Us Congress House Bill HJR120

Us Congress 2023-2024 Regular Session

• Introduced: 3/22/24
• Refer: 3/22/24
• Report Pass: 4/17/24

Caption

Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Financial Stability Oversight Council related to "Guidance on Nonbank Financial Company Determinations".

Impact

If enacted, HJR120 would directly impact the regulations governing nonbank financial institutions by eliminating the recent guidance established by the FSOC. This could lead to a more permissive environment for nonbank financial companies, potentially encouraging more competition and innovation within the financial services sector. However, the absence of this guidance might also raise concerns about consumer protection and financial stability, as oversight mechanisms could be less stringent without the federal guidelines in place. The resolution reflects a broader trend among certain legislators to reduce federal regulatory influence on the financial sector, which they argue has become overly burdensome.

Summary

HJR120 is a joint resolution aimed at disapproving a specific rule provided by the Financial Stability Oversight Council (FSOC) regarding guidance on nonbank financial company determinations. This legislation seeks to nullify the rule published in the Federal Register on November 17, 2023, effectively rendering it without force or effect. Advocates of HJR120 argue that the rule imposes unnecessary regulatory burdens on nonbank financial entities, which could hinder their operations and create uncertainties in the financial markets. The resolution seeks to ensure a more streamlined regulatory landscape for these entities and reduce the reach of federal oversight into sectors that might be more efficiently regulated at the state level or through market forces.

Sentiment

The sentiment surrounding HJR120 is divided, with strong support from some lawmakers, primarily those who advocate for less regulatory oversight and the promotion of market freedom. Proponents believe that disapproving the FSOC rule will free nonbank financial companies from unnecessary constraints, allowing them to operate more flexibly and effectively. Conversely, opponents express concern that disapproving the rule could lead to a lack of essential consumer protections and risk management practices that the guidance was intended to provide, potentially jeopardizing financial stability in the long term.

Contention

One notable point of contention regarding HJR120 is the balance between effective regulation and promoting financial innovation. Supporters of the resolution argue that current federal guidance is overly restrictive, affecting competition and the ability of nonbank entities to respond to market demands. Critics, however, caution that removing such guidance may create gaps in regulatory oversight that could lead to systemic risks, particularly in a sector that is already complex and difficult to monitor. The discussions surrounding HJR120 encapsulate a larger debate on how best to ensure accountability in the financial sector while also fostering an environment conducive to growth and innovation.