Negotiations among House and Senate Democrats on the budget reconciliation bill have stretched on for another month despite hopes that a deal was within reach. Urgency to pass large portions of President Biden’s domestic agenda continues to increase as limited legislative days remain until the new year brings increased focus on the elections.
With slim majorities and often conflicting priorities, the size and scope of the reconciliation package remains unclear. As the overall package shrinks, Speaker Pelosi recently wrote a Dear Colleague letter saying “Overwhelmingly, the guidance I am receiving from Members is to do fewer things well so that we can still have a transformative impact on families in the workplace and responsibly address the climate crisis: a Build Back Better agenda for jobs and the planet For The Children!” This has generated intense efforts from Members of Congress and organizations to ensure their priorities are included. Senate Banking Chair Sherrod Brown (D-OH) and House Financial Services Committee Chair Maxine Waters (D-CA-43) have publicly pushed for inclusion of housing provisions through press conferences, hearings, and letters.
Recently, President Biden announced a $1.75 trillion framework for reconciliation based on all of negotiations. This includes $150 billion for housing, $400 billion for childcare, $555 billion in clean energy and climate investments. The framework also includes a 15% Corporate Minimum Tax on large corporations and 1% surcharge on corporate stock buybacks.
Meanwhile, the bi-partisan infrastructure bill passed by the Senate remains stuck in the House. Progressive Democrats have signaled that the reconciliation framework is not sufficient and want both bills to advance together. Additionally, government funding and the debt ceiling will need addressed again in early December. The debt ceiling was raised by $480 billion as Republicans provided procedural support in the Senate but indicated that Democrats should use the additional time to pass a longer-term solution alone.
FSOC Report on Climate-Related Financial Risk
The Financial Stability Oversight Council (FSOC) released a Report on Climate-Related Financial Risk in response to an Executive Order directing the Secretary of the Treasury to engage FSOC members on this topic and report on the activities.
The report recommends that financial regulators:
- Assess climate-related financial risks to financial stability, including through scenario analysis, and evaluate the need for new or revised regulations or supervisory guidance to account for climate-related financial risks
- Enhance climate-related disclosures to give investors and market participants the information they need to make informed decisions
- Enhance actionable climate-related data to allow better risk measurement by regulators and in the private sector
- Build capacity and expertise to ensure that climate-related financial risks are identified and managed.
FHFA Expands Eligibility for Fannie Mae’s and Freddie Mac’s Refinance Programs for Low- and Moderate-Income Borrowers and Restores Desktop Appraisal Flexibility
The Federal Housing Finance Agency (FHFA) recently announced two measures aimed at increasing the affordability of homeownership for mortgage borrowers, especially those in underserved communities. Fannie Mae’s and Freddie Mac’s RefiNow and Refi Possible programs will be expanded to borrowers with incomes at or below 100% of AMI, an increase from at or below 80%. Additionally, desktop appraisals will be incorporated for many new purchase loans starting in early 2022. The use of desktop appraisals was one of several temporary flexibilities initiated last year in response to the COVID-19 pandemic.
Senate Appropriations Committee Releases 2022 THUD Bill
The Senate Appropriations committee released the Transportation, Housing and Urban Development, and Related Agencies (THUD) spending bill for FY2022. If passed the Department of Housing and Urban Development (HUD) would receive $65.4 billion which is $5.7 billion above the fiscal year 2021 enacted level.
This bill includes:
- $3.26 billion for Homeless Assistance Grants
- $1.45 billion is provided for the HOME Investment Partnership program
- $27.7 billion for tenant-based Section 8 vouchers
- $13.97 billion for project-based Section 8 rental assistance
- $8.8 billion for public housing
U.S. Postal Service Begins Pilot Program to Provide Financial Services
The postal service launched a pilot program in September that allows customers in limited areas to obtain a single-use gift card for checks less than $500 with a flat processing fee of $5.95. This is reportedly the first step in an effort by the postal service to provide services such as ATM and wire transfers. Legislation would be necessary to provide full service postal banking and Senate Banking Chair Sherrod Brown (D-OH) has previously voiced support while Ranking Member Pat Toomey (R-PA) is strongly opposed.
CFPB Small Business Data Collection
The Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking to implement the Dodd-Frank small business lending data collection requirements. Financial institutions that originate at least 25 covered transactions to small businesses in each of the two preceding calendar years would be required to collect data on minority-owned business status, women-owned business status, and the ethnicity, race, and sex of the principal applicant.
FDIC Mission Drive Bank Fund
The Federal Deposit Insurance Corporation (FDIC) announced the launch of a new Mission-Driven Bank Fund, a capital investment vehicle being developed by the FDIC to support insured Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs). As anchor investors, Microsoft and Truist Financial Corporation will lead the investment fund. In addition, Discovery, Inc. will join as a founding investor in the Fund bringing the combined initial commitment to $120 million, with additional investments expected.
The Mission-Driven Bank Fund is a collaborative investment framework to drive capital investment and other funding to FDIC-insured MDIs and CDFIs that support low- and moderate-income, minority, and rural communities, enabling them to build size, scale, and capacity to in turn allow them to provide affordable financial products and services to individuals and businesses, stimulate economic and community development, and build opportunity and prosperity.