Bill Huizenga

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, additionally, proxy advisory firms often provide voting recommendations to investment advisers on matters for which they also provide consulting services to public companies. Talk about, again, a conflict of interest. Some proxy advisory firms also rate or score these public companies on their governance structures, policies, practices, and they are trying to actually influence the corporate governance practices of these companies. Essentially, these proxy advisory firms have hijacked the proxy system by aligning themselves with activist shareholders, who also might be their clients, to push social and political initiatives rather than using shareholder votes to maximize shareholder value and increasing shareholder returns. Well, H.R. 4015 is to the rescue on this. It would foster greater accountability, competition, responsiveness, and, most importantly of all, transparency. This legislation would ensure that voting recommendations at proxy advisory firms are, in fact, in the interest of long-term shareholders. So let's not misunderstand. The role of these proxy advisory firms serves a very important place in our economy. However, these firms aren't immune to conflicts of interest. The good work of my friend, Mr. Duffy, on H.R. 4015 will improve that transparency.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I appreciate the chairman's hard work on this. The mission of the Securities and Exchange Commission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. As part of that mission, the SEC was mandated by law to conduct an annual forum focusing on small business capital formation. For nearly a decade, the SEC Government-Business Forum on Small Business Capital Formation has highlighted the merger and acquisition broker proposal as one of its top recommendations to help small businesses. The MAB proposal would address securities regulation of business brokers and merger and acquisition advisers who are in the business of facilitating the purchase and sale of privately held small companies. This proposal would significantly reduce their Federal regulation compliance costs, which can initially exceed $150,000 per broker and, after that, cost $75,000 per additional year. However, the SEC has never acted on this, despite their recommendation. As we see more and more baby boomers retire, it has been estimated that $10 trillion--with a T--of equity is locked up into these small, family-owned typically privately held businesses. Today the Federal securities regulations require an M&A broker to be registered and regulated by the SEC and FINRA just like a Wall Street investment banker buying or selling publicly traded companies. Anyone who is trying to sell a hometown business, like a family hardware store, a jewelry store, or even a pizza parlor, suddenly has to be treated like they are being sold or bought by a Wall Street investment bank regardless of their size. We don't think that is right. But the impact of this legislation is meaningful because it reduces transaction costs, promoting competition among those small business brokers and facilitating private business merger, acquisitions, and sales of these small businesses. This small business initiative promotes economic growth and development. So we have worked very closely across the aisle with our colleagues, and I thank them. Even in today's politically charged environment that we have, it is nice to show the American people that we can actually do some positive, efficient, and effective initiatives with bipartisan support. I would like to thank my colleagues, Representatives Posey, Higgins, Sherman, and Maloney, as well as Chairman Hensarling and Ranking Member Waters for their efforts to reach a bipartisan consensus and to get the important legislation across the finish line. I have been working on this now for three Congresses, and we believe that we have a very positive spot here where we can all support this. I want to encourage my colleagues to support and vote for H.R. 477 and demonstrate that Congress can actually work in a bipartisan manner and get some things done for the American people. Mr. Speaker, I urge swift consideration.

Mr. HUIZENGA. Mr. Speaker, I claim the time in opposition to the amendment, even though I am not opposed.

Mr. HUIZENGA. Mr. Speaker, I appreciate the opportunity to address the amendment and the work of Mr. Sherman, Mrs. Maloney, the ranking member, and, obviously, our chairman as well. So I do agree and accept this amendment as a friendly amendment. It does confirm what the no-action letter has put in place. I believe it properly makes sure that the SEC's role is preserved but that Congress has its imprimatur on this as well. It aligns the bill with the principles outlined in the SEC's no-action letter. I think this is a good, reasonable amendment. I am pleased to work with the gentleman from California as well. I am glad that we can get this settled in a timely manner. Mr. Speaker, I yield back the balance of my time.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I come down here again finding myself in a position, not planning on speaking. I am down here to speak on a bill that I have on the floor--a bipartisan bill, I might add. I can't help but address what I am hearing from the other side. First you are hearing: This is getting rushed through. We need to slow this down. We need to be thoughtful. I ran in 2010 talking about tax reform. Many of my colleagues ran in 2010, 2012, 2014, and 2016 talking about tax reform and the need for it. Even President Obama talked about this, when he was saying we needed to lower the corporate rate from 35 percent down to 25 percent. Why? Because we are uncompetitive. We are uncompetitive as a country. Now you are hearing the other side saying: Wait a minute. Wait a minute. We have to slow this down, slow the whole train down. What they want to do is protect the status quo. They want to protect the status quo, which I believe is unacceptable. We know that there is great agreement between the House version and the Senate version, delivering $24,000 on a standard deduction, which is going to bring real tax relief to working families; making sure that pass-throughs, those small businesses, those S-corporations and LLCs and sole proprietorships, actually get treated better and, at the least, the same way that a C-corporation would. Here we are on the cusp of making sure that we advance the ball.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I thank my friend and classmate from Georgia, Mr. Woodall, for the opportunity to be here. Mr. Speaker, more and more baby boomers retire every day, and it has been estimated that approximately $10 trillion of privately owned, small, and family-run businesses will either be closed or, if possible, sold to a new generation of entrepreneurs in the coming years. Mergers and acquisitions--or M&A as it is oftentimes referred to-- brokers play a critical role in facilitating the transfer of ownership of these smaller, privately held companies. However, today's one-size- fits-all system of broker-dealer regulation unnecessarily burdens business sellers and buyers with the pass-through of heavy regulatory compliance costs that do not provide significant incremental benefits in privately negotiated M&A transactions. Today, Federal securities regulations technically require local mergers and acquisitions brokers to be registered and regulated by the Securities and Exchange Commission and FINRA, just like Wall Street investment bankers. Those bankers are trying to sell or buy publicly traded companies. That is right; anyone brokering the sale of a hometown small business in your district or in mine, like in Holland, Michigan, must be federally registered and regulated as a securities broker-dealer, in addition to State law requirements, regardless of the size of the business or the sale transaction. Federal securities regulation was primarily designed to protect passive investors and public securities markets. Privately negotiated mergers and acquisitions transactions facilitated by these small business brokers are vastly different and do not typically relate to the transactions meant to be protected by the SEC and FINRA regulation and registration. That is why I have continued to introduce bipartisan legislation known as the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act. This bipartisan bill would create a simplified system for brokers performing services in connection with the transfer of ownership of smaller, privately held companies. I would like to thank Representatives Sherman and Maloney, along with the work of Chairman Hensarling and Ranking Member Waters for what they have done. And as my friend from Georgia had pointed out, not every day do we have to just keep kicking each other in the shins. We actually can work together, and this is an example of doing that. So the impact of this legislation would significantly reduce transaction costs, promote competition among these small business brokers, and facilitate private businesses and acquisitions of these small businesses. This initiative promotes economic growth and development through these sales, and there is really substantial relief of regulatory burdens on small business professionals who serve these smaller business owners. Business brokerage services are critically important to entrepreneurs who start, build, and eventually want to sell their private companies. Similarly, these services help new entrepreneurs acquire these businesses, while helping existing companies grow, thus preserving and creating jobs in the communities that we all serve. We have worked very closely with our colleagues across the aisle, and this has been a multi--not just multiyear--a multi-Congress effort over the last few different Congresses, and I am just pleased today that we can show the American people positive, effective, bipartisan work that is coming together. It is legislation like H.R. 477 that demonstrates, frankly, that Congress can act in a bipartisan manner to positively impact the lives of Americans, and I urge swift consideration and passage of this important bill.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, as I had said before, when information is the equivalent of modern-day gold, we need to make sure that whatever vaults that information, that gold, is going into are properly protected--properly protected for consumers and their personally identifiable information. We have an obligation, as the government, to make sure that their information is protected as best as possible, and doubly so when it is going into government-run systems. That is the reason why H.R. 3973 is so imperative that it be passed. Mr. Speaker, I again commend my friend from Ohio (Mr. Davidson) and my friend from California (Mr. Sherman) on their bipartisan work on that. Mr. Speaker, I urge passage, and I yield back the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3973) to amend the Securities Exchange Act of 1934 to require certain entities to develop internal risk control mechanisms to safeguard and govern the storage of market data.

Mr. HUIZENGA. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and to include extraneous material on this bill.

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, cybersecurity is critical to consumers, investors, market participants and, frankly, the very markets themselves. However, in April of 2016, the GAO--the Government Accountability Office-- identified weaknesses regarding information security protocols at the Securities and Exchange Commission, and noted that the SEC's failure to implement an agencywide data security program had occurred. Once confirmed in May of this year, SEC Chairman Jay Clayton initiated an assessment of the SEC's internal cybersecurity risk profile and their approach to cybersecurity from a regulatory and oversight perspective. The SEC's internal assessment found that the agency had inadequate controls and that there were serious cyber and data risks. Unfortunately, in September of this year, Chairman Clayton issued a statement on cybersecurity in which he revealed that a cyber breach ``previously detected in 2016 may have provided illicit gain through trading.'' Specifically, a software vulnerability existed in the test filing component of the SEC's Electronic Data Gathering, Analysis, and Retrieval--also known as the EDGAR system--which resulted in access to nonpublic information. While this breach provided hackers access to highly sensitive material, at the time, the SEC believed ``the intrusion did not result in unauthorized access to personally identifiable information''--or PII, as we commonly refer to it-- therefore, ``jeopardize the operations of the SEC, or result in a systemic risk.'' And that was a quote from the SEC's report. However, unfortunately, in a follow-up disclosure shortly after that, Chairman Clayton revealed that personally identifiable information, including names, birth dates, Social Security numbers, were actually compromised for two individuals in that particular breach. The GAO report and the EDGAR data breach underscore what is now even of greater concern, the sufficiency of risk control mechanisms for the SEC-approved consolidated audit trail, or also known as the CAT system. The CAT will be the most comprehensive repository of market data we have seen, and it will collect and identify every order, cancellation, and trade execution for all exchange-listed equities and options across all U.S. markets. It will also collect personally identifiable information beginning 1 year after it begins accepting market data. Thesys Technologies, which was selected to be the plan processor for the CAT, is scheduled to begin accepting data from self-regulatory organizations who must provide data to CAT on Wednesday, November 15, just merely days from today. Many of my colleagues, as well as market participants, have voiced concerns about the cost of building and implementing such a system and the amount of PII that will be required to be collected by the CAT. Last Congress, several Members wrote to former SEC Chair Mary Jo White expressing serious concerns about the security of such sensitive information held within that CAT system, as well as those who will have access to such information. As I mentioned, the deadline for the SROs to begin reporting to this CAT system is just 2 days away. It is paramount that the SEC has adequate data security controls in place before that implementation. Previously, in committee, I had put it this way: That is a repository of the information of gold. Gold is the equivalent of information today. What they are doing is they are putting more gold into that data vault, and we don't have the security to support it. So while the CAT may be a helpful resource for the SEC, and even the self-regulatory agencies or organizations--SROs--once fully implemented, insufficient data security controls will undermine confidence in our markets and may very well result in the CAT being counterproductive. Thus, I joined with Financial Services Committee Chairman Hensarling in writing Chairman Clayton to ``encourage the SEC to delay implementation of the CAT system until the SEC can implement information security safeguards and internal controls to ensure the security of confidential and sensitive data.'' No assurances for a delay in implementing the CAT have been provided, and even if they have, it is appropriate for Congress to set baseline standards to ensure that controls are in place. In other words, Mr. Speaker, we are trying to do our job. H.R. 3973, the Market Data Protection Act, introduced by Representatives Davidson and Sherman, is necessary to ensure that the SEC is properly securing critical data that supports our financial markets as well as the personal information of millions of customers with broker-dealer accounts. Specifically, the bipartisan legislation would mandate that the SEC, FINRA, and the operator of the consolidated audit trail, in consultation with the SEC's chief economist, develop comprehensive internal risk control mechanisms to safeguard and govern the storage of market data, all market data-sharing agreements, and all academic research using that market data. The bill also halts market data reporting to the consolidated audit trail until the operator of the CAT system develops such internal risk control mechanisms that they are deemed satisfactory. The EDGAR security breach and the recent massive Equifax data breach--and I might add, Mr. Speaker, we just saw a report of an NSA breach that had just happened, our largest database--well, this would become the second largest database in the country. Those breaches--in which the sensitive information of nearly 150 million Americans have been compromised, in the Equifax breach--only underscore the importance of proactively ensuring that any highly sensitive data being collected by the Securities and Exchange Commission or at the SEC's discretion, subject to their oversight, is protected with appropriate safeguards. We owe that to the American people. The importance of cybersecurity at the SEC cannot be overstated. The SEC's ability to safeguard nonpublic financial information and other highly sensitive data instills confidence in the markets. SEC Commissioner Michael Piwowar recently commented regarding CAT that ``deadlines are important, but the SEC has one chance to get this right. We have to make sure that we have everything locked down. We can get it done, or we can get it done right. We need to get it done right.'' I couldn't agree more with Commissioner Piwowar. That is why this legislation is so urgently needed. I commend the bipartisan work of Representatives Davidson and Sherman, and I urge my colleagues to vote in favor of this very important bill. Mr. Speaker, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio (Mr. Davidson), the sponsor of this legislation and a member of the Financial Services Committee.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I rise today to honor Chris VanderSlice, who passed away on October 28, 2017 after a courageous four year battle with leukemia. Chris was a beloved educator and leader in the West Michigan community--whose legacy will never be forgotten. Chris, or ``Slice'' as his colleagues knew him best, was a servant leader with Grandville Public Schools for nearly 18 years. His career began as a teacher at Grandville's Middle School and South Elementary. Chris was then promoted to assistant principal at Grandville High School, where he became principal in 2013. A former Hope College basketball team captain, Chris brought his competitive spirit to the classroom and school district. He inspired a culture of ``pride and excellence,'' that influenced both students and teachers. After only a short time as principal, Chris implemented professional learning communities to improve teaching techniques and accountability. Following the initial diagnosis of acute lymphoblastic leukemia in 2013, the Grandville community quickly rallied to embrace the VanderSlice family. The swift response from the community is a touching testament to the character of Chris, his family, and West Michigan as a whole. Chris leaves behind a legacy of ``grit and perseverance''-- characteristics that will continue to inspire, encourage, and forever impact generations to come. Mr. Speaker, Chris VanderSlice spent his life working to educate and better the students of Grandville, Michigan. It is thus fitting and proper that we honor him here today. I extend my deepest condolences to his wife Tonya, daughters Hannah and Elizabeth, and to all who knew and loved Chris.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I had planned to come down to the floor here to manage some bills here in a couple of minutes, but I decided I needed to take this opportunity to address some of the things that the American people might have been hearing from the other side of the aisle just now. This is absolutely just political demagoguery what is going on. Frankly, it is political malfeasance. This is about simplification. This is about fairness. This is about making sure that hardworking American men and women and their families have the opportunity to live the American Dream. Right now, we have a Tax Code that is massive, first of all. Second, it is filled with loopholes and exceptions that lobbyists and the well connected have put in there over the last number of decades. It is time to change that. The American people deserve this. There is real tax relief for real working families, and that is why I think you are seeing such enthusiasm out of the American people for this tax plan.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I appreciate my friend from Colorado allowing me an opportunity to speak on this bill. Mr. Speaker, currently, the Securities and Exchange Commission prohibits the sale or delivery of securities that have not been registered with the agency. A large portion of startups--and, really, these are ideas--rely on small, nonprofit offerings also known as private placements, such as with friends and family. They do a round of offerings in order to raise initial, early-stage seed capital; however, the Securities Act of 1933 does not define what constitutes a public offering or, conversely, a nonpublic offering. As a result, startups may unintentionally violate the act when it seeks to offer securities to potential investors in a private placement. Let's put that in real English. Let's make this actually approachable in a way that I think true American entrepreneurs can understand. The reality is, these are people with an idea, a drive to move forward and to improve something. They go and offer to their family, or maybe ask of their family, to be a part of that dream, to help with some seed capital, to give them a little bit of their hard-earned money to help them achieve their dream. And, guess what? They get to take part in the success of that. There is some risk, but there is also reward. How this really translates is that there might be the doctor who has got a great idea for a new health drink or a new implement to use while he is in surgery. This might be a mom who left the workforce and was taking care of her kids and said: There has got to be a better way of making sure my kids are getting a healthy meal transported to school; or something like that. These are people who are looking around and saying: I can go make life better not for me, not just for my family, but for others. They are then trying to pursue that. To address this uncertainty that we have, H.R. 2201, the Micro Offering Safe Harbor Act, would implement a simple amendment to the Securities Act of 1933, by making clear what constitutes a nonpublic offering. It is going to provide small businesses with needed clarity and confidence to know that their offering is not a Securities Act violation. Think of that. Again, it might be that doctor or that stay- at-home mom who is out there just trying to fund an idea, unintentionally and with no malice or no understanding that they are violating Federal law. A micro-offering authorized under this bill would allow small businesses or small entrepreneurs to operate with confidence, and the commonsense requirements to be a part of this are such: Each investor has a substantive preexisting relationship with an owner. This is no fly-by friendship. This is somebody who you actually know; There are fewer than 35 purchasers or investors; and Also, the amount cannot exceed $500,000. If you just divide out $500,000, which is a lot of money, by 35 people, that is less than $15,000 a person. That is $14,285, to be exact. This is not about helping Wall Street somehow, for crying out loud. This is about Main Street. I believe it is important to note, as the sponsor, Mr. Emmer, had noted earlier, that nothing in this bill would remove or inhibit the authority of the Securities and Exchange Commission or the Department of Justice from prosecuting securities fraud. With antifraud protections still in place, the legislation appropriately scales Federal rules and regulatory compliance costs for these small businesses and entrepreneurs. H.R. 2201 is a commonsense bill designed to help Main Street and not Wall Street. Simply put, it will allow these small businesses and entrepreneurs, these DREAMers, to access capital necessary for their growth. As I said, Representative Emmer has done a phenomenal job in shepherding this through. In a 2016 Capital Markets, Securities, and Investments Subcommittee hearing where we dealt with the bill, he had a great quote that said: ``The problem with the ability of small businesses to effectively use this exemption is--the term `private offering' is not defined in law. Not only does this prevent small business from using the exemption, it leaves businesses who try to use the exemption and can't afford a team of expensive lawyers--which, again, most small businesses cannot-- exposed to potential lawsuits and future liability. . . . This legislation will create a bright line safe harbor for small private offerings. It will help entrepreneurs open new businesses and expand existing ones.'' Mr. Speaker, I applaud the hard work of my colleague, Mr. Emmer, on this bill, and I encourage all my colleagues to vote in favor of H.R. 2201.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I encourage all of my colleagues to support H.R. 2148. I commend my good friend, Mr. Pittenger, for his great work on this. Again, I point out that this bill came out of the Financial Services Committee on a bipartisan vote of 59-1. We think that this is a commonsense, reasonable accommodation for a problem that has been created by Dodd-Frank, and we are glad that, on a bipartisan basis, we can be addressing that. Mr. Speaker, I yield back the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2148) to amend the Federal Deposit Insurance Act to clarify capital requirements for certain acquisition, development, or construction loans, as amended.

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, in response to the 2008 financial crisis, the Basel Committee on Banking Supervision, an organization that, frankly, most citizens might not have any idea exists, much less the effects and the influences on their banking lives, the Basel Committee on Banking Supervision agreed to modify internationally negotiated bank regulatory standards, known as the Basel Accords. This was going to increase bank capital requirements. On July 9, 2013, the Federal banking regulators here in the United States--including the Federal Reserve; the Federal Deposit Insurance Corporation, FDIC; and the Office of the Comptroller of the Currency, OCC--all issued a final rule to implement most of the so-called Basel III recommendations, including modifications to capital requirements. Basel III imposes new rules for high volatility commercial real estate, also known as HVCREs. Unfortunately, we have a lot of acronyms in the Financial Services space, but you will be hearing a lot about these HVCREs over the course of the next few minutes. These HVCRE rules are those which the regulations characterize as loans that finance the acquisition, development, or construction of real property. Loans that finance the acquisition, development, and construction of one- to four-family residential properties, projects that qualify as community development investment, and loans to businesses or farms with gross revenue exceeding $1 million are exempt from this HVCRE classification. In June of 2017, the Treasury Department released its first report in response to the President's February 2017 ``Core Principles for Regulating the United States Financial System,'' informing the administration's perspective to regulate the financial system. The report, entitled, ``A Financial System That Creates Economic Opportunities--Banks and Credit Unions,'' calls on regulators to simplify and clarify the definition of these HVCRE loans to avoid the application of excessively stringent postcrisis capital requirements and concentration limits related to such loans, but does not identify specific language and changes. Additionally, in September of this past year, the OCC, FDIC, and the Federal Reserve proposed a rule that attempted to simplify the regulatory capital calculations for these HVCREs. The proposal would change the current definition of HVCRE and replace it with a new definition related to high volatility acquisition, development, or construction loans. HVADC is what it has been dubbed. The complexity of the HVCRE definition and its uncertain application are making it difficult for banks to comply. While we appreciate the various banking agencies' attempt at simplifying the capital treatment of acquisition, development, and construction loans, their proposal actually broadens the number of loans subject to higher capital charge. This actually increases the amount capital banks will be required to carry for these ADC loans-- hardly a simplification. Increases in risk weighting on these loans have had a significant impact on institutions' capital ratios and, as a result, have increased costs to borrowers. If a loan is classified as an HVCRE loan, the lender will face a lower return on its capital as a result of the higher capital reserve requirement, meaning they are going to have to hold more capital. This will lead to increased pricing on the loan, including a higher interest rate for the borrower. H.R. 2148, Clarifying Commercial Real Estate Loans, introduced by my colleagues Representatives Pittenger and Scott, helps address the uncertainty related to the Basel capital rules and its impact on certain acquisition, development, or construction loans. The bill clarifies the types of loans that should and should not be classified as HVCREs and which types of equity can be used to meet capital requirements. Currently, that uncertainty is creating confusion and affecting commercial real estate ADC loans by increasing borrowing costs and reducing credit availability, which may be contributing to a slowdown in commercial real estate lending. I commend the bipartisan works of Representatives Pittenger and Scott on this important bill. Having passed the Financial Services Committee by an overwhelmingly bipartisan vote of 59-1, there is no reason that we shouldn't have the same overwhelming bipartisan support for H.R. 2148 today. Mr. Speaker, I encourage all of my colleagues to vote in favor of H.R. 2148, and I reserve the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on this bill.

Mr. HUIZENGA. Mr. Speaker, I yield 5 minutes to the gentleman from North Carolina (Mr. Pittenger), the vice chairman of the Terrorism and Illicit Finance Subcommittee of the Financial Services Committee and the sponsor of this legislation.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3911) to amend the Securities Exchange Act of 1934 with respect to risk-based examinations of Nationally Recognized Statistical Rating Organizations.

Mr. HUIZENGA. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to include extraneous material on this bill.

Mr. HUIZENGA. Mr. Speaker, I yield such time as she may consume to the gentlewoman from Missouri (Mrs. Wagner), who is the author of this bill and chair of the Financial Services Oversight and Investigations Subcommittee and, as I had said, sponsor of this legislation.

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, nationally recognized statistical rating organizations-- or NRSROs, as they are known--have been heavily criticized for the role that they played in facilitating the financial crisis. In the years leading up to the crisis, the government adopted a series of policies that had the effect of conferring a ``Good Housekeeping'' seal of approval on the rating agencies and on their products, including designating certain agencies as nationally recognized--a label that they had put on--and hardwiring references to their ratings into numerous Federal statutes and regulations. These regulatory privileges and the perception that the government had placed its blessing on the rating agencies' assessments led to a sense of complacency among investors and a failure of private sector due diligence that contributed to mispriced risk and a collapse of market confidence when ratings of certain asset-backed securities were called into question during the credit meltdown of 2007 and 2008. Mr. Speaker, as a result, the Dodd-Frank Act mandated myriad regulatory requirements on these NRSROs that were aimed at enhancing their disclosure and transparency. While some of these provisions may have been constructive, several created new barriers to entry and further entrenched a type of rating agency oligopoly that has not served investors or the economy well. The Dodd-Frank Act follows a ``registration, not regulation'' approach. While it does not require the SEC--the Securities and Exchange Commission--to regulate or evaluate the rating agencies' methodologies or models, it does seek to ensure that ratings are based on an objective application of the methodologies and that commercial considerations do not influence ratings decisions. Specifically, section 932, creates the Office of Credit Ratings at the Securities and Exchange Commission, which imposes more stringent conflict-of-interest regulations on credit rating agencies and gives the compliance officers at these rating agencies additional responsibilities, including filing annual reports with the SEC. While credit agencies must be held accountable, these increased reporting requirements have given the burden to small credit rating agencies and have hurt investors who bear the true cost of these rules. That one-size-fits-all annual reporting requirements imposed by Dodd- Frank on all NRSROs placed unnecessary burdens and compliance costs on small NRSROs, who in no way were a cause of the financial crisis. As a result of the annual reporting requirements, large NRSROs that can absorb these compliance costs have gotten bigger; and smaller NRSROs, for whom these compliance costs really impose a disproportionate burden, they have been prevented from entering the marketplace and providing necessary competition. On May 15, 2013, former Securities and Exchange Commission Chair Mary Jo White wrote a letter on behalf of a unanimous commission to Chairman Hensarling of the Financial Services Committee to request the provisions of H.R. 3911 as a legislative proposal. She said: ``Rather than focusing every year on each of the designated eight review areas, allowing a risk-based approach would permit the SEC staff to tailor examinations. . . . As a result, staff could focus limited resources on these specific risks rather than reviewing the designated eight areas, some of which may not present a risk for a particular firm. . . . `' Consistent with former Chair White's request, H.R. 3911, statutorily changes the annual reporting requirements so that they are risk-based, instead of requiring the burdensome review of all eight review areas currently mandated. This approach is a commonsense balance that still ensures large NRSROs are regulated while smaller NRSROs are provided necessary relief to enter and thrive in the marketplace. The legislation unanimously passed the Financial Services Committee last month, and I was pleased to be a part of that. At this time I would like to commend the bipartisan work of Representatives Wagner and Foster on this important bill. I encourage all of my colleagues to vote in favor of H.R. 3911. Mr. Speaker, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Speaker, on that I demand the yeas and nays.

Mr. HUIZENGA. Mr. Speaker, I would like to echo the words of my colleague from Michigan: a bipartisan, unanimous bill coming out of the Financial Services Committee deserves the support of this House. We are very pleased that we have been able to strike this accommodation, this balance, between making sure that those rating agencies that truly did have a hand in causing our economic downturn are separated from those smaller institutions that really had nothing to do with that. Now, with this overregulation that has occurred due to Dodd-Frank, I have really been put at a disadvantage and, ironically, have lowered competition in this space. So we believe that we are restoring some commonsense provisions back into the law. With that, I would like to encourage all of my colleagues to vote for H.R. 3911. Mr. Speaker, I yield back the balance of my time.