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CREFC Highlights Threats to Debt Liquidity 

September 25, 2023

This week, CREFC continued its ongoing efforts to highlight government policies that could negatively impact CRE and multifamily debt liquidity. The key concerns include:

• Basel Endgame Proposal that would raise capital requirements on banks with >$100 billion in assets. Some estimate overall capital charges could increase 20%, which means less credit available for borrowers.
• The SEC’s overly broad Conflicts of Interest in Securitization proposal could levy additional compliance burdens and limitations on CMBS participants and possibly chill participation in the market.
• The looming threat to the 144A market in 2025 when the SEC’s interpretation of 15c2-11 will require broker-dealers to verify information is publicly available on 144A bonds to freely quote them.

Any of these proposals in isolation could prove challenging for CRE finance in normal times. But during this difficult market, government policy could exacerbate the cost and availability of CRE and multifamily credit. The above will only exacerbate the market challenges to CRE debt liquidity given today’s sharply higher benchmark and mortgage rates.

Last week, CREFC met with key policymakers including:

• SEC Commissioner Hester Peirce;
• Rep. Andy Barr (R-KY), Chairman of the Financial Institutions and Monetary Policy Subcommittee of the House Financial Services Committee; and
• Key Democratic and Republican members and staff of the House Financial Services Committee.

Policymakers are interested in developments in the CRE markets, and there is bipartisan concern that regulation, including capital rules, may overburden access to credit for CRE during one of the more challenging market environments since the GFC.

Contact Sairah Burki (sburki@crefc.org) with questions on regulatory advocacy and David McCarthy (dmccarthy@crefc.org) with questions about legislative advocacy. 

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Key Committees See Influx of Freshman Lawmakers

December 17, 2024

The makeup of key committees in Congress is starting to take shape and there have been a few surprises. Notably, a record number of freshman lawmakers will join the so-called “A Committees.”

As reported in the story above, Rep. French Hill (R-AK) beat out Rep. Andy Barr (R-KY) for the coveted top spot on the Financial Services Committee. He will replace retiring chair Rep. Patrick McHenry (R-NC).

The leadership of key “A Committees” is listed below.

Committee on Appropriations

• Chairman: Tom Cole (R-OK)
• Ranking Member: Rosa DeLauro (D-CT)

Committee on Energy and Commerce

• Chairman: Brett Guthrie (R-KY) (New chair)
• Ranking Member: Frank Pallone (D-NJ)

Committee on Financial Services

• Chairman: French Hill (R-AR) (New chair)
• Ranking Member: Maxine Waters (D-CA)

Committee on Ways and Means

• Chairman: Jason Smith (R-MO)
• Ranking Member: Richard Neal (D-MA)

Why it matters: The GOP appointed a record number of eight freshman members to the “A Committees.” No newly elected lawmakers made it to the Ways And Means Committee, for which freshman members are rarely selected.

However, there were some new additions to the Ways and Means Committee on the GOP side. They are:

• Rep. Aaron Bean (R-FL)
• Rep. Max Miller (R-OH)
• Rep. Nathaniel Moran (R-TX)
• Rep. Rudy Yakym (R-IN)

The eight freshman members who made it on to the other three “A Committees” are:

• Appropriations Committee: Rep-elect Riley Moore (R-WV)
• Energy and Commerce Committee: Reps-elect Gabe Evans (R-CO), Julie Fedorchak (R-ND) and Craig Goldman (R-TX)
• Financial Services Committee: Reps-elect Mike Haridopolos (R-FL), Marlin Stutzman (R-IN), Tim Moore (R-NC) and Troy Downing (R-MT)

The bottom line: These freshman members have the rare privilege of sitting on highly sought-after committees and likely will have an impact on policies relating to financial markets, energy, and government spending.

Contact James Montfort (jmontfort@crefc.org) with any questions.

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Rep. French Hill to Lead House Financial Services Committee

December 17, 2024

Congressman French Hill (R-AR) won a four-way race to become chairman of the House Financial Services Committee (HFSC) in the next Congress. Hill will replace retiring Rep. Patrick McHenry (R-NC) who served as the lead HFSC Republican since 2019 and as chairman for the past two years.

Why it matters: Rep. Hill brings a deep knowledge of financial markets as he takes the committee gavel. He was a founder and CEO of Delta Trust and Banking Corp., and he was Deputy Assistant Secretary of the Treasury for Corporate Finance from 1989 to 1991.

• Hill was first elected to Congress in 2014 and has served on HFSC in a variety of leadership capacities, including as the current committee vice chair and chair of the Digital Assets Subcommittee.
• CREFC has a strong relationship with Rep. Hill, who has been a key ally on issues like Basel Capital rules, Conflicts of Interest in Securitization, and 15c2-11.
• In his pitch for the chairmanship, Hill laid out his “Make Community Banking Great Again” plan, which includes a number of proposals to tailor and reduce regulatory burdens on financial institutions.

Go deeper: The House GOP selects its committee leaders via the Steering Committee, which includes the chamber leadership (Speaker, majority leader, etc.) and other rank-and-file members selected from various regions.

The race to succeed McHenry was among the most closely contested in this cycle as Hill faced off against other senior committee members:

• Rep. Andy Barr (R-KY) was first elected in 2012 and currently serves as HFSC Financial Institutions Subcommittee Chair;
• Rep. Bill Huizenga (R-MI) was first elected in 2010 and currently serves as HFSC Oversight Subcommittee Chair; and
• Rep. Frank Lucas (R-OK) was first elected in 1994 and currently serves as Chairman of the House Space, Science, and Technology Committee. Lucas also had been the lead Republican on the House Agriculture Committee.

What they’re saying: Toward the end of the campaign, insiders saw the race tighten between Hill and Barr, with some expecting Barr to take the gavel given Hill’s close ties to ousted Speaker Kevin McCarthy (R-CA). Barr is also seen as a favorite to succeed Sen. Mitch McConnell (R-KY) should he choose not to run for re-election in 2026.

The bottom line: The HFSC contest was not acrimonious and observers noted that Republicans had strong options in all the candidates. Former HFSC chair Rep. Jeb Hensarling told Politico:

“It was going to be a good day for America and her capital regardless of who was chosen. French Hill will be a fantastic chair. Absolutely fantastic.”

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Rep. French Hill will lead the House Financial Services Committee starting in January 2025.

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