Patrick McHenry

Mr. McHENRY

Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume. I am opposed to H.R. 2513, and I want to begin by outlining my opposition. This bill before us is a new small business mandate on the smallest businesses in America. The bill before us today requires some of the smallest businesses in America, those with fewer than 20 employees and those with less than $5 million in receipts, to file annually a list of all of their owners with the Financial Crimes Enforcement Network, or FinCEN. For those who are watching on C-SPAN, I have a trivia question for them, Mr. Chairman. I bet most of them have never heard of FinCEN. I bet those in the House office buildings, Mr. Chairman, have not heard of FinCEN. It is a little-known agency even here in Washington that deals with financial crimes, in the Treasury Department. Imagine you are a small business owner. You are getting a notice from the Financial Crimes Enforcement Network mandating that you disclose the owners of your entity. This would be the first consumer-facing intelligence bureau that we would have in the Federal Government. This bill would require small business owners and small business investors to submit their personal information to a new Federal database without adequate privacy protections. This new Federal database will be accessible to law enforcement without a warrant and without a subpoena, a disturbing violation of due process, in my view. This has the fewest civil liberties protections of any Federal intelligence bureau database. It is a lower standard of accountability than what Congress provides in the PATRIOT Act, which largely targets foreign actors. According to the National Federation of Independent Business, this bill would also add more than $5.7 billion in new regulatory costs for America's small businesses. Supporters of the bill are calling for these changes without any direct evidence to justify the mandate. There is plenty of anecdote, but no data. For several months leading up to the committee's consideration of this bill, I sought data from the intelligence bureau called FinCEN and from the Treasury Department, along with the Department of Justice, to better understand the need for this legislation. They provided none. They gave anecdotes of very scary stories to try to compel me as a legislator to vote for what is a very specific threshold in law and a very specific new small business mandate. I refuse to legislate based off of anecdotes. I would like to have hard data. My questions have not been answered by FinCEN, the Treasury Department, or the Department of Justice. We have no information on how beneficial ownership information will be protected, in addition to that. We do not have information on how the privacy of small businesses will be preserved. In fact, we have an amendment here considered on the House floor that could further expose their data to the public, so even that determination is not in stone now with the bill before us. We don't have information on how many law enforcement agencies will have access to the database, how many financial institutions will have access to the database, or what threshold for amount of sales and the number of employees will yield the most effective outcome. In the bill, we have $5 million of revenue and under, and 20 employees and under. We have no data to back up that that is the right threshold for either the dollar amount or the number of employees. We will have stories, and we will have Members come to the House floor telling us stories of bad actors, but that is anecdote. That is not data to provide for this threshold. If we are going to have such an encroachment on America's personally identifiable information of small businesses across this country, shouldn't we have solid data? I believe so. I believe we have a number of issues that need to be dealt with to make this bill sustainable and provide protections for civil liberties. I believe that combating illicit finance is a nonpartisan issue that all Members want to address. Our actions must be thoughtful and data- driven. For example, in committee, we came together in support of H.R. 2514, the COUNTER Act, introduced by the gentleman from Missouri (Mr. Cleaver) and the gentleman from Ohio (Mr. Stivers). H.R. 2514 is a compilation of bipartisan policies that modernize and reform the Bank Secrecy Act and anti-money laundering regimes. It balances security and privacy. I think we have a nice bipartisan bill that was reported out of the committee without a dissenting vote. It provides the Treasury Department and other Federal agencies with the resources they need to help catch bad actors. There have been years of work in the production of that bill that is wrapped up in this larger bill. I am disappointed that the COUNTER Act is not being considered as a standalone bill, instead being swept into this bill. Because I believe as a standalone bill, we could get that bill through the House, through the Senate, and signed by the President into law this year. I think it is unfortunate that we are not considering that as a standalone measure. I thank my colleagues on the other side of the aisle for listening to some of our concerns on the Republican side of the aisle. We will have some Republican Members who vote for this bill. I, however, will not. The encroachment on the question of civil liberties, the lack of separation of powers, the lack of the use of a subpoena, and the lack of regulatory relief for those who are collecting this data, both in terms of small businesses and financial institutions, has not been fixed nor dealt with. In particular, the Rules Committee last night rejected amendments that would require law enforcement to obtain a subpoena before accessing--I am sorry, during committee, there was a rejection of a subpoena in our discussions, and then last night, the Rules Committee rejected my amendment that would provide greater certainty for small businesses and for community banks by repealing the customer due diligence rule, which requires financial institutions to collect similar data that is being required in this bill. I believe that issue still merits a more thoughtful solution that doesn't treat legitimate small businesses as collateral damage, like the current bill does. Mr. Chair, I am opposed to the bill, and I reserve the balance of my time.

Mr. McHENRY. Mr. Chair, I yield myself such time as I may consume. Mr. Chairman, I would like to commend the chair of the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee, Mrs. Maloney, for the work that she has put into this bill. She has been willing to address many concerns from Republicans about her legislation, though we are not able to come to final terms between her and me; but, as she knows and as I have stated clearly, it is for lack of data from the Treasury Department and from FinCEN itself, and those issues still remain. It is not because of a lack of good will on her behalf or her staff's behalf, but an enormous amount of frustration we have from one of our intelligence bureaus that is not complying with reasonable oversight from Congress. So I want to commend Mrs. Maloney for her work that she put into this important piece of legislation, and I do wish that we were able to come to terms on the details in the finer points of this bill. Mr. Chairman, I yield 3 minutes to the gentleman from Kentucky (Mr. Barr), who is the Oversight and Investigations Subcommittee ranking member.

Mr. McHENRY. Mr. Chairman, I yield the gentleman from Kentucky an additional 30 seconds.

Mr. McHENRY. Mr. Chairman, I yield 4 minutes to the gentleman from Little Rock, Arkansas (Mr. Hill).

Mr. McHENRY. And, Mr. Chair, I include in the Record two newspaper pieces, or news articles, if you will, from The Wall Street Journal and from The Verge. From The Verge, it says: ``FBI violated Americans' privacy by abusing access to NSA surveillance data, court rules.'' And the second, from The Wall Street Journal, says: ``FBI's Use of Surveillance Database Violated Americans' Privacy Rights, Court Found.'' These are two recent articles that have been published in the last 10 days. [From The Verge, Oct. 8, 2019] FBI Violated Americans' Privacy by Abusing Access to NSA Surveillance Data, Court Rules (By Nick Statt) FBI Agents made tens of thousands of unauthorized searches on American Citizens The Federal Bureau of Investigation made tens of thousands of unauthorized searches related to US citizens between 2017 and 2018, a court ruled. The agency violated both the law that authorized the surveillance program they used and the Fourth Amendment of the US Constitution. The ruling was made in October 2018 by the Foreign Intelligence Surveillance Court (FISC), a secret government court responsible for reviewing and authorizing searches of foreign individuals inside and outside the US. It was just made public today. THE FBI MADE UNAUTHORIZED, WARRANTLESS ELECTRONIC SEARCHES ON AMERICAN

Mr. McHENRY. Mr. Chair, I appreciate my colleague for yielding. I think this highlights the very fact that this bill provides no regulatory relief for financial institutions to collect information under the customer due diligence rule. It highlights the nature of this obligation, especially on small businesses, and the paperwork burden on small businesses and, on top of that, the paperwork burden on financial institutions to collect enormous amounts of information. The very nature of this amendment highlights the missing elements of the underlying bill. Mr. Chair, I appreciate my colleague for yielding.

Mr. McHENRY. Mr. Chairman, I yield myself the balance of my time. I include in the Record a letter in opposition to this very amendment from the National Federation of Independent Business opposing this amendment. [From NFIB] House Makes Last Minute Bait-and-Switch on Corporate Transparency Act In advance of today's vote, an amendment filed last night shows the true motivations of those pushing the Corporate Transparency Act of 2019 (H.R. 2513). Despite months of rhetoric about protecting the privacy of small business owners, this last-minute amendment would allow the Treasury Department's Financial Crimes Enforcement Network to make public the individual names, addresses, birth dates, and even the driver's license numbers of small business owners. This is a complete reversal of what promoters of this bill have been saying over the last several months. Purportedly about national security, in reality, this bill shifts a burden from big banks, something they said today is merely ``a client pain point,'' to small businesses who simply cannot absorb an additional 131.7 million hours of paperwork over the first 10 years at a cost of $5.7 billion. And, with the last-minute amendment, it allows for the creation a public registry. ``Supporters of this bill have revealed their cards today,'' said Brad Close, NFIB's Senior Vice President, Public Policy. ``This amendment confirms one of small business owners' greatest fears--that the true intention of those pushing this bill is to establish a public registry of every small business owner--something that can be used to shame law-abiding small business owners for free speech activities or political purposes. This is a serious breach of the privacy and first amendment rights, and we urge members of the United States House of Representatives to defeat this amendment today.'' The amendment filed last night would prohibit FinCEN from making public the names of specific businesses but would not prohibit FinCEN from listing the names of business owners or the personally identifiable information of business owners such as home addresses. This morning, The Hill published an op-ed by NFIB President and CEO Juanita D. Duggan on the significant risks and penalties the Corporate Transparency Act imposes on small business owners. This followed on the heels of an announcement by NFIB of a coalition of 38 business groups, including NFIB, who joined together in strong oppositior of this legislation. To read more on NFIB's efforts to protect small business privacy, visit https://nfib.com/protectprivacy.

Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, this amendment exposes the very problem I have with this new governmental database. We put enormous protections into the collection of foreigners into our database and intelligence bureaus. We have granted rights to special courts and that is for information that is less specific than the information that will be a part of this beneficial owner or ownership database of America's small businesses. The amendment here says that basically you redact the specific personally identifiable information of the beneficial owners of the small business. Now, it doesn't have provision for small areas. Let's say that you are from my hometown or you are from the town I lived in for nearly a decade, a small town that only has a handful of businesses, and so, you aggregate the data, but you can still expose people to enormous amounts of unwanted targeting. It also exposes to me the additional issues that we have with another government database, that a future Congress could then take this data and make it public or some congressional investigator could just want this for partisan political reasons and try to seek it out of the executive branch. This amendment highlights to me the grave concerns I have with a mass collection of this type of data, no matter how justified the anecdotes are from law enforcement. The amendment specifically allows FinCEN to ``issue guidance and otherwise make materials available to financial institutions and the public using beneficial ownership information.'' That is deeply problematic, and I do not believe appropriate protections are in place for an amendment like this to be made reasonable. I think if you have civil liberties concerns, I would say that this amendment highlights the very civil liberties concerns you would have with the new Federal Government database. I would like to ask the bill's sponsor, though he is not here, about the intent of creating this type of information, but he is not here. I don't think this is a wise amendment. I think it should be rejected for a number of different counts. I would urge my colleagues to vote ``no,'' and I reserve the balance of my time.

Mr. McHENRY. Mr. Chair, I rise in opposition to the amendment.

Mr. McHENRY

Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume. Let us be clear: The bill we are considering right now has nothing to do with outsourcing. This is a political talking point, not a piece of legislation. It will not bring jobs back to the United States. The bill is simply designed to create more opportunities for corporate activists and the trial bar to name and shame companies. What does this do for the American people? Nothing. In contrast, the Republican Tax Cut and Jobs Act has brought more jobs and greater payback to the United States. Mr. Chair, our unemployment rate is at a 50-year low, so all this economic gloom about outsourcing, we have been talking about insourcing, bringing jobs back to the United States from overseas. We have a President who has an aggressive trade agenda to make sure that we have more jobs here in the United States instead of outsourcing jobs through bad trade deals that we agree in a bipartisan way. Bad trade deals have cost us jobs over the years, led by both Republican and Democratic Presidents, unfortunately. So there is bipartisan support here for better trade legislation, better trading relationships. Let's focus on that. The labor force participation rate is way up and continues to rise. More people in the United States are entering the workforce than leaving the workforce. The American people are reaping the benefits of a strong economy. If Democrats are serious about continuing to grow our economy and create high-paying jobs, let's start passing bills that unleash companies, not constrain them. Let's help businesses grow, not discourage them from going public. American businesses need resources, not mandates, to compete with our biggest economic threat--China. If my Democratic colleagues are not interested in growing our economy, let's find other areas of common ground. We should pass bills that help everyday Americans save for their retirement, for their children's college education, or to buy their first home. Let's help those workers who are putting together a couple of jobs get full-time jobs. Let's pass bipartisan legislation to help seniors access prescription drugs. Let's authorize the Defense Department and have a stronger national defense by passing a bipartisan National Defense Authorization Act. Unfortunately, this bill we are discussing today would do none of those things; and we have spent the large majority of our week discussing two small, tidy, but very vacuous, extraordinarily vacuous, pieces of legislation that have consumed our week, legislatively. We have a 2\1/2\ page bill that is the full bit of our business here on a Friday, on a legislative day. We had a really meaningless, vacuous, poorly designed bill yesterday that consumed a whole legislative day as well. This is not the way we should be running Congress. I would like to reiterate: The Republicans stand ready to work with our colleagues across the aisle on meaningful legislation that will help the American people. So let's vote this bill down. Let's not just agree with the political talking point that is put into legislative text for political reasons. Let's vote this down. Let's get to serious legislating and get done with these empty bills and on with the work of the American people. Mr. Chairman, I yield back the balance of my time.

Mr. McHENRY. Mr. Chair, I yield the gentleman from Michigan an additional 1 minute.

Mr. McHENRY. Mr. Chair, I am ready to close, if I may inquire if the gentlewoman from California has any further speakers.

Mr. McHENRY. Mr. Chair, I yield myself such time as I may consume. Mr. Chair, I rise in opposition to H.R. 3624. The Republicans stand ready to work with our colleagues on the other side of the aisle to strengthen our public markets and increase opportunities for everyday investors. We know that robust capital markets give everyday investors the opportunity to save for a first home, a child's college education, and retirement. But instead of considering a bill that will grow the economy and create jobs, we are using our floor time, a full legislative day, in fact, to talk about where public company employees are located; not foreign companies, but American public companies. We are considering a bill that really should be part of a larger bill. It shouldn't take up a full legislative day. It is two-and-a-half pages of legislative text and does very little that it purports to do. But here we are. We must ensure that public companies are properly regulated and supervised to protect our capital markets for all Americans. That is why companies are already required to provide information to investors on risk exposure, material financial data, and the company's financial condition. These reports help investors determine whether they believe the company's value is worthy of investment. Unfortunately, Democrats are pursuing a partisan agenda of government mandates that jeopardize economic opportunity for millions of middle- income Americans. H.R. 3624 is just the latest in a series of partisan proposals offered by committee Democrats to add nonfinancial disclosures to an already thorough list of mandatory disclosures, and the effort is really to pursue a political agenda or political interest rather than economic interest. These mandates add to a company's cost of compliance. And in some cases, they can put lives at risk for people who are employed in countries around the globe. They do not have an impact on the underlying value of the firm, and most certainly will discourage companies from going public. Why the bill's sponsor wants companies to disclose where employees reside is unclear. I know the title of the bill, but I don't see in the contents of the bill anything related to the title of the bill. The bill provides no context for this data. In fact, during the hearing on this legislation, witnesses shared that simply knowing that 1 percent of the company's workforce resides in a particular State or abroad, does not explain whether American workers hold these jobs or have moved between States or overseas for work; whether some expertise or resource is central to that job that cannot be found in the United States or cannot be found in the State or another region of the country; or whether moving jobs overseas results in cheaper products for the American consumer or more jobs here in the United States. Perhaps they are selling something to a foreign country. We don't have that as a part of information here with this disclosure. The information sought by H.R. 3624 would, at best, tell an incomplete story and, at worst, could be deeply misleading. The only plausible explanation for this bill is to use the information to try to shame public companies based on incomplete and misleading information. It is unclear to me how shaming a company benefits the everyday investor, or encourages more companies to go public, or brings more vibrant capital markets here in the United States or creates jobs here in the United States. How does shaming a company encourage more companies to go public? How does shaming create more opportunities to save for retirement? How does it enhance children's savings for college, or parents saving for their children to go to college? How does it build a brighter, more vibrant future for them economically? In fact, we have yet this Congress to bring a bill to the floor that would accomplish the goal of building retirement savings, savings for a college education, or help with buying a first home. We have yet to consider one bill that will grow the economy or actually create jobs. We are falling behind China. We are falling behind our economic competitors across the world when it comes to the number of initial public offerings, the number of IPOs. China has more IPOs than the United States in recent time. We need to right this. I want to hear what my Democrat colleagues' solution is to that issue; not just a messaging bill that we have here today of two- and-a-half pages of legislative text. I urge my colleagues to listen to the American people. Let's get back to the economic work that they need, given where we are in this economic cycle. I encourage my colleagues to vote ``no'' on this bill. It does nothing that the title says that it does. Mr. Chairman, I reserve the balance of my time.

Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume. The bill does no such thing as the author just stated, Mr. Chair. It gives a list of the numbers of employees in each State or territory in the United States. It gives the number of employees in a country as a matter of corporate disclosures. If my friend wants to talk about accountability, a list of names is not accountability, unless this is about the trial bar suing or it is about naming and shaming companies for changing head counts in different States or government intervening to say that you can't move employees between States. It does not do the things that the author states. Mr. Chairman, I reserve the balance of my time.

Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume. While I agree with my colleague from New York's sartorial decisions, we diverge here. What I would say to my colleagues here in the Chamber is that we all care about having more workers here in America. We do. A corporate mandate on disclosing the number of employees does not actually do that. Having competitive regulations, having a competitive Tax Code, competing around the globe for jobs here in the United States, winning a trade war with the biggest competitor on the globe that we have--a rising China--and having an eye to the competition we face globally is the way we get American jobs here and keep them here. Simply mandating something more on our companies and holding them back and retraining them does not actually move us forward in the globe. It doesn't. It doesn't actually get at the driving force of this. What I hear from my colleagues on the other side of the aisle is that it seems like they do support our having a reset with our trade relationship with China and that they do agree that we need to have a new trading relationship with our biggest trading partners so we get more jobs here. The unions support that concept. Republicans support that concept. We should be able to have a bipartisan coalition to support a better agenda on trade so that we have American jobs here. My district has felt that intensely, with the loss of textile manufacturing jobs. The way we brought them back is by competing: by having better regulation, better tax rates, and more technological innovation here in the United States. Now, we have more jobs than we did 10 years ago in textiles in North Carolina. We have more jobs than we did 10 years ago when it deals with furniture. We can compete. We can do this smartly, and we can do it well. But more corporate mandates and more expense burdens on public companies does not lead to more public companies and does not lead to better investments for pensioners, whether it is public pensions, union pensions, or individual folks who want to save for their retirement. What we have to do is think differently than just more mandates, more regulation, and more burden. No State has felt this type of challenge and dealt with it in a competitive way than the State of Michigan. Mr. Chairman, I yield 3 minutes to the gentleman from Michigan (Mr. Huizenga), who is the lead Republican on the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee.

Mr. McHENRY. Mr. Chairman, I reserve the balance of my time.

Mr. McHENRY

Mr. McHENRY. Madam Speaker, due to a family obligation, I was unable to vote in the House on September 27, 2019. Had I been present, I would have voted ``nay'' on rollcall No. 553, ``yea'' on rollcall No. 554, and ``nay'' on rollcall No. 555.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, due to a family obligation, I unfortunately missed today's vote series. Listed below is how I would have voted had I been in attendance: Previous Question--``Nay''; Adoption of the Rule Providing for Consideration of S.J. Res. 54--``Nay''; Republican Motion to Recommit--``Yea''; and Passage of H.R. 3525--``Nay''.

Mr. McHENRY

Mr. McHENRY. Madam Speaker, may I inquire how much time I have remaining.

Mr. McHENRY. Madam Speaker, I am prepared to close, and I yield myself such time as I may consume. Madam Speaker, let me begin as I did with my opening statement. I commend the gentleman from Colorado (Mr. Perlmutter) for how he has managed this bill and brought it to the floor. What we have here on the House floor, and we are debating now, is a much broader bill and, therefore, will have a much broader vote than what we had in committee, however limited we were in committee jurisdiction. Madam Speaker, I know if the gentleman from Colorado (Mr. Perlmutter) were on the Appropriations Committee, he would have worked for medical research funding. I know that if he were on the Energy and Commerce Committee, he would have worked for an FDA process on cannabis. And if he were on the Committee on the Judiciary, he would have worked to deschedule the drug. However, we find ourselves on the Financial Services Committee, and this is not a normal conversation that we have on the committee. But this is addressing a key issue that many States are facing, and many financial institutions, credit unions, and banks are facing, which is how to bank people with a lot of cash, with a product that is legal at the State level but defined at the Federal level as an illicit substance that is harmful for human consumption. While Congress is taking this half-measure, it doesn't resolve the issue. It does not resolve the issue of medical research or understanding the brain science and how cannabis affects the adolescent brain. There are enormous questions there. There are enormous questions about the Federal Criminal Code. But these are things that we should be debating rather than this half-measure on banking. While this is an important step on the question of the overall legalization of this drug, it still doesn't resolve the issue fully. Madam Speaker, I ask my colleagues for a ``no'' vote, but I expect this vote will pass on the suspension calendar today. I thank my colleague for his handling of this important issue and the wise nature of how he has approached the amendment process to address many different equities across the country. I yield back the balance of my time.

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

Mr. McHENRY. Madam Speaker, I yield 2 minutes to the gentleman from Kentucky (Mr. Barr), chair of the Subcommittee on Oversight and Investigations of the Committee on Financial Services.

Mr. McHENRY. Madam Speaker, I yield 1 minute to the gentleman from Ohio (Mr. Davidson), a great member of the Committee on Financial Services.

Mr. McHENRY. Madam Speaker, may I inquire how much time I have remaining.

Mr. McHENRY. Madam Speaker, I yield 1 minute to the gentleman from Florida (Mr. Gaetz).