Banking Chairman Open to Pairing Cannabis Bill with Stablecoin Bill
April 23, 2024
Senate Banking Committee Chairman Sherrod Brown (D-OH) suggested in an interview last week that he is open to advancing cannabis banking legislation (Safer Banking Act), a Stablecoin bill, and legislation to claw back bank executive compensation from failed institutions.
Why it matters: The Safer Banking Act would create a federal safe harbor for banks and insurance companies that service state and local authorized cannabis businesses.
- Last September, the Senate Banking Committee advanced the legislation in a bipartisan markup, but the full Senate has yet to act.
- The House has passed similar cannabis banking legislation numerous times by wide margins in the past several years, though the GOP majority has declined to take up legislation this Congress.
What they’re saying: Brown’s suggestion pairs the cannabis bill with stablecoin, a key priority of House Financial Services Chairman Patrick McHenry (R-NC). McHenry opted not to run for re-election and will retire from Congress in January 2025.
- McHenry and Ranking Member Maxine Waters (D-CA) are reportedly close to striking a deal on a House stablecoin bill.
- As reported in Politico, McHenry recently met with Majority Leader Chuck Schumer (D-NY) about advancing stablecoin in the Senate.
Chairman Brown also mentioned the bipartisan RECOUP Act, which is a bipartisan legislative response to the 2023 regional bank failures.
- Among other things, the bill establishes the authority to recover from senior executive bonus compensation and profits from the sale of securities received during the 24-month period preceding an institution’s failure.
- The bill passed out of the Senate Banking Committee on a 21-2 vote in June 2023, but the House Financial Services Committee has not shown interest in taking up the issue.
Our thought bubble: The package deal could be one path forward for Safer Banking, though even pairing the three initiatives may not be enough for Schumer to use precious Senate floor time.
- If Brown and McHenry come to an agreement, the bills, alone or as a package, could more easily hitch a ride on a must-pass bill, e.g., NDAA, FAA, or government funding legislation.
- But a grand bargain on must-pass legislation will require buy-in from Senate GOP Leader Mitch McConnell, who previously axed cannabis banking legislation from a 2022 year-end bill.
- McConnel generally is opposed to efforts aimed at easing cannabis restrictions, but with his tenure as GOP leader drawing to a close, he may demure on post-election bargain.
The bottom line: There continue to be many political and policy obstacles to enacting the Safer Banking Act. Action ahead of the election is less likely, but the chatter now could help the measure advance in the November and December lame duck session.
Contact David McCarthy (dmccarthy@crefc.org) with questions.