In 118th Congress, House Financial Services Committee, Legislation

Today. February 28th, the House Financial Services Committee (HFSC) held its first legislative markup of the of the 118th Congress, and its first markup with a Republican majority since Fall, 2018.  Most of the bills selected for markup dealt with Washington’s latest bipartisan punching bag: the Peoples Republic of China (PRC).  As the Committee’s Chairman, Rep Patrick McHenry (R-NC) acknowledged, like many other House committees, the HFSC is looking for ways “to thwart the Chinese Communist Party’s aggression.”  The remaining bills were a motley crew of measures, dealing with everything from the the World Bank’s International Development Association to emergency health supplies for public emergencies to financing for illicit synthetic drugs.  Only a single bill, H.R. 1165, The Data Privacy Act of 2023 – lacked any Democratic support.

The Committee voted unanimously to report ten bipartisan bills to the House and approved an additional three bills by voice-vote.  At the conclusion, the Committee voted along party lines to defeat some half-dozen Democratic amendments to the Data Privacy Act, prior to voting 26-21 to approve the bill along party lines.  Another (even larger) markup is expected at the end of March.

Here are the most important takeaways from today’s markup.

Top takeaways.

  1. McHenry strove to project bipartisanship as he presided over an inclusive and largely successful markup. In his first time presiding over a markup of the HFSC, Chairman McHenry strove to present himself as interested in working with Democrats, and sought differentiate the HFSC from the “majority of committees.”  In his opening statement, McHenry emphasized that “The majority of the bills we will consider today are bipartisan. That is notable in a divided Congress that many pundits have claimed will not accomplish much,” and called attention to “the 10 bipartisan bills that address the generational threat posed by the Chinese Communist Party we will advance today.”  When the committee’s attention turned to the lone partisan bill – discussed in detail below – McHenry exhibited patience and good humor, even as Democrats offered amendment after amendment aimed at forcing the Republicans to cast politically awkward or difficult votes.  Also noteworthy was the fact that McHenry allowed Democratic members – such as Rep. Vargas (CA), and Rep. Spanberger (VA) – to offer  “substitute amendments” with his support, effectively making these Democratic versions of the bills  the “base text” of the legislation that will eventually be considered by the full House.


  1. McHenry is positioning HFSC as a policymaking committee rather than messaging committee. In what can be thought of as a sort-of corollary to his emphasis on bipartisanship, in his opening statement and thereafter, Rep. McHenry made clear through his words and conduct that he views the HFSC as primarily a policymaking committee as opposed to politically focused “messaging” committee.  “We are a legislating committee. I renew my call for every Member to bring your ideas to me–my door is open. These are not messaging bills or a markup to clear the decks. To that end, it is my expectation we will hold several markups throughout the year on serious bills.”  During the course of the markup, McHenry also engaged in informal colloquies with some half-dozen Democrats, making commitments to address issues they raised and care about, including with respect to increasing the penalties and enforcement of the Gramm Leach Bliley act , and clarifying protections with respect to use of bio-metric data by financial services firms.


  1. Ranking Member Waters will be forced to walk a tight line this year. She is off to a good start.  As she enters her second decade as the top Democrat on the HFSC, Rep. Maxine Waters (D-CA) finds herself caught between the advances of a Chairman eager to cut deals to address issues from fintech to “private” securities offering reform, and an ample contingent of new and relatively moderate Democrats – some of whole are also potentially eager to make a deal.  Waters will play a crucial role in helping rank-in-file Democrats navigate the dangerous politics of compromise.  Her deft performance on Tuesday left little doubt she is up to the task.


  1. The Chairman announced – and then appeared to abandon – some interesting changes to the Committee’s parliamentary practices.  In his opening statement at the beginning of the markup, McHenry appeared to suggest an end to the HFSC’s longtime practice of postponing or “rolling” recorded votes until the end of a given day or markup.  If his pledge holds, the change would mean that the HFSC would take votes on amendments and motions in “real time.”  The significance of “real time” voting in a Congressional committee is that it denies members of both parties the ability to leave the hearing room (sometimes for extended periods) and instead requires them to at least stay in proximity to the markup, lest their absence be recorded (or their party lose a vote).  The practice of holding “real time” votes in committee is believed by some to encourage engagement and over time to foster trust and bipartisanship. Late in the day, however, McHenry announced that due to “other markups” occurring concurrently, he would “roll” the vote on one of the bills.  So, we’ll need to wait to see if the changes stick.  We also noticed that the Chairman seems to have shortened to two day (from five) the amount of time members have to file extended remarks or submit materials for the hearing record.


  1. Despite a months-long push by McHenry to win Democratic backing, data privacy legislation on the HFSC remains a s strictly partisan affair. Although the markup saw the HFSC consider 14 bills, most of the discussion and nearly all of the amendments centered on a major data privacy bill introduced by Rep. McHenry.  The bill the committee considered was a revised version of a “discussion draft” Rep.McHenry posted last June, and since that time, he and other proponents of the bill have worked hard to secure bipartisan support.  At Tuesday’s markup, however, McHenry was unable to break through unified Democratic opposition, led by Rep. Waters.  Indeed, Waters set the tone for the debate, in her opening statements, and through her consenting to an amendment strategy aimed at undermining support for McHenry’s bill.  The depth of opposition to the bill articulated by Waters’ in her opening statement is worth underscoring because it shows how difficult consensus will be to reach in this area.


  1. Democrats were effective from the minority. As discussed above, Democratic partisan opposition at the markup centered on the Data Security Act of 2023.  While opposition to that bill was expected – it is complicated, ambitious, controversial policy proposal – what impressed us was the way HFSC Democrats successfully, and patiently, used amendments to highlight and force discussion of wedge issues that reflect their policy priorities and/or issues they believe favor them politically.  For hours, Democrats were able to tie the Committee up in discussion of privacy concerns related to bio-metric data (Rep. Lynch, MA), fines (Rep. Tlaib, Mich), reproductive rights (Rep. Garcia, TX), and a federal private right of action (Rep. Williams, GA), among others.  This approach, which allows the minority to shift the terms of the discussion, and ultimately explain a decision to vote “no” vote of the bill in committee, is a hallmark of an effective minority.  After a  subdued performance at several subcommittee hearings early this month, HFSC Democrats have upped their game.


  1. Inflation, default, and national debt are now Republican problems, too. (At least in the House.)  The markup had been underway for scarcely 5 minutes before the first Democrat, Rep. Waters, began to lament the way in which “despite repeatedly claiming last year that it was a priority, after two months of leadership, Republicans have not brought forward any legislation to bring down costs for consumers…undermin[ing] our ability to compete with China and inflict[ing] further pain across our communities.”  Waters also took Republicans to task for “not considering any legislation to address the biggest threats to our economy: a possible default on the United States debt or the persistent inflation in our economy.”  Republicans largely shrugged.


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