should take serious steps to improve safeguards. We support this bill.

 

H.R. 2441, the Improving Disclosure for Investors Act, is a misnamed bill that would reduce the paper mailings of financial disclosures to investors, forcing internet-only access. Many Americans do not enjoy ready access to the internet, such as some seniors. Pew Research quantifies the millions of Americans including those aged 50 and older or living in rural areas who lack regular broadband internet access. Seventeen percent of adults above the age of 65 can access the internet only on their smartphones. A small screen isn’t ideal for studying a large balance sheet. Ending mailings would harm their ability to remain informed about foundation company information. We oppose this bill.

 

H.R. 3301, (as yet unnamed), allows certain smaller companies to file draft registration statements with the SEC for confidential review. It would also allow these firms to submit only two years, instead of three years of audited financial statements before an initial public offering (IPO). Smaller firms with limited track records should disclose more, not less information to investors as they represent higher risk. We oppose this bill.

 

H.R. 3323, the Helping Startups Continue To Grow Act, extends exemptions and reduces disclosure requirements for so-called emerging growth companies (EGCs) while expanding the qualification to $3 billion in revenue. Any firm with $3 billion in revenue deserves no coddling by the SEC. This classification should be abolished altogether. We oppose this bill.

 

H.R. 3339, the Equal Opportunity for All Investors Act of 2025,  expands the “accredited investor” definition to include individuals who are certified through an examination established by the SEC.

H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, expands the “accredited investor” definition to include individuals with certain licenses, qualifying education, or job experience.

H.R. 3348, the Accredited Investor Definition Review Act, requires the SEC to review the list of certifications, designations, and credentials for individuals to qualify as an accredited investor and add additional certifications, designations, and credentials that the SEC determines are substantially similar. This bill requires the SEC to repeat this process every five years after the initial assessment.

Accredited investors, defined as those earning more than $200,000 annually with more than $1 million in assets (beyond the value of a home), may be offered higher risk investment opportunities. The SEC established these thresholds in 1982, so inflation renders them irresponsible low, exposing too many investors to risky ventures. The SEC should dramatically increase these levels. Meanwhile, permitting a test devised by an agency such as the current one bent on reducing investor protections insufficiently qualifies an investor. Moreover, growth in the private markets (open only to accredited investors) subverts growth in public markets. We urge Congress to take steps that bridle the flow of investor capital away from public markets, which should be the gold standard.  We support studies on this issue, but oppose rulemaking, especially by the current SEC commission which lacks a majority committed to investor protection. We oppose these bills.

 

H.R. 3343, the Greenlighting Growth Act, allows an emerging growth company (EGC) to provide only two years of audited financial statements. As noted, before, such firms can be large and should issue more financial statements, not fewer. We oppose this bill.

 

H.R. 3352, the Helping Angels Lead Our Startups (HALOS) Act, allows small firms to promote their shares at certain events known as “demo days” without previous registration with the SEC. This eliminates an important step for companies that hope to win public investment. Stock shouldn’t be sold in church meetings, or through whispered encounters in dark allies. Firms that solicit public investment should file necessary information with the SEC; that applies to large firms and especially small firms with limited histories. We oppose this bill.

 

H.R. 3357, the Enhancing Multi-Class Share Disclosures Act, requires issuers with a multi-class stock structure to make certain disclosures in any proxy or consent solicitation material. Firms with multi-class stock suffer less accountability. For example, certain tech giant founders may sit on super-rights, which means they can outvote a majority of shareholders. Such classes should be abolished altogether. We welcome additional disclosure, as provided in this measure, as a start. Please see attached a blog published about the Facebook/Meta dual class stock. We support this bill.

 

H.R. 3381, the Encouraging Public Offerings Act of 2025 allows an issuer to communicate with potential investors to determine interest in a securities offering before filing registration. We believe registration should precede sales efforts; a company should stand on the cold numerical facts of its performance and not the hot pitch of a salesman. We oppose this bill.

 

H.R. 3383, the Increasing Investor Opportunities Act, allows certain mutual funds, which cater to average investors, to invest in private funds. Private funds pose greater risks than those available to average investors. Those funds that lack sufficient investment may disguise failures that so-called “smart money” avoids. We oppose this bill.

H.R. 3395, the Middle Market IPO Underwriting Cost Act, requires the Government Accountability Office in consultation with the SEC, to study and report on the costs encountered by small- and medium-sized companies when undertaking IPOs. Information informs policy in any arena. We support this bill.

 

H.R. ___, (as yet not formally introduced) the Promoting Opportunities for Non-Traditional Capital Formation Act, requires the Advocate for Small Business Capital Formation to provide educational resources and host events to promote capital-raising options for underrepresented small businesses and businesses in rural areas. Silicon Valley infamously oozes more investment capital than worthy investments. Meanwhile, the heartland remains relatively unexplored. We support this bill.

 

H.R. 940, the Fair Audits and Inspections for Regulators’ (FAIR) Exams Act, establishes an Office of Independent Examination Review within the Federal Financial Institutions Examination Council (FFIEC) to review material supervisory determinations (MSDs) issued by the federal banking agencies. The bill then allows all financial institutions to appeal supervisory findings. Banks don’t face overbearing oversight. On the contrary, the pathology of Silicon Valley Bank’s failure revealed mismanagement flagged by regulators that bank executives ignored. Allowing an appeals process exacerbates a problem where bankers already capture their regulators. We oppose this bill.

 

H.R. 1900, the Bank Failure Prevention Act of 2025, establishes timelines for reviewing merger and acquisition applications submitted by depository institutions and holding companies. Specifically, it requires regulators to decide on applications within 90 days of the initial submission. (A one-time 30-day extension is permitted at the applicant’s request.) Bank mergers require careful review as they may deprive swaths customers of needed competitive alternatives. Regulators must not be shackled to an unworkably short timeline. We attach a letter expanding on our views of merger policy. We oppose this bill.

 

H.R. 2702, the Financial Integrity and Regulation Management (FIRM) Act, prohibits the use of “reputational risk” as a factor in the supervision of depository institutions. Reputational risk is real and constitutes a present danger to any firm. Banks name themselves using words of confidence, such as “trust,” underscoring the role of reputation. We oppose this bill.

H.R. 3230, the Financial Institution Regulatory Tailoring Enhancement Act , increases the asset threshold from $10 billion to $50 billion for financial institutions to be subject to several regulatory requirements, including oversight by the Consumer Financial Protection Bureau (CFPB), the Volcker Rule restrictions on proprietary trading, qualified mortgage standards under the Truth in Lending Act, and enhanced leverage and risk-based capital standards. This essentially exempts all but the mega-banks from basic oversight. We oppose this bill.

 

H.R. 3379, the Halting Uncertain Methods and Practices in Supervision (HUMPS) Act, requires the Federal Financial Institutions Examination Council (FFIEC) to develop formal recommendations to revise the CAMELS rating system.^[1] This system includes the core areas of bank examination. While review of any oversight methodology deserves consideration, this bill specifically aims to eliminate consideration of “management” as a component. Banks die, commit misconduct, or thrive because of management decisions. We oppose this bill.

 

H.R. 3380, the Taking Account of Institutions with Low Operation Risk (TAILOR) Act, requires federal financial regulators to “tailor,” or take into account an institution’s risk profile and business model when issuing new regulations or taking supervisory actions. Essentially, this bill would allow banks to travel at their own chosen speed limit. While some banks may require closer scrutiny, all must oblige basic rules. We oppose this bill.

 

In conclusion, this committee faces important financial issues that deserve attention and lawmaking. During the week of this vote, the president will host as many as 220 individuals from across the globe who sent him the most money as part of his Trump crypto meme. We believe this financial scam represents the greatest episode of presidential corruption in U.S. history. Trump is selling access to the highest bidders, which we believe is a violation of numerous statutes and the Constitution. When historians recount this  week, many will unkindly note that during the week of that Trump crypto meeting, the House Financial Services Committee busied itself approving bills to deregulate the financial sector.

For questions, please contact Bartlett Naylor at bnaylor@citizen.org

 

Sincerely,

 

Public Citizen

^[1] CAMELS refers to

• Capital adequacy: This assesses the institution’s ability to absorb losses and maintain a sufficient capital base to support its operations.
• Asset quality: This examines the quality and risk associated with an institution’s assets, such as loans and investments.
• Management: This evaluates the competence and effectiveness of the institution’s management team in overseeing operations and managing risk.
• Earnings: This assesses the institution’s profitability and its capacity to generate sufficient income to support its operations and growth.
• Liquidity: This evaluates the institution’s ability to meet its short-term obligations and maintain adequate liquidity to cover its liabilities.
• Sensitivity to market risk: This assesses the institution’s exposure to fluctuations in market conditions, such as changes in interest rates or exchange rates