[Pages H5477-H5495]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

GUIDING UNIFORM AND RESPONSIBLE DISCLOSURE REQUIREMENTS AND INFORMATION
LIMITS ACT OF 2023

Mr. HUIZENGA. Mr. Speaker, pursuant to House Resolution 1455, I call
up the bill (H.R. 4790) to amend the Federal securities laws with
respect to the materiality of disclosure requirements, to establish the
Public Company Advisory Committee, and for other purposes, and ask for
its immediate consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 1455, in lieu
of the amendment in the nature of a substitute recommended by the
Committee on Financial Services printed in the bill, an amendment in
the nature of a substitute consisting of the text of Rules Committee
Print 118-48, modified by the amendment printed in part B of House
Report 118-685, is adopted, and the bill, as amended, is considered
read.
The text of the bill, as amended, is as follows:

H.R. 4790

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the
``Prioritizing Economic Growth Over Woke Policies Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.

DIVISION A--GUARDRAIL ACT OF 2023

Sec. 1001. Short title; table of contents.

TITLE I--MANDATORY MATERIALITY REQUIREMENT

Sec. 1101. Limitation on disclosure requirements.

TITLE II--SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES

Sec. 1201. SEC justification of non-material disclosure mandates.

TITLE III--PUBLIC COMPANY ADVISORY COMMITTEE

Sec. 1301. Public Company Advisory Committee.

TITLE IV--PROTECTING U.S. BUSINESS SOVEREIGNTY

Sec. 1401. Study on detrimental impact of the Directive on Corporate
Sustainability Due Diligence and Corporate Sustainability
Reporting Directive.

DIVISION B--BUSINESSES OVER ACTIVISTS ACT

Sec. 2001. Short title.
Sec. 2002. Limitation with respect to compelling the inclusion or
discussion of shareholder proposals.

DIVISION C--PROTECTING AMERICANS' RETIREMENT SAVINGS FROM POLITICS ACT

Sec. 3001. Short title; Table of contents.

TITLE I--PERFORMANCE OVER POLITICS

Sec. 3101. Exclusion of certain substantially similar shareholder
proposals.

TITLE II--NO EXPENSIVE, STIFLING GOVERNANCE

Sec. 3201. Exclusion of certain shareholder proposals.

TITLE III--EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS

Sec. 3301. Exclusion of certain ESG shareholder proposals.

TITLE IV--EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY
ISSUE

Sec. 3401. Exclusions available regardless of significant social policy
issue.

TITLE V--CORPORATE GOVERNANCE EXAMINATION

Sec. 3501. Study of certain issues with respect to shareholder
proposals, proxy advisory firms, and the proxy process.

TITLE VI--REGISTRATION OF PROXY ADVISORY FIRMS

Sec. 3601. Registration of proxy advisory firms.

TITLE VII--LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL
INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS

Sec. 3701. Liability for certain failures to disclose material
information or making of material misstatements.

TITLE VIII--DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION
FUNDS

Sec. 3801. Duties of investment advisors, asset managers, and pension
funds.

TITLE IX--PROTECTING AMERICANS' SAVINGS

Sec. 3901. Requirements related to proxy voting.

TITLE X--EMPOWERING SHAREHOLDERS

Sec. 3911. Proxy voting of passively managed funds.

TITLE XI--PROTECTING RETAIL INVESTORS' SAVINGS

Sec. 3921. Best interest based on pecuniary factors.
Sec. 3922. Study on climate change and other environmental disclosures
in municipal bond market.
Sec. 3923. Study on solicitation of municipal securities business.

DIVISION D--AMERICAN FIRST ACT OF 2023

Sec. 4001. Short title; Table of contents.

TITLE I--STOP EXECUTIVE CAPTURE OF BANKING REGULATORS

Sec. 4101. Report on the implementation of recommendations from the
FSOC Chairperson and Executive Orders.

[[Page H5478]]

TITLE II--ENSURING U.S. AUTHORITY OVER U.S. BANKING REGULATIONS

Sec. 4201. Requirements in connection with rulemakings implementing
policies of non-governmental international organizations.
Sec. 4202. Report on certain climate-related interactions with covered
international organizations.

TITLE III--BANKING REGULATOR INTERNATIONAL REPORTING

Sec. 4301. Reporting on interactions with non-governmental
international organizations.

TITLE IV--SUPERVISION REFORM

Sec. 4401. Removal of the Vice Chairman for Supervision designation.

DIVISION E--LIMITATION ON SEC RESERVE FUND

DIVISION A--GUARDRAIL ACT OF 2023

SECTION 1001. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This division may be cited as the
``Guiding Uniform and Responsible Disclosure Requirements and
Information Limits Act of 2023'' or the ``GUARDRAIL Act of
2023''.
(b) Table of Contents.--The table of contents for this
division is as follows:

Sec. 1001. Short title; table of contents.

TITLE I--MANDATORY MATERIALITY REQUIREMENT

Sec. 1101. Limitation on disclosure requirements.

TITLE II--SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES

Sec. 1201. SEC justification of non-material disclosure mandates.

TITLE III--PUBLIC COMPANY ADVISORY COMMITTEE

Sec. 1301. Public Company Advisory Committee.

TITLE IV--PROTECTING U.S. BUSINESS SOVEREIGNTY

Sec. 1401. Study on detrimental impact of the Directive on Corporate
Sustainability Due Diligence and Corporate Sustainability
Reporting Directive.

TITLE I--MANDATORY MATERIALITY REQUIREMENT

SEC. 1101. LIMITATION ON DISCLOSURE REQUIREMENTS.

(a) Securities Act of 1933.--Section 2(b) of the Securities
Act of 1933 (15 U.S.C. 77b(b)) is amended--
(1) in the subsection heading, by inserting ``; Limitation
on Disclosure Requirements'' after ``Formation'';
(2) by striking ``Whenever'' and inserting the following:
``(1) In general.--Whenever''; and
(3) by adding at the end the following:
``(2) Limitation.--
``(A) In general.--Whenever pursuant to this title the
Commission is engaged in rulemaking regarding disclosure
obligations of issuers, the Commission shall expressly
provide that an issuer is only required to disclose
information in response to such disclosure obligations to the
extent the issuer has determined that such information is
material with respect to a voting or investment decision
regarding the securities of such issuer.
``(B) Applicability.--Subparagraph (A) shall not apply with
respect to the removal of any disclosure requirement with
respect to an issuer.
``(C) Rule of construction.--For the purposes of this
paragraph, information is considered material with respect to
a voting or investment decision regarding the securities of
an issuer if there is a substantial likelihood that a
reasonable investor would view the failure to disclose that
information as having significantly altered the total mix of
information made available to the investor.''.
(b) Securities Exchange Act of 1934.--Section 3(f) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(f)) is
amended--
(1) in the subsection heading, by inserting ``; Limitation
on Disclosure Requirements'' after ``Formation'';
(2) by striking ``Whenever'' and inserting the following:
``(1) In general.--Whenever''; and
(3) by adding at the end the following:
``(2) Limitation.--
``(A) In general.--Whenever pursuant to this title the
Commission is engaged in rulemaking regarding disclosure
obligations of issuers, the Commission shall expressly
provide that an issuer is only required to disclose
information in response to such disclosure obligations to the
extent the issuer has determined that such information is
material with respect to a voting or investment decision
regarding the securities of such issuer.
``(B) Applicability.--Subparagraph (A) shall not apply with
respect to the removal of any disclosure requirement with
respect to an issuer.
``(C) Rule of construction.--For the purposes of this
paragraph, information is considered material with respect to
a voting or investment decision regarding the securities of
an issuer if there is a substantial likelihood that a
reasonable investor would view the failure to disclose that
information as having significantly altered the total mix of
information made available to the investor.''.

TITLE II--SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES

SEC. 1201. SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE
MANDATES.

Section 23 of the Securities Exchange Act of 1934 (15
U.S.C. 78w) is amended by adding at the end the following:
``(e) Non-material Disclosure Mandates.--
``(1) Disclosure.--The Commission shall maintain a list on
the website of the Commission that contains--
``(A) each mandate under the Federal securities laws and
regulations that requires the disclosure of non-material
information; and
``(B) for each such disclosure mandate, an explanation of
why the mandate is required.
``(2) Study and report.--The Commission shall, every 5
years, issue a report to the Congress justifying each
disclosure contained on the list required under paragraph
(1).
``(3) No private liability for failing to make a non-
material disclosure.--A person who fails to disclose non-
material information required to be disclosed under the
Federal securities laws or regulations shall not be liable
for such failure in any private action.''.

TITLE III--PUBLIC COMPANY ADVISORY COMMITTEE

SEC. 1301. PUBLIC COMPANY ADVISORY COMMITTEE.

The Securities Exchange Act of 1934 is amended by inserting
after section 40 (15 U.S.C. 78qq) the following:

``SEC. 40A. PUBLIC COMPANY ADVISORY COMMITTEE.

``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Public Company Advisory Committee (referred to
in this section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) provide the Commission with advice on its rules,
regulations, and policies with regard to its mission of
protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation, as
they relate to--
``(i) existing and emerging regulatory priorities of the
Commission;
``(ii) issues relating to the public reporting and
corporate governance of public companies;
``(iii) issues relating to the proxy process for
shareholder meetings held by public companies;
``(iv) issues relating to trading in the securities of
public companies; and
``(v) issues relating to capital formation; and
``(B) submit to the Commission such findings and
recommendations as the Committee determines are appropriate,
including recommendations for proposed regulatory and
legislative changes.
``(b) Membership.--
``(1) In general.--The membership of the Committee shall be
not fewer than 10, and not more than 20, members appointed by
the Commission from among individuals who--
``(A) are officers, directors, or senior officials of
public companies registered with the Commission under the
Securities Act or 1933 and this Act, except for those public
companies that own asset management, fixed income, investment
advisory, broker-dealer, or proxy services businesses;
``(B) are executives or other individuals with senior
managerial responsibility in business, professional, trade,
and industry associations that represent the interests of
such public companies; or
``(C) are professional advisers and service providers to
such public companies (including attorneys, accountants,
investment bankers, and financial advisers).
``(2) Qualifications.--At least 50 percent of the Committee
membership shall be drawn from individuals who would qualify
for membership under paragraph (1)(A).
``(3) Term.--
``(A) In general.--Each member of the Committee appointed
under paragraph (1) shall serve for a term of 4 years.
``(B) Vacancies.--Vacancies among the members, whether
caused by the resignation, death, removal, expiration of a
term, or otherwise, will be filled consistent with the
Commission's procedures then in effect.
``(C) Staggered terms.--The members of the Committee shall
serve staggered terms, with one-third of the initial members
of the Committee each serving for 1, 2, or 3 years.
``(4) Members not on other advisory committees.--Public
companies and other organizations that are currently
represented on any other Commission Advisory Committee are
not eligible to have representatives also serve on the Public
Company Advisory Committee.
``(5) Members not commission employees.-- Members appointed
under paragraph (1) shall not be considered to be employees
or agents of the Commission solely because of membership on
the Committee.
``(c) Chair; Vice Chair; Secretary; Assistant Secretary.--
``(1) In general.--The members of the Committee shall
elect, from among the members of the Committee--
``(A) a Chair;
``(B) a Vice Chair;
``(C) a Secretary; and
``(D) an Assistant Secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of two years in the capacity the member was
elected under paragraph (1).
``(3) Subcommittees.--The Chair may create subcommittees
that hold public or non-public meetings and provide
recommendations to the full Committee.
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than twice annually, at the call
of the Chair of the Committee; and
``(B) from time to time, at the call of the Commission.
``(2) Notice.--The Chair of the Committee shall give the
members of the Committee written notice of each meeting, not
later than two weeks before the date of the meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United
States shall--
``(1) be entitled to receive compensation at a rate not to
exceed the daily equivalent of the

[[Page H5479]]

annual rate of basic pay in effect for a position at level V
of the Executive Schedule under section 5316 of title 5,
United States Code, for each day during which the members is
engaged in the actual performance of the duties of the
Committee; and
``(2) while away from the home or regular place of business
of the member in the performance of services for the
Committee, be allowed travel expenses, including per diem in
lieu of subsistence, in the same manner as persons employed
intermittently in the Government service are allowed expenses
under section 5703(b) of title 5, United States Code.
``(f) Staff.--The Commission shall make available to the
Committee such staff as the Chair of the Committee determines
are necessary to carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the
Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, promptly issue a public
statement--
``(A) assessing the finding or recommendation of the
Committee; and
``(B) disclosing the action, if any, the Commission intends
to take with respect to the finding or recommendation.
``(h) Committee Findings.--Nothing in this section shall
require the Commission to agree to or act upon any finding or
recommendation of the Committee.
``(i) Nonapplicability of FACA.--Chapter 10 of part I of
title 5, United States Code, shall not apply to the Committee
and its activities.''.

TITLE IV--PROTECTING U.S. BUSINESS SOVEREIGNTY

SEC. 1401. STUDY ON DETRIMENTAL IMPACT OF THE DIRECTIVE ON
CORPORATE SUSTAINABILITY DUE DILIGENCE AND
CORPORATE SUSTAINABILITY REPORTING DIRECTIVE.

(a) Study.--The Securities and Exchange Commission shall
conduct a study to examine and evaluate--
(1) the detrimental impact and potential detrimental impact
of each of the Directives on--
(A) United States companies, consumers, and investors; and
(B) the economy of the United States;
(2) the extent to which each of the Directives aligns with
international conventions and declarations on human rights
and environmental obligations; and
(3) the legal basis for the extraterritorial reach of each
of the Directives.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Securities and Exchange Commission
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate, the Committee on Financial Services of
the House of Representatives, the Secretary of State, the
Secretary of Commerce, and the United States Trade
Representative a report that includes--
(1) the results of the study conducted under this section;
and
(2) recommendations for policymakers and relevant
stakeholders on potential mitigating measures, alternative
approaches, or modifications to each of the Directives that
would address any concerns identified in the study.
(c) Access to Information.--The Securities and Exchange
Commission may request from private entities such relevant
data and information as the Securities and Exchange
Commission determines necessary to carry out the study
required under this section and such private entities shall
provide such requested data and information to the Securities
and Exchange Commission.
(d) Directives Defined.--In this section the term
``Directives'' means--
(1) the proposed directive entitled ``Corporate
Sustainability Due Diligence'' adopted by the European
Commission on February 23, 2022; and
(2) the Corporate Sustainability Reporting Directive of the
European Commission effective January 5, 2023.

DIVISION B--BUSINESSES OVER ACTIVISTS ACT

SEC. 2001. SHORT TITLE.

This division may be cited as the ``Businesses Over
Activists Act''.

SEC. 2002. LIMITATION WITH RESPECT TO COMPELLING THE
INCLUSION OR DISCUSSION OF SHAREHOLDER
PROPOSALS.

Section 14(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78n(a)) is amended by adding at the end the following:
``(3) Limitation with respect to compelling inclusion or
discussion of shareholder proposals.--Except as provided in
paragraph (2), the Commission may not compel an issuer to
include in a proxy statement of the issuer--
``(A) any shareholder proposal; or
``(B) any discussion (either from the issuer or otherwise)
related to a shareholder proposal contained in the proxy
statement.
``(4) Rule of construction relating to state authority.--
Nothing in this Act or any other securities law shall be
construed to provide the Commission the authority to preempt
the State regulation of shareholder proposals or proxy or
consent solicitation materials.''.

DIVISION C--PROTECTING AMERICANS' RETIREMENT SAVINGS FROM POLITICS ACT

SEC. 3001. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This division may be cited as the
``Protecting Americans' Retirement Savings from Politics
Act''.
(b) Table of Contents.--The table of contents for this
division is as follows:

Sec. 3001. Short title; Table of contents.

TITLE I--PERFORMANCE OVER POLITICS

Sec. 3101. Exclusion of certain substantially similar shareholder
proposals.

TITLE II--NO EXPENSIVE, STIFLING GOVERNANCE

Sec. 3201. Exclusion of certain shareholder proposals.

TITLE III--EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS

Sec. 3301. Exclusion of certain ESG shareholder proposals.

TITLE IV--EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY
ISSUE

Sec. 3401. Exclusions available regardless of significant social policy
issue.

TITLE V--CORPORATE GOVERNANCE EXAMINATION

Sec. 3501. Study of certain issues with respect to shareholder
proposals, proxy advisory firms, and the proxy process.

TITLE VI--REGISTRATION OF PROXY ADVISORY FIRMS

Sec. 3601. Registration of proxy advisory firms.

TITLE VII--LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL
INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS

Sec. 3701. Liability for certain failures to disclose material
information or making of material misstatements.

TITLE VIII--DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION
FUNDS

Sec. 3801. Duties of investment advisors, asset managers, and pension
funds.

TITLE IX--PROTECTING AMERICANS' SAVINGS

Sec. 3901. Requirements related to proxy voting.

TITLE X--EMPOWERING SHAREHOLDERS

Sec. 3911. Proxy voting of passively managed funds.

TITLE XI--PROTECTING RETAIL INVESTORS' SAVINGS

TITLE I--PERFORMANCE OVER POLITICS

SEC. 3101. EXCLUSION OF CERTAIN SUBSTANTIALLY SIMILAR
SHAREHOLDER PROPOSALS.

The Securities and Exchange Commission shall revise the
resubmission requirements in section 240.14a-8(i)(12) of
title 17, Code of Federal Regulations, to provide that a
shareholder proposal may be excluded by an issuer from its
proxy or consent solicitation material for a meeting of the
shareholders of such issuer if the shareholder proposal
addresses substantially the same subject matter as a
proposal, or proposals, previously included in the proxy or
consent solicitation material for a meeting of the
shareholders of such issuer--
(1) for a meeting of the shareholders conducted in the
preceding 5 calendar years; and
(2) if the most recent vote--
(A) occurred in the preceding 3 calendar years; and
(B)(i) if voted on once during such 5-year period, received
less than 10 percent of the votes cast;
(ii) if voted on twice during such 5-year period, received
less than 20 percent of the votes cast; or
(iii) if voted on three or more times during such 5-year
period, received less than 40 percent of the votes cast.

TITLE II--NO EXPENSIVE, STIFLING GOVERNANCE

SEC. 3201. EXCLUSION OF CERTAIN SHAREHOLDER PROPOSALS.

(a) Exclusion of Certain Shareholder Proposals.--A
shareholder proposal submitted to an issuer pursuant to
section 240.14a-8 of title 17, Code of Federal Regulations,
may be excluded by an issuer from its proxy or consent
solicitation material for a meeting of the shareholders of
such issuer if the shareholder proposal--
(1) has been substantially implemented by the issuer by
implementing policies, practices, or procedures that compare
favorably with the guidelines of the proposal and address the
proposal's underlying concerns; or
(2) substantially duplicates by having the same principal
thrust or principal focus as another proposal previously
submitted to the issuer by another proponent that will be
included in such material.
(b) Nullification of Proposed Rule.--The Securities and
Exchange Commission may not finalize or apply the positions
contained in the proposed rule entitled ``Substantial
Implementation, Duplication, and Resubmission of Shareholder
Proposals under Exchange Act Rule 14a-8'' (87 Fed. Reg.
45052), issue any substantially similar rule, or apply any
substantially similar rule, including with respect to a no-
action or other interpretive request.

TITLE III--EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS

SEC. 3301. EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS.

A shareholder proposal submitted to an issuer pursuant to
section 240.14a-8 of title 17, Code of Federal Regulations,
may be excluded by an issuer from its proxy or consent
solicitation material for a meeting of the shareholders of
such issuer if the subject matter of the shareholder proposal
is environmental, social, or political (or a similar subject
matter).

[[Page H5480]]

TITLE IV--EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY
ISSUE

SEC. 3401. EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT
SOCIAL POLICY ISSUE.

An issuer may exclude a shareholder proposal pursuant to
section 240.14a-8(i) of title 17, Code of Federal
Regulations, without regard to whether such shareholder
proposal relates to a significant social policy issue.

TITLE V--CORPORATE GOVERNANCE EXAMINATION

SEC. 3501. STUDY OF CERTAIN ISSUES WITH RESPECT TO
SHAREHOLDER PROPOSALS, PROXY ADVISORY FIRMS,
AND THE PROXY PROCESS.

Section 4(j) of the Securities Exchange Act of 1934 (15
U.S.C. 78d(j)) is amended by adding at the end the following:
``(10) Study of certain issues with respect to shareholder
proposals, proxy advisory firms, and the proxy process.--
``(A) In general.--Not later than 180 days after the date
of the enactment of this paragraph, and every 5 years
thereafter, the Commission shall conduct a comprehensive
study on shareholder proposals, proxy advisory firms, and the
proxy process.
``(B) Scope of study.--The studies required under
subparagraph (A) shall cover--
``(i) the previous 10 years, with respect to the initial
study; and
``(ii) the previous 5 years, with respect to each other
study.
``(C) Contents.--Each study required under subparagraph (A)
shall address the following issues:
``(i) The financial and other incentives and obligations of
all groups involved in the proxy process.
``(ii) A consideration of whether financial and other
incentives have created a process that no longer serves the
economic interests of long-term retail investors.
``(iii) An analysis of whether regulations and financial
incentives have created and protected the outsized influence
of proxy advisors or a duopoly in proxy advice, and if so,
what are the benefits and costs of that outsized influence or
duopoly.
``(iv) The costs incurred by issuers in responding to
politically-, environmentally-, or socially-motivated
shareholder proposals.
``(v) An assessment, including a cost-benefit analysis, of
the adequacy of the current submission thresholds in Rule
14a-8 (17 CFR 240.14a-8) to ensure that shareholder
proponents have demonstrated a meaningful economic stake in a
company, which is appropriate to effectively serve markets
and shareholders at large.
``(vi) An examination of the extent to which the
politicization of the shareholder proposal process is
increasing the operating costs of public companies.
``(vii) An analysis of the impact that shareholder
proposals have on discouraging private companies from going
public.
``(viii) An evaluation of the risk that shareholder
proposals may contribute to the balkanization of the U.S.
economy over time.
``(ix) A thorough assessment of the economic analysis, if
any, conducted by proxy advisory firms and institutional
shareholders when recommending or voting in favor of
shareholder proposals.
``(x) A review of the extent to which institutional
investors, who owe fiduciary duties, rely on proxy advisory
firm recommendations.
``(xi) An assessment of whether, in light of their
significant influence on corporate actions and vote outcomes,
proxy advisors are subject to sufficient and effective
regulation to ensure that their policies and recommendations
are accurate, free of conflicts, and benefit the economic
best interest of shareholders at large.
``(D) Report.--At the completion of each study required
under subparagraph (A) the Commission shall issue a report to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives that includes the results of the study.''.

TITLE VI--REGISTRATION OF PROXY ADVISORY FIRMS

SEC. 3601. REGISTRATION OF PROXY ADVISORY FIRMS.

(a) Amendment.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 15G
the following new section:

``SEC. 15H. REGISTRATION OF PROXY ADVISORY FIRMS.

``(a) Conduct Prohibited.--It shall be unlawful for a proxy
advisory firm to make use of the mails or any means or
instrumentality of interstate commerce to provide proxy
voting advice, research, analysis, ratings or recommendations
to any client, unless such proxy advisory firm is registered
under this section.
``(b) Registration Procedures.--
``(1) Application for registration.--
``(A) In general.--A proxy advisory firm shall file with
the Commission an application for registration, in such form
as the Commission shall require, by rule, and containing the
information described in subparagraph (B).
``(B) Required information.--An application for
registration under this section shall contain--
``(i) a certification that the applicant is able to
consistently provide proxy advice based on accurate
information;
``(ii) with respect to clients of the applicant that vote
shares held on behalf of shareholders, a certification that
the applicant--

``(I) will provide proxy voting advice only in the best
economic interest of those shareholders; and
``(II) has the requisite expertise to ensure that voting
recommendations are in the best economic interest of those
shareholders;

``(iii) information on the procedures and methodologies
that the applicant uses to ensure that proxy voting
recommendations are in the best economic interest of the
ultimate shareholders;
``(iv) information on the organizational structure of the
applicant;
``(v) an explanation of whether or not the applicant has in
effect a code of ethics, and if not, the reasons therefor;
``(vi) a description of any potential or actual conflict of
interest relating to the provision of proxy advisory
services, including those arising out of or resulting from
the ownership structure of the applicant or the provision of
other services by the applicant or any person associated with
the applicant;
``(vii) the policies and procedures in place to publicly
disclose and manage conflicts of interest under subsection
(f);
``(viii) information related to the professional and
academic qualifications of staff tasked with providing proxy
advisory services; and
``(ix) any other information and documents concerning the
applicant and any person associated with such applicant as
the Commission, by rule, may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.
``(2) Review of application.--
``(A) Initial determination.--Not later than 90 days after
the date on which the application for registration is filed
with the Commission under paragraph (1) (or within such
longer period as to which the applicant consents) the
Commission shall--
``(i) by order, grant registration; or
``(ii) institute proceedings to determine whether
registration should be denied.
``(B) Conduct of proceedings.--
``(i) Content.--Proceedings referred to in subparagraph
(A)(ii) shall--

``(I) include notice of the grounds for denial under
consideration and an opportunity for hearing; and
``(II) be concluded not later than 120 days after the date
on which the application for registration is filed with the
Commission under paragraph (1).

``(ii) Determination.--At the conclusion of such
proceedings, the Commission, by order, shall grant or deny
such application for registration.
``(iii) Extension authorized.--The Commission may extend
the time for conclusion of such proceedings for not longer
than 90 days, if the Commission finds good cause for such
extension and publishes its reasons for so finding, or for
such longer period as to which the applicant consents.
``(C) Grounds for decision.--The Commission shall grant
registration under this subsection--
``(i) if the Commission finds that the requirements of this
section are satisfied; and
``(ii) unless the Commission finds (in which case the
Commission shall deny such registration) that--

``(I) the applicant has failed to certify to the
Commission's satisfaction that it is able to consistently
provide proxy advice based on accurate information and to
materially comply with the procedures and methodologies
disclosed under paragraph (1)(B) and with subsections (f) and
(g); or
``(II) if the applicant were so registered, its
registration would be subject to suspension or revocation
under subsection (d).

``(3) Public availability of information.--Subject to
section 24, the Commission shall make the information and
documents submitted to the Commission by a proxy advisory
firm in its completed application for registration, or in any
amendment submitted under paragraph (1) or (2) of subsection
(c), publicly available on the Commission's website, or
through another comparable, readily accessible means.
``(c) Update of Registration.--
``(1) Update.--Each registered proxy advisory firm shall
promptly amend and update its application for registration
under this section if any information or document provided
therein becomes materially inaccurate, except that a
registered proxy advisory firm is not required to amend the
information required to be filed under subsection
(b)(1)(B)(i) by filing information under this paragraph, but
shall amend such information in the annual submission of the
organization under paragraph (2) of this subsection.
``(2) Certification.--Not later than 90 calendar days after
the end of each calendar year, each registered proxy advisory
firm shall file with the Commission an amendment to its
registration, in such form as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest
or for the protection of investors--
``(A) certifying that the information and documents in the
application for registration of such registered proxy
advisory firm continue to be accurate in all material
respects; and
``(B) listing any material change that occurred to such
information or documents during the previous calendar year.
``(d) Censure, Denial, or Suspension of Registration;
Notice and Hearing.--The Commission, by order, shall censure,
place limitations on the activities, functions, or operations
of, suspend for a period not exceeding 12 months, or revoke
the registration of any registered proxy advisory firm if the
Commission finds, on the record after notice and opportunity
for hearing, that such censure, placing of limitations,
suspension, or revocation is necessary for the protection of
investors and in the public interest and that such registered
proxy advisory firm, or any person associated with such an
organization, whether prior to or subsequent to becoming so
associated--
``(1) has committed or omitted any act, or is subject to an
order or finding, enumerated in subparagraph (A), (D), (E),
(H), or (G) of section 15(b)(4), has been convicted of any
offense

[[Page H5481]]

specified in section 15(b)(4)(B), or is enjoined from any
action, conduct, or practice specified in subparagraph (C) of
section 15(b)(4), during the 10-year period preceding the
date of commencement of the proceedings under this
subsection, or at any time thereafter;
``(2) has been convicted during the 10-year period
preceding the date on which an application for registration
is filed with the Commission under this section, or at any
time thereafter, of--
``(A) any crime that is punishable by imprisonment for 1 or
more years, and that is not described in section 15(b)(4)(B);
or
``(B) a substantially equivalent crime by a foreign court
of competent jurisdiction;
``(3) is subject to any order of the Commission barring or
suspending the right of the person to be associated with a
registered proxy advisory firm;
``(4) fails to furnish the certifications required under
subsections (b)(2)(C)(ii)(I) and (c)(2);
``(5) has engaged in one or more prohibited acts enumerated
in paragraph (1);
``(6) fails to maintain adequate financial and managerial
resources to consistently offer advisory services to clients
that vote shares held on behalf of shareholders consistent
with the best economic interest of those shareholders,
including by failing to comply with subsections (f) or (g);
``(7) fails to maintain adequate expertise to ensure that
proxy advisory services for clients that vote shares held on
behalf of shareholders are tied to the best economic interest
of those shareholders; or
``(8) engages in a prohibited act enumerated in subsection
(j).
``(e) Termination of Registration.--
``(1) Voluntary withdrawal.--A registered proxy advisory
firm may, upon such terms and conditions as the Commission
may establish as necessary in the public interest or for the
protection of investors, which terms and conditions shall
include at a minimum that the registered proxy advisory firm
will no longer conduct such activities as to bring it within
the definition of proxy advisory firm in section 3(a)(82),
withdraw from registration by filing a written notice of
withdrawal to the Commission.
``(2) Commission authority.--In addition to any other
authority of the Commission under this title, if the
Commission finds that a registered proxy advisory firm is no
longer in existence or has ceased to do business as a proxy
advisory firm, the Commission, by order, shall cancel the
registration under this section of such registered proxy
advisory firm.
``(f) Management of Conflicts of Interest.--
``(1) Organization policies and procedures.--Each
registered proxy advisory firm shall establish, maintain, and
enforce written policies and procedures reasonably designed,
taking into consideration the nature of the business of such
registered proxy advisory firm and associated persons, to
publicly disclose and manage any conflicts of interest that
arise or would reasonably be expected to arise from such
business.
``(2) Commission authority.--The Commission shall, within
one year of the date of enactment of this section, issue
final rules to prohibit, or require the management and public
disclosure of, any conflicts of interest relating to the
offering of proxy advisory services by a registered proxy
advisory firm, including, without limitation, conflicts of
interest relating to--
``(A) the manner in which a registered proxy advisory firm
is compensated by the client, any affiliate of the client, or
any other person for providing proxy advisory services;
``(B) business relationships, ownership interests, or any
other financial or personal interests between a registered
proxy advisory firm, or any person associated with such
registered proxy advisory firm, and any client, or any
affiliate of such client;
``(C) the formulation of proxy voting policies;
``(D) the execution, or assistance with the execution, of
proxy votes if such votes are based upon recommendations made
by the proxy advisory firm in which a person other than the
issuer is a proponent; and
``(E) any other potential conflict of interest, as the
Commission deems necessary or appropriate in the public
interest or for the protection of investors.
``(3) Disclosure on factors influencing recommendations.--
Each registered proxy advisory firm shall annually disclose
to the Commission and make publicly available the economic
and other factors that a reasonable investor would expect to
influence the recommendations of such proxy advisory firm,
including the ownership composition of such proxy advisory
firm and any meetings with, or feedback received from,
outside entities.
``(g) Reliability of Proxy Advisory Firm Services.--
``(1) In general.--Each registered proxy advisory firm
shall--
``(A) have staff and other resources sufficient to produce
proxy voting recommendations that are based on accurate and
current information and designed for clients that vote shares
held on behalf of shareholders to advance the best economic
interest of those shareholders;
``(B) implement procedures that permit issuers that are the
subject of proxy voting recommendations--
``(i) access in a reasonable time to data and information
used to make recommendations; and
``(ii) a reasonable opportunity to provide meaningful
comment and corrections to such data and information,
including the opportunity to present (in person or
telephonically) details to the person responsible for
developing such data and information prior to the publication
of proxy voting recommendations to clients;
``(C) employ an ombudsman to receive complaints about the
accuracy of information used in making recommendations from
the companies that are the subject of the proxy advisory
firm's voting recommendations and seek to resolve those
complaints in a timely fashion and prior to the publication
of proxy voting recommendations to clients; and
``(D) if the ombudsman is unable to resolve a complaint to
a company's satisfaction prior to the publication of proxy
voting recommendations to clients, include in the final
report of the firm to clients--
``(i) a statement detailing the company's complaints, if
requested in writing by the company; and
``(ii) a statement explaining why the proxy voting
recommendation is in the best economic interest of
shareholders.
``(2) Definitions.--In this subsection:
``(A) Data and information used to make recommendations.--
The term `data and information used to make voting
recommendations'--
``(i) means the financial, operational, or descriptive data
and information on an issuer used by proxy advisory firms and
any contextual or substantive analysis impacting the
recommendation; and
``(ii) does not include the entirety of the proxy advisory
firm's final report to its clients.
``(B) Reasonable time.--The term `reasonable time'--
``(i) means not less than 1 week before the publication of
proxy voting recommendations for clients; and
``(ii) shall not otherwise interfere with a proxy advisory
firm's ability to provide its clients with timely access to
accurate proxy voting research, analysis, or recommendations.
``(h) Private Right of Action With Respect to Illegal
Recommendations.--Any proxy advisory firm that endorses a
proposal that is not supported by the issuer but is approved
and subsequently found by a court of competent jurisdiction
to violate State or Federal law shall be liable to the
applicable issuer for the costs associated with the approval
of such proposal, including implementation costs and any
penalties incurred by the issuer.
``(i) Designation of Compliance Officer.--Each registered
proxy advisory firm shall designate an individual who reports
directly to senior management as responsible for
administering the policies and procedures that are required
to be established pursuant to subsections (f) and (g), and
for ensuring compliance with the securities laws and the
rules and regulations thereunder, including those promulgated
by the Commission pursuant to this section.
``(j) Prohibited Conduct.--
``(1) Prohibited acts and practices.--Not later than one
year after the date of enactment of this section, the
Commission shall issue final rules to prohibit any act or
practice relating to the offering of proxy advisory services
by a registered proxy advisory firm that the Commission
determines to be unfair, coercive, or abusive, including any
act or practice relating to--
``(A) advisory or consulting services (offered directly or
indirectly, including through an affiliate) related to
corporate governance issues; or
``(B) modifying a voting recommendation or otherwise
departing from its adopted systematic procedures and
methodologies in the provision of proxy advisory services,
based on whether an issuer, or affiliate thereof, subscribes
or will subscribe to other services or product of the
registered proxy advisory firm or any person associated with
such organization.
``(2) Rule of construction.--Nothing in paragraph (1), or
in any rules or regulations adopted thereunder, may be
construed to modify, impair, or supersede the operation of
any of the antitrust laws (as defined in the first section of
the Clayton Act, except that such term includes section 5 of
the Federal Trade Commission Act, to the extent that such
section 5 applies to unfair methods of competition).
``(k) Statements of Financial Condition.--Each registered
proxy advisory firm shall, on a confidential basis, file with
the Commission, at intervals determined by the Commission,
such financial statements, certified (if required by the
rules or regulations of the Commission) by an independent
public auditor, and information concerning its financial
condition, as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the
protection of investors.
``(l) Annual Report.--
``(1) In general.--Each registered proxy advisory firm
shall, not later than 90 calendar days after the end of each
fiscal year, file with the Commission and make publicly
available an annual report in such form as the Commission, by
rule, may prescribe as necessary or appropriate in the public
interest or for the protection of investors.
``(2) Contents.--Each annual report required under
paragraph (1) shall include, at a minimum, disclosure by the
registered proxy advisory firm of the following:
``(A) A list of shareholder proposals the staff of the
registered proxy advisory firm reviewed in the prior fiscal
year.
``(B) A list of the recommendations made in the prior
fiscal year.
``(C) The economic analysis conducted to determine that
final recommendations provided in the prior fiscal year
(other than recommendations relating to an issuer-sponsored
proposal or recommendations consistent with that of a board
of directors composed of a majority of independent directors)
delivered to clients that vote shares held on behalf of
shareholders were in the best economic interest of those
shareholders.
``(D) The staff who reviewed and made recommendations on
such proposals in the prior fiscal year.
``(E) The qualifications of such staff to ensure that each
of the recommendations for clients that vote shares held on
behalf of shareholders

[[Page H5482]]

were tied to the best economic interest of those
shareholders.
``(F) The recommendations made in the prior fiscal year
where the proponent of such recommendation was a client of or
received services from the proxy advisory firm.
``(G) A certification by the chief executive officer, chief
financial officer, and the primary executive responsible for
overseeing the compilation and dissemination of proxy voting
advice that the final recommendations (other than
recommendations relating to an issuer-sponsored proposal or
recommendations consistent with that of a board of directors
composed of a majority of independent directors) delivered to
clients that vote shares held on behalf of shareholders in
the last fiscal year--
``(i) were based on internal controls and procedures that
are designed to ensure accurate information and that such
internal controls and procedures are effective;
``(ii) do not violate applicable State or Federal law; and
``(iii) were based on the best economic interest of those
shareholders.
``(H) The economic and other factors that a reasonable
investor would expect to influence the recommendations of
such proxy advisory firm, including the ownership composition
of such proxy advisory firm.
``(m) Transparent Policies.--Each registered proxy advisory
firm shall file with the Commission and make publicly
available its methodology for the formulation of proxy voting
policies and voting recommendations to clients that vote
shares held on behalf of shareholders and how that
methodology ensures that the firm's voting recommendations
are in the best economic interest of those shareholders.
``(n) Rules of Construction.--Registration under and
compliance with this section does not constitute a waiver of,
or otherwise diminish, any right, privilege, or defense that
a registered proxy advisory firm may otherwise have under any
provision of State or Federal law, including any rule,
regulation, or order thereunder.
``(o) Regulations.--
``(1) New provisions.--Such rules and regulations as are
required by this section or are otherwise necessary to carry
out this section, including the application form required
under subsection (a)--
``(A) shall be issued by the Commission, not later than 180
days after the date of enactment of this section; and
``(B) shall become effective not later than 1 year after
the date of enactment of this section.
``(2) Review of existing regulations.--Not later than 270
days after the date of enactment of this section, the
Commission shall--
``(A) review its existing rules and regulations which
affect the operations of proxy advisory firms; and
``(B) amend or revise such rules and regulations in
accordance with the purposes of this section, and issue such
guidance as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.
``(p) Applicability.--This section, other than subsection
(n), which shall apply on the date of enactment of this
section, shall apply on the earlier of--
``(1) the date on which regulations are issued in final
form under subsection (o)(1); or
``(2) 270 days after the date of enactment of this section.
``(q) Best Economic Interest Defined.--In this section, the
term `best economic interest' means decisions that seek to
maximize investment returns over a time horizon consistent
with the investment objectives and risk management profile of
the fund in which the shareholders are invested.''.
(b) Conforming Amendment.--Section 17(a)(1) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q(a)(1)) is
amended by inserting ``proxy advisory firm,'' after
``nationally recognized statistical rating organization,''.
(c) Proxy Advisory Firm Definitions.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is
amended--
(1) by redesignating the second paragraph (80) (relating to
funding portal) as paragraph (81); and
(2) by adding at the end the following:
``(82) Proxy advisory firm.--The term `proxy advisory
firm'--
``(A) means any person who is primarily engaged in the
business of providing proxy voting advice, research,
analysis, ratings, or recommendations to clients, which
conduct constitutes a solicitation within the meaning of
section 14; and
``(B) does not include any person that is exempt under law
or regulation from the requirements otherwise applicable to
persons engaged in such a solicitation.
``(83) Person associated with a proxy advisory firm.--With
respect to a proxy advisory firm--
``(A) a person is `associated' with the proxy advisory firm
if the person is--
``(i) a partner, officer, or director of the proxy advisory
firm (or any person occupying a similar status or performing
similar functions);
``(ii) a person directly or indirectly controlling,
controlled by, or under common control with the proxy
advisory firm;
``(iii) an employee of the proxy advisory firm; or
``(iv) a person the Commission determines by rule is
controlled by the proxy advisory firm; and
``(B) a person is not `associated' with the proxy advisory
firm if the person only performs clerical or ministerial
functions with respect to a proxy advisory firm.''.

TITLE VII--LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL
INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS

SECTION 3701. LIABILITY FOR CERTAIN FAILURES TO DISCLOSE
MATERIAL INFORMATION OR MAKING OF MATERIAL
MISSTATEMENTS.

Section 14 of the Securities Exchange Act of 1934 (15
U.S.C. 78n) is amended by adding at the end the following:
``(l) False or Misleading Statements.--For purposes of
section 18, the failure to disclose material information
(such as a proxy voting advice business's methodology,
sources of information, or conflicts of interest) or the
making of a material misstatement regarding proxy voting
advice that makes a recommendation to a security holder as to
the security holder's vote, consent, or authorization on a
specific matter for which security holder approval is
solicited, and that is furnished by a person that markets the
person's expertise as a provider of such proxy voting advice
separately from other forms of investment advice, and sells
such proxy voting advice for a fee, shall be considered to be
false or misleading with respect to a material fact.''.

TITLE VIII--DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION
FUNDS

SEC. 3801. DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND
PENSION FUNDS.

Section 13(f) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(f)) is amended by adding at the end the following:
``(7) Disclosures by institutional investment managers in
connection with proxy advisory firms.--
``(A) In general.--Every institutional investment manager
which uses the mails, or any means or instrumentality of
interstate commerce in the course of its business as an
institutional investment manager, which engages a proxy
advisory firm, and which exercises voting power with respect
to accounts holding equity securities of a class described in
subsection (d)(1) or otherwise becomes or is deemed to become
a beneficial owner of any security of a class described in
subsection (d)(1) upon the purchase or sale of a security-
based swap that the Commission may define by rule, shall file
an annual report with the Commission containing--
``(i) an explanation of how the institutional investment
manager voted with respect to each shareholder proposal;
``(ii) the percentage of votes cast on shareholder
proposals that were consistent with proxy advisory firm
recommendations, for each proxy advisory firm retained by the
institutional investment manager;
``(iii) an explanation of--

``(I) how the institutional investment manager took into
consideration proxy advisory firm recommendations in making
voting decisions, including the degree to which the
institutional investment manager used those recommendations
in making voting decisions;
``(II) how often the institutional investment manager voted
consistent with a recommendation made by a proxy advisory
firm, expressed as a percentage;
``(III) how such votes are reconciled with the fiduciary
duty of the institutional investment manager to vote in the
best economic interests of shareholders;
``(IV) how frequently votes were changed when an error
occurred or due to new information from issuers; and
``(V) the degree to which investment professionals of the
institutional investment manager were involved in proxy
voting decisions; and

``(iv) a certification that the voting decisions of the
institutional investment manager were based solely on the
best economic interest of the shareholders on behalf of whom
the institutional investment manager holds shares.
``(B) Requirements for larger institutional investment
managers.--Every institutional investment manager described
in subparagraph (A) that has assets under management with an
aggregate fair market value on the last trading day in any of
the preceding twelve months of at least $100,000,000,000
shall--
``(i) in any materials provided to customers and related to
customers voting their shares, clarify that shareholders are
not required to vote on every proposal;
``(ii) with respect to each shareholder proposal for which
the institutional investment manager votes (other than votes
consistent with the recommendation of a board of directors
composed of a majority of independent directors) perform an
economic analysis before making such vote, to determine that
the vote is in the best economic interest of the shareholders
on behalf of whom the institutional investment manager holds
shares; and
``(iii) include each economic analysis required under
clause (ii) in the annual report required under subparagraph
(A).
``(C) Best economic interest defined.--In this paragraph,
the term `best economic interest' means decisions that seek
to maximize investment returns over a time horizon consistent
with the investment objectives and risk management profile of
the fund in which shareholders are invested.''.

TITLE IX--PROTECTING AMERICANS' SAVINGS

SEC. 3901. REQUIREMENTS RELATED TO PROXY VOTING.

Section 14 of the Securities Exchange Act of 1934 (15
U.S.C. 78n), as amended by section 3701, is further amended
by adding at the end the following:
``(m) Prohibition on Robovoting.--
``(1) In general.--The Commission shall issue final rules
prohibiting the use of robovoting with respect to votes
related to proxy or consent solicitation materials.
``(2) Robovoting defined.--In this subsection, the term
`robovoting' means the practice of automatically voting in a
manner consistent with the recommendations of a proxy
advisory

[[Page H5483]]

firm or pre-populating votes on a proxy advisory firm's
electronic voting platform with the proxy advisory firm's
recommendations, in either case, without independent review
and analysis.
``(n) Prohibition on Outsourcing Voting Decisions by
Institutional Investors.--With respect to votes related to
proxy or consent solicitation materials, an institutional
investor may not outsource voting decisions to any person
other than an investment adviser or a broker or dealer that
is registered with the Commission and has a fiduciary or best
interest duty to the institutional investor.
``(o) No Requirement to Vote.--No person may be required to
cast votes related to proxy or consent solicitation
materials.
``(p) Proxy Advisory Firm Calculation of Votes.--With
respect to votes related to proxy or consent solicitation
materials with respect to an issuer, a proxy advisor firm
shall calculate the vote result consistent with the law of
the State in which the issuer is incorporated.''.

TITLE X--EMPOWERING SHAREHOLDERS

SEC. 3911. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

(a) In General.--The Investment Advisers Act of 1940 (15
U.S.C. 80b-1 et seq.) is amended by inserting after section
208 (15 U.S.C. 80b-8) the following:

``SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

``(a) Investment Adviser Proxy Voting.--
``(1) In general.--An investment adviser that holds
authority to vote a proxy solicited by an issuer pursuant to
section 14 of the Securities Exchange Act of 1934 (15 U.S.C.
78n) in connection with any vote of covered securities held
by a passively managed fund shall--
``(A) vote in accordance with the instructions of the
beneficial owner of a voting security of the passively
managed fund;
``(B) vote in accordance with the voting recommendations of
such issuer; or
``(C) abstain from voting but make reasonable efforts to be
considered present for purposes of establishing a quorum.
``(2) Exception.--Paragraph (1) shall not apply with
respect to a vote on a routine matter.
``(b) Safe Harbor.--With respect to a matter that is not a
routine matter, in the case of a vote described in subsection
(a)(1), an investment adviser shall not be liable to any
person under any law or regulation of the United States, any
constitution, law, or regulation of any State or political
subdivision thereof, or under any contract or other legally
enforceable agreement (including any arbitration agreement),
for any of the following:
``(1) Voting in accordance with the instructions of the
beneficial owner of a voting security of the passively
managed fund.
``(2) Not soliciting voting instructing from any person
under subsection (a)(1) with respect to such vote.
``(3) Voting in accordance with the voting recommendations
of an issuer pursuant to subparagraph (B) of such subsection.
``(4) Abstaining from voting in accordance with
subparagraph (C) of such subsection.
``(c) Foreign Private Issuers Exemption.--Subsection (a)
shall not apply with respect to a foreign private issuer if
the voting policy of the investment advisor with respect to
such foreign private issuers is fully and fairly disclosed to
beneficial owners, including the extent to which such policy
differs from the voting policy for non-exempt issuers.
``(d) Definitions.--In this section:
``(1) Covered security.--The term `covered security'--
``(A) means a voting security, as that term is defined in
section 2(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)), in which a qualified fund is invested; and
``(B) does not include any voting security (as defined in
subparagraph (A)) of an issuer registered with the Commission
as an investment company under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8).
``(2) Passively managed fund.--The term `passively managed
fund' means a qualified fund that--
``(A) is designed to track, or is derived from, an index of
securities or a portion of such an index;
``(B) discloses that the qualified fund is a passive index
fund; or
``(C) allocates not less than 60 percent of the total
assets of the qualified fund to an investment strategy that
is designed to track, or is derived from, an index of
securities or a portion of such an index fund.
``(3) Qualified fund.--The term `qualified fund' means--
``(A) an investment company, as that term is defined in
section 3 of the Investment Company Act of 1940 (15 U.S.C.
80a-3);
``(B) a private fund;
``(C) an eligible deferred compensation plan, as that term
is defined in section 457(b) of the Internal Revenue Code of
1986;
``(D) a trust, plan, account, or other entity described in
section 3(c)(11) of the Investment Company Act of 1940 (15
U.S.C. 80a-3(c)(11));
``(E) a plan maintained by an employer described in clause
(i), (ii), or (iii) of section 403(b)(1)(A) of the Internal
Revenue Code of 1986 to provide annuity contracts described
in section 403(b) of such Code;
``(F) a common trust fund, or similar fund, maintained by a
bank;
``(G) any fund established under section 8438(b)(1) of
title 5, United States Code; or
``(H) any separate managed account of a client of an
investment adviser.
``(4) Registrant.--The term `registrant' means an issuer of
covered securities.
``(5) Routine matter.--The term `routine matter'--
``(A) includes a proposal that relates to--
``(i) an election with respect to the board of directors of
the registrant;
``(ii) the compensation of management or the board of
directors of the registrant;
``(iii) the selection of auditors;
``(iv) a matter where there is a material conflict of
interest between or among the issuer, members of management,
members of the board of directors, or an affiliate of the
issuer;
``(v) declassification; or
``(vi) transactions that would transform the structure of
the registrant, including--

``(I) a merger or consolidation; and
``(II) the sale, lease, or exchange of all, or
substantially all, of the property and assets of a
registrant; and

``(B) does not include--
``(i) a proposal that is not submitted to a holder of
covered securities by means of a proxy statement comparable
to that described in section 240.14a-101 of title 17, Code of
Federal Regulations, or any successor regulation; or
``(ii) a proposal that is--

``(I) the subject of a counter-solicitation; or
``(II) part of a proposal made by a person other than the
applicable registrant.''.

(b) Effective Date.--The amendment made by this section
shall take effect on the first August 1 that occurs after the
date that is 2 years after the date of enactment of this Act.

TITLE XI--PROTECTING RETAIL INVESTORS' SAVINGS

SEC. 3921. BEST INTEREST BASED ON PECUNIARY FACTORS.

(a) In General.--Section 211(g) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-11(g)) is amended by adding at the
end the following:
``(3) Best interest based on pecuniary factors.--
``(A) In general.--For purposes of paragraph (1), the best
interest of a customer shall be determined using pecuniary
factors, which may not be subordinated to or limited by non-
pecuniary factors, unless the customer provides informed
consent, in writing, that such non-pecuniary factors be
considered.
``(B) Disclosure of pecuniary factors.--If a customer
provides a broker, dealer, or investment adviser with the
informed consent to consider non-pecuniary factors described
under subparagraph (A), the broker, dealer, or investment
adviser shall--
``(i) disclose the expected pecuniary effects to the
customer over a time period selected by the customer and not
to exceed three years; and
``(ii) at the end of the time period described in clause
(i), disclose, by comparison to a reasonably comparable index
or basket of securities selected by the customer, the actual
pecuniary effects of that time period, including all fees,
costs, and other expenses incurred to consider non-pecuniary
factors.
``(C) Pecuniary factor defined.--In this paragraph, the
term `pecuniary factor' means a factor that a fiduciary
prudently determines is expected to have a material effect on
the risk or return of an investment based on appropriate
investment horizons.''.
(b) Rulemaking.--Not later than the end of the 12-month
period beginning on the date of enactment of this Act, the
Securities and Exchange Commission shall revise or issue such
rules as may be necessary to implement the amendment made by
subsection (a).
(c) Applicability.--The amendment made by subsection (a)
shall apply to actions taken by a broker, dealer, or
investment adviser beginning on the date that is 12 months
after the date of enactment of this Act.

SEC. 3922. STUDY ON CLIMATE CHANGE AND OTHER ENVIRONMENTAL
DISCLOSURES IN MUNICIPAL BOND MARKET.

(a) In General.--The Securities and Exchange Commission
shall--
(1) conduct a study to determine the extent to which
issuers of municipal securities (as such term is defined in
section 3(a)(29) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(29)) make disclosures to investors regarding
climate change and other environmental matters; and
(2) solicit public comment with respect to such study.
(b) Contents.--The study required under subsection (a)
shall consider and analyze--
(1) the frequency with which disclosures described in
subsection (a)(1) are made;
(2) whether such disclosures made by issuers of municipal
securities in connection with offerings of securities align
with such disclosures made by issuers of municipal securities
in other contexts or to audiences other than investors;
(3) any voluntary or mandatory disclosure standards
observed by issuers of municipal securities in the course of
making such disclosures;
(4) the degree to which investors consider such disclosures
in connection with making an investment decision; and
(5) such other information as the Securities and Exchange
Commission determines appropriate.
(c) Report.--Not later than 1 year after the date of the
enactment of this Act, the Securities and Exchange Commission
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that includes--
(1) the results of the study required under this section;
(2) a detailed discussion of the financial risks to
investors from investments in municipal securities;
(3) whether such risks are adequately disclosed to
investors; and
(4) recommended regulatory or legislative steps to address
any concerns identified in the study.

SEC. 3923. STUDY ON SOLICITATION OF MUNICIPAL SECURITIES
BUSINESS.

(a) In General.--The Securities and Exchange Commission
shall--
(1) conduct a study on the effectiveness of each covered
rule in preventing the payment of

[[Page H5484]]

funds to elected officials or candidates for elected office
in exchange for the receipt of government business in
connection with the offer or sale of municipal securities;
and
(2) solicit public comment with respect to such study.
(b) Contents.--The study required under subsection (a)
shall consider and analyze--
(1) the effectiveness of each covered rule, including
whether each covered rule accomplishes the intended effect of
such covered rule and has any unintended adverse effects;
(2) the frequency and scope of enforcement actions
undertaken pursuant to each covered rule;
(3) the degree to which--
(A) persons subject to each covered rule--
(i) have in effect policies and procedures intended to
ensure compliance with each such covered rule; and
(ii) are disadvantaged from participating in the political
process generally and in relation to persons who solicit or
receive government business or government licenses, permits,
and approvals other than in connection with the offer or sale
of municipal securities; and
(B) other State and Federal laws and regulations impact the
solicitation of municipal securities business; and
(4) such other information as the Securities and Exchange
Commission determines appropriate.
(c) Report.--Not later than 1 year after the date of the
enactment of this Act, the Securities and Exchange Commission
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that includes--
(1) the results of the study required under this section;
(2) an analysis of the extent to which persons affiliated
with small businesses, as well as persons affiliated with
minority and women opened businesses, have been affected by
the covered rules; and
(3) recommended regulatory or legislative steps to address
any concerns identified in the study.
(d) Definitions.--In this section:
(1) Covered rule.--The term ``covered rule'' means--
(A) Rule G-38 of the Municipal Securities Rulemaking Board;
and
(B) Rule 206(4)-5 (17 CFR 275.206(4)-5).
(2) Municipal securities.--The term ``municipal
securities'' has the meaning given the term in section
3(a)(29) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(29)).

DIVISION D--AMERICAN FIRST ACT OF 2023

SEC. 4001. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This division may be cited as the
``American Financial Institution Regulatory Sovereignty and
Transparency Act of 2023'' or the ``American FIRST Act of
2023''.
(b) Table of Contents.--The table of contents for this
division is as follows:

Sec. 4001. Short title; Table of contents.

TITLE I--STOP EXECUTIVE CAPTURE OF BANKING REGULATORS

Sec. 4101. Report on the implementation of recommendations from the
FSOC Chairperson and Executive Orders.

TITLE II--ENSURING U.S. AUTHORITY OVER U.S. BANKING REGULATIONS

TITLE III--BANKING REGULATOR INTERNATIONAL REPORTING

Sec. 4301. Reporting on interactions with non-governmental
international organizations.

TITLE IV--SUPERVISION REFORM

Sec. 4401. Removal of the Vice Chairman for Supervision designation.

TITLE I--STOP EXECUTIVE CAPTURE OF BANKING REGULATORS

SEC. 4101. REPORT ON THE IMPLEMENTATION OF RECOMMENDATIONS
FROM THE FSOC CHAIRPERSON AND EXECUTIVE ORDERS.

(a) Board of Governors of the Federal Reserve System.--
Section 10 of the Federal Reserve Act (12 U.S.C. 247b), as
amended by section 4401(b), is further amended by adding at
the end the following:
``(11) Report on the implementation of recommendations from
the fsoc chairperson and executive orders.--The Board of
Governors of the Federal Reserve System may not implement a
non-binding recommendation made by the Chairperson of the
Financial Stability Oversight Council or contained in an
Executive Order unless the Board of Governors first provides
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with--
``(A) notice that the Board of Governors intends to
implement such recommendation;
``(B) a report containing the proposed implementation by
the Board of Governors and a justification for such
implementation; and
``(C) upon request, not later than the end of the 120-day
period beginning on the date of the notice under subparagraph
(A), testimony on such proposed implementation.''.
(b) Office of the Comptroller of the Currency.--Section 324
of the Revised Statutes of the United States (12 U.S.C. 1) is
amended by adding at the end the following:
``(c) Report on the Implementation of Recommendations From
the FSOC Chairperson and Executive Orders.--The Comptroller
of the Currency may not implement a non-binding
recommendation made by the Chairperson of the Financial
Stability Oversight Council or contained in an Executive
Order unless the Comptroller of the Currency first provides
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with--
``(1) notice that the Comptroller of the Currency intends
to implement such recommendation;
``(2) a report containing the proposed implementation by
the Comptroller of the Currency and a justification for such
implementation; and
``(3) upon request, not later than the end of the 120-day
period beginning on the date of the notice under paragraph
(1), testimony on such proposed implementation.''.
(c) Federal Deposit Insurance Corporation.--Section 2 of
the Federal Deposit Insurance Act (12 U.S.C. 1812) is amended
by inserting after subsection (f) the following:
``(g) Report on the Implementation of Recommendations From
the FSOC Chairperson and Executive Orders.--The Board of
Directors of the Corporation may not implement a non-binding
recommendation made by the Chairperson of the Financial
Stability Oversight Council or contained in an Executive
Order unless the Board of Directors first provides the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with--
``(1) notice that the Board of Directors intends to
implement such recommendation;
``(2) a report containing the proposed implementation by
the Board of Directors and a justification for such
implementation; and
``(3) upon request, not later than the end of the 120-day
period beginning on the date of the notice under paragraph
(1), testimony on such proposed implementation.''.
(d) National Credit Union Administration.--Section 102 of
the Federal Credit Union Act (12 U.S.C. 1752a) is amended by
adding at the end the following:
``(g) Report on the Implementation of Recommendations From
the FSOC Chairperson and Executive Orders.--The Board may not
implement a non-binding recommendation made by the
Chairperson of the Financial Stability Oversight Council or
contained in an Executive Order unless the Board first
provides the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with--
``(1) notice that the Board intends to implement such
recommendation;
``(2) a report containing the proposed implementation by
the Board and a justification for such implementation; and
``(3) upon request, not later than the end of the 120-day
period beginning on the date of the notice under paragraph
(1), testimony on such proposed implementation.''.
(e) Federal Housing Finance Agency.--Section 1311 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4511) is amended by adding at the end the following:
``(d) Report on the Implementation of Recommendations From
the FSOC Chairperson and Executive Orders.--The Director may
not implement a non-binding recommendation made by the
Chairperson of the Financial Stability Oversight Council or
contained in an Executive Order unless the Director first
provides the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with--
``(1) notice that the Director intends to implement such
recommendation;
``(2) a report containing the proposed implementation by
the Director and a justification for such implementation; and
``(3) upon request, not later than the end of the 120-day
period beginning on the date of the notice under paragraph
(1), testimony on such proposed implementation.''.

TITLE II--ENSURING U.S. AUTHORITY OVER U.S. BANKING REGULATIONS

SEC. 4201. REQUIREMENTS IN CONNECTION WITH RULEMAKINGS
IMPLEMENTING POLICIES OF NON-GOVERNMENTAL
INTERNATIONAL ORGANIZATIONS.

(a) Board of Governors of the Federal Reserve System.--
Section 10 of the Federal Reserve Act (12 U.S.C. 247b), as
amended by section 4101(a), is further amended by inserting
after paragraph (11) the following:
``(12) Requirements in connection with rulemakings
implementing policies of non-governmental international
organizations.--
``(A) In general.--The Board of Governors of the Federal
Reserve System may not propose or finalize a major covered
rule unless, not later than 120 days before issuing such a
proposed or final rule, the Board of Governors provides the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with notice, testimony, and a
detailed economic analysis with respect to the proposed or
final rule, including projections of economic costs, sectoral
effects, and effects on the availability of credit, the gross
domestic product, and employment.
``(B) Major covered rule defined.--In this paragraph, the
term `major covered rule' means a rule--
``(i) that the Board of Governors determines would have an
effect, in the aggregate, on the economy of the United States
of $10,000,000,000 or more during the 10-year period
beginning on the date the rule takes effect; and
``(ii) that is intended to align or conform with a
recommendation from a non-governmental international
organization (including the Financial Stability Board, the
Bank for International Settlements, the Network of Central

[[Page H5485]]

Banks and Supervisors for Greening the Financial System, and
the Basel Committee on Banking Supervision).''.
(b) Office of the Comptroller of the Currency.--Section 324
of the Revised Statutes of the United States (12 U.S.C. 1),
as amended by section 4101(b), is further amended by adding
at the end the following:
``(d) Requirements in Connection With Rulemakings
Implementing Policies of Non-governmental International
Organizations.--
``(1) In general.--The Comptroller of the Currency may not
propose or finalize a major covered rule unless, not later
than 120 days before issuing such a proposed or final rule,
the Comptroller of the Currency provides the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate with notice, testimony, and a detailed economic
analysis with respect to the proposed or final rule,
including projections of economic costs, sectoral effects,
and effects on the availability of credit, the gross domestic
product, and employment.
``(2) Major covered rule defined.--In this subsection, the
term `major covered rule' means a rule--
``(A) that the Comptroller of the Currency determines would
have an effect, in the aggregate, on the economy of the
United States of $10,000,000,000 or more during the 10-year
period beginning on the date the rule takes effect; and
``(B) that is intended to align or conform with a
recommendation from a non-governmental international
organization (including the Financial Stability Board, the
Bank for International Settlements, the Network of Central
Banks and Supervisors for Greening the Financial System, and
the Basel Committee on Banking Supervision).''.
(c) Federal Deposit Insurance Corporation.--Section 2 of
the Federal Deposit Insurance Act (12 U.S.C. 1812), as
amended by section 4101(c), is further amended by inserting
after subsection (g) the following:
``(h) Requirements in Connection With Rulemakings
Implementing Policies of Non-governmental International
Organizations.--
``(1) In general.--The Board of Directors of the
Corporation may not propose or finalize a major covered rule
unless, not later than 120 days before issuing such a
proposed or final rule, the Board of Directors provides the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with notice, testimony, and a
detailed economic analysis with respect to the proposed or
final rule, including projections of economic costs, sectoral
effects, and effects on the availability of credit, the gross
domestic product, and employment.
``(2) Major covered rule defined.--In this subsection, the
term `major covered rule' means a rule--
``(A) that the Board of Directors determines would have an
effect, in the aggregate, on the economy of the United States
of $10,000,000,000 or more during the 10-year period
beginning on the date the rule takes effect; and
``(B) that is intended to align or conform with a
recommendation from a non-governmental international
organization (including the Financial Stability Board, the
Bank for International Settlements, the Network of Central
Banks and Supervisors for Greening the Financial System, and
the Basel Committee on Banking Supervision).''.
(d) National Credit Union Administration.--Section 102 of
the Federal Credit Union Act (12 U.S.C. 1752a), as amended by
section 4101(d), is further amended by adding at the end the
following:
``(h) Requirements in Connection With Rulemakings
Implementing Policies of Non-governmental International
Organizations.--
``(1) In general.--The Board may not propose or finalize a
major covered rule unless, not later than 120 days before
issuing such a proposed or final rule, the Board provides the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with notice, testimony, and a
detailed economic analysis with respect to the proposed or
final rule, including projections of economic costs, sectoral
effects, and effects on the availability of credit, the gross
domestic product, and employment.
``(2) Major covered rule defined.--In this subsection, the
term `major covered rule' means a rule--
``(A) that the Board determines would have an effect, in
the aggregate, on the economy of the United States of
$10,000,000,000 or more during the 10-year period beginning
on the date the rule takes effect; and
``(B) that is intended to align or conform with a
recommendation from a non-governmental international
organization (including the Financial Stability Board, the
Bank for International Settlements, the Network of Central
Banks and Supervisors for Greening the Financial System, and
the Basel Committee on Banking Supervision).''.
(e) Federal Housing Finance Agency.--Section 1311 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4511), as amended by section 4101(e), is further amended by
adding at the end the following:
``(e) Requirements in Connection With Rulemakings
Implementing Policies of Non-governmental International
Organizations.--
``(1) In general.--The Director may not propose or finalize
a major covered rule unless, not later than 120 days before
issuing such a proposed or final rule, the Director provides
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate with notice, testimony, and a
detailed economic analysis with respect to the proposed or
final rule, including projections of economic costs, sectoral
effects, and effects on the availability of credit, the gross
domestic product, and employment.
``(2) Major covered rule defined.--In this subsection, the
term `major covered rule' means a rule--
``(A) that the Director determines would have an effect, in
the aggregate, on the economy of the United States of
$10,000,000,000 or more during the 10-year period beginning
on the date the rule takes effect; and
``(B) that is intended to align or conform with a
recommendation from a non-governmental international
organization (including the Financial Stability Board, the
Bank for International Settlements, the Network of Central
Banks and Supervisors for Greening the Financial System, and
the Basel Committee on Banking Supervision).''.

SEC. 4202. REPORT ON CERTAIN CLIMATE-RELATED INTERACTIONS
WITH COVERED INTERNATIONAL ORGANIZATIONS.

(a) In General.--A Federal banking regulator may not meet
with or otherwise engage with a covered international
organization on the topic of climate-related financial risk
during a calendar year unless the Federal banking regulator
has issued a report to the Committee on Financial Services of
the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate containing, for the
previous calendar year--
(1) a complete description of the activities of the covered
international organization in which the Federal banking
regulator participates (including any task force, committee,
or other organizational unit thereof); and
(2) a detailed accounting of the governmental and non-
governmental funding sources of the covered international
organization (including any task force, committee, or other
organizational unit thereof).
(b) Definitions.--In this section:
(1) Covered international organization.--The term ``covered
international organization'' means the Financial Stability
Board, the Bank for International Settlements, the Network of
Central Banks and Supervisors for Greening the Financial
System, and the Basel Committee on Banking Supervision.
(2) Federal banking regulator.--The term ``Federal banking
regulator'' means the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation,
the Federal Housing Finance Agency, the National Credit Union
Administration, and the Office of the Comptroller of the
Currency.

TITLE III--BANKING REGULATOR INTERNATIONAL REPORTING

SEC. 4301. REPORTING ON INTERACTIONS WITH NON-GOVERNMENTAL
INTERNATIONAL ORGANIZATIONS.

(a) Board of Governors of the Federal Reserve System.--
Section 10 of the Federal Reserve Act (12 U.S.C. 247b), as
amended by section 4201(a), is further amended by inserting
after paragraph (12) the following:
``(13) Reporting on interactions with non-governmental
international organizations.--With respect to interactions
between the Board of Governors of the Federal Reserve System
and a non-governmental international organization (including
the Financial Stability Board, the Bank for International
Settlements, the Network of Central Banks and Supervisors for
Greening the Financial System, and the Basel Committee on
Banking Supervision), the Board of Governors shall--
``(A) keep a complete record of all such interactions,
including minutes of all meetings and any recommendations
made during such interaction for international
standardization with respect to open-market policies and
operations, discount lending and operations (including
collateral policies), or supervisory policies and operations;
and
``(B) issue an annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate
containing--
``(i) all of the information recorded pursuant to
subparagraph (A) with respect to the previous year; and
``(ii) with respect to each non-governmental international
organization with which the Board of Governors had an
interaction in the previous year, a description of the
funding sources of the non-governmental international
organization.''.
(b) Office of the Comptroller of the Currency.--Section 324
of the Revised Statutes of the United States (12 U.S.C. 1),
as amended by section 4201(b), is further amended by adding
at the end the following:
``(e) Reporting on Interactions With Non-governmental
International Organizations.--With respect to interactions
between the Office of the Comptroller of the Currency and a
non-governmental international organization (including the
Financial Stability Board, the Bank for International
Settlements, the Network of Central Banks and Supervisors for
Greening the Financial System, and the Basel Committee on
Banking Supervision), the Comptroller of the Currency shall--
``(1) keep a complete record of all such interactions,
including minutes of all meetings and any recommendations
made during such interaction for international
standardization with respect to discount lending and
operations (including collateral policies) or supervisory
policies and operations; and
``(2) issue an annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate
containing--
``(A) all of the information recorded pursuant to paragraph
(1) with respect to the previous year; and

[[Page H5486]]

``(B) with respect to each non-governmental international
organization with which the Office of the Comptroller of the
Currency had an interaction in the previous year, a
description of the funding sources of the non-governmental
international organization.''.
(c) Federal Deposit Insurance Corporation.--Section 2 of
the Federal Deposit Insurance Act (12 U.S.C. 1812), as
amended by section 4201(c), is further amended is amended by
inserting after subsection (h) the following:
``(i) Reporting on Interactions With Non-governmental
International Organizations.--With respect to interactions
between the Federal Deposit Insurance Corporation and a non-
governmental international organization (including the
Financial Stability Board, the Bank for International
Settlements, the Network of Central Banks and Supervisors for
Greening the Financial System, and the Basel Committee on
Banking Supervision), the Board of Directors of the
Corporation shall--
``(1) keep a complete record of all such interactions,
including minutes of all meetings and any recommendations
made during such interaction for international
standardization with respect to discount lending and
operations (including collateral policies) or supervisory
policies and operations; and
``(2) issue an annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate
containing--
``(A) all of the information recorded pursuant to paragraph
(1) with respect to the previous year; and
``(B) with respect to each non-governmental international
organization with which the Corporation had an interaction in
the previous year, a description of the funding sources of
the non-governmental international organization.''.
(d) National Credit Union Administration.--Section 102 of
the Federal Credit Union Act (12 U.S.C. 1752a), as amended by
section 4201(d), is further amended by adding at the end the
following:
``(i) Reporting on Interactions With Non-governmental
International Organizations.--With respect to interactions
between the Administration and a non-governmental
international organization (including the Financial Stability
Board, the Bank for International Settlements, the Network of
Central Banks and Supervisors for Greening the Financial
System, and the Basel Committee on Banking Supervision), the
Board shall--
``(1) keep a complete record of all such interactions,
including minutes of all meetings and any recommendations
made during such interaction for international
standardization with respect to discount lending and
operations (including collateral policies) or supervisory
policies and operations; and
``(2) issue an annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate
containing--
``(A) all of the information recorded pursuant to paragraph
(1) with respect to the previous year; and
``(B) with respect to each non-governmental international
organization with which the Administration had an interaction
in the previous year, a description of the funding sources of
the non-governmental international organization.''.
(e) Federal Housing Finance Agency.--Section 1311 of the
Housing and Community Development Act of 1992 (12 U.S.C.
4511), as amended by section 4201(e), is further amended by
adding at the end the following:
``(f) Reporting on Interactions With Non-governmental
International Organizations.--With respect to interactions
between the Federal Housing Finance Agency and a non-
governmental international organization (including the
Financial Stability Board, the Bank for International
Settlements, the Network of Central Banks and Supervisors for
Greening the Financial System, and the Basel Committee on
Banking Supervision), the Director shall--
``(1) keep a complete record of all such interactions,
including minutes of all meetings and any recommendations
made during such interaction for international
standardization with respect to discount lending and
operations (including collateral policies) or supervisory
policies and operations; and
``(2) issue an annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate
containing--
``(A) all of the information recorded pursuant to paragraph
(1) with respect to the previous year; and
``(B) with respect to each non-governmental international
organization with which the Federal Housing Finance Agency
had an interaction in the previous year, a description of the
funding sources of the non-governmental international
organization.''.

TITLE IV--SUPERVISION REFORM

SEC. 4401. REMOVAL OF THE VICE CHAIRMAN FOR SUPERVISION
DESIGNATION.

(a) In General.--The second undesignated paragraph of
section 10 of the Federal Reserve Act (12 U.S.C. 242)
(relating to the Chairman and Vice Chairman of the Board) is
amended by striking ``and 2 shall be designated by the
President, by and with the advice and consent of the Senate,
to serve as Vice Chairmen of the Board, each for a term of 4
years, 1 of whom shall serve in the absence of the Chairman,
as provided in the fourth undesignated paragraph of this
section, and 1 of whom shall be designated Vice Chairman for
Supervision. The Vice Chairman for Supervision shall develop
policy recommendations for the Board regarding supervision
and regulation of depository institution holding companies
and other financial firms supervised by the Board, and shall
oversee the supervision and regulation of such firms.'' and
inserting ``and 1 shall be designated by the President, by
and with the consent of the Senate, to serve as Vice Chairman
of the Board for a term of 4 years.''.
(b) Conforming Amendment.--Section 10 of the Federal
Reserve Act (12 U.S.C. 241 et seq.) is amended by striking
paragraph (12).

DIVISION E--LIMITATION ON SEC RESERVE FUND

SEC. 5001. LIMITATION.

During fiscal years 2026 and 2027, registration fees
collected by the Securities and Exchange Commission shall not
be deposited in the Securities and Exchange Commission
Reserve Fund.

The SPEAKER pro tempore. The bill, as amended, shall be debatable for
1 hour equally divided and controlled by the chair and ranking minority
member of the Committee on Financial Services or their respective
designees.
The gentleman from Michigan (Mr. Huizenga) and the gentlewoman from
California (Ms. Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Huizenga).

General Leave

Mr. HUIZENGA. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and include extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today, we have an opportunity to put a stake in the
ground and ensure our financial system remains the envy of the world by
passing H.R. 4790, the Prioritizing Economic Growth Over Woke Policies
Act.
Under the Biden-Harris administration, agencies that have
traditionally been viewed as independent have been hijacked to push
through a partisan environmental, social, and governance, or ESG,
agenda.
Politically motivated, unelected bureaucrats are forcing these
leftwing political priorities--which, by the way, Mr. Speaker,
Democrats were unable to pass into law even when they had unified
control of Congress--on the American people through financial
regulation.
In other words, rogue Democrat-appointed regulators are forcing
companies to waste limited time and resources on ESG political mandates
that have little or nothing to do with a firm's financial performance.
These misguided ESG efforts don't benefit our banking system or our
capital markets. They certainly don't help consumers, workers, job
creators, everyday investors, or retirement savers.
That is why House Republicans are fighting back with the Prioritizing
Economic Growth Over Woke Policies Act. This bill is critical to combat
the risks woke ESG initiatives pose to the American people and our
financial system. It is a combination of four packages consisting of 20
different bills from the Committee on Financial Services, including my
GUARDRAIL Act, Congressman Steil's Protecting Americans' Retirement
Savings from Politics Act, Congressman Norman's Businesses Over
Activists Act, and Congressman Loudermilk's American FIRST Act.
I applaud my colleagues for their work and appreciate their
partnership. I also commend Chairman McHenry for his steadfast
leadership to ensure protecting Americans and our financial system from
out-of-bounds ESG mandates is a key priority for Republicans on the
Committee on Financial Services.
I want to underscore, Mr. Speaker, why H.R. 4790 is so desperately
needed. Under the Biden-Harris administration, rogue regulators are
weaponizing independent agencies to pursue the objective of the
political far left at the expense of our financial system and, more
importantly, everyday investors.
SEC Chair Gensler and progressive Democrats are abusing our
securities laws, overstepping their statutory authority, and redefining
the long-accepted ``materiality standard'' to accommodate the demands
of radical climate and social activists.
The materiality standard, which has been a pillar of American
securities laws for decades, requires public companies to disclose
information that has substantial likelihood to influence the financial
judgments of a reasonable investor. Those are the standards that have
been accepted, I believe, since 1976.

[[Page H5487]]

House Democrats have proposed legislation to require public companies
to disclose nonmaterial information, including all information related
to climate impact and emissions, human capital, and ``equity,''
whatever that might be, none of which have a substantial impact on a
given firm's financial performance. None of these proposals were
enacted into law.
More recently, Chair Gensler's rogue SEC has overstepped its
authority by pursuing rulemakings to mandate similar nonmaterial
disclosures. This includes finalizing the disastrous climate disclosure
rule earlier this year.
Let me be clear: If this information is material to a business'
financial performance and therefore affects the everyday investor, it
is already required to be disclosed under the materiality standard.
That is where my GUARDRAIL Act, a key pillar of this legislation we
are considering today, comes in. It protects U.S. capital markets and
the financial interests of everyday investors by rejecting this new,
prescriptive, and expansive notion of materiality by reining in SEC
overreach.
Specifically, the bill prevents rogue regulators from mandating the
disclosure of nonmaterial ESG information that would overwhelm, not
inform, everyday investors, also known as reasonable investors.
At the same time, H.R. 4790 holds large asset managers and the proxy
advisory duopoly of ISS and Glass Lewis accountable. These firms are
abusing their outsized market influence to force leftwing political
views on public companies, rather than aligning their shareholder
voting with the financial interests of investors and economic goals.
The Prioritizing Economic Growth Over Woke Policies Act returns power
to everyday investors and retirement savers from these unaccountable
third parties. Additionally, the bill would require the SEC's
shareholder proposal process to stop progressive activists from
hijacking the proxy process to inject woke ESG initiatives into
corporate boardrooms.
Now, Mr. Speaker, it actually would stop all left, right, or center
activists' proposals from being introduced. That is a good thing for
everyone. This will allow executives and directors to focus on creating
shareholder value--by the way, their legal responsibility--and
benefiting retirement savers and bolstering economic growth.

Finally, this bill would stop the alliance of leftwing activists,
unaccountable global governance organizations, and politicized Biden-
Harris regulators from weaponizing the U.S. banking regulatory
framework to inject radical ESG initiatives to the detriment of
consumers and American competitiveness.
With the Prioritizing Economic Growth Over Woke Policies Act, House
Republicans are taking action to protect the financial system, workers,
job creators, and everyday investors from radical ESG initiatives that
put leftwing political goals above American prosperity.
Mr. Speaker, I urge my colleagues to support H.R. 4790, and I reserve
the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we are on the brink of yet another government shutdown
brought to you by MAGA Republicans. I have lost track of how many times
this has happened in this Congress. Frankly, I and the rest of America
are just tired. We are exhausted.
There are real consequences when the government shuts down. It harms
our national security. It harms our economy. It harms servicemembers,
veterans, retirees, and vulnerable communities.
Instead of working to prevent a shutdown, we are debating a bill that
seeks to divide America with fake culture wars that are really about
denying the real dangers posed by climate change and denying the fact
that our country's rich diversity is one of our greatest resources.
This bill, H.R. 4790, which I am calling the promoting MAGA
priorities over economic growth act, is straight out of the Republicans
Project 2025 playbook. It would restrict voting rights for investors,
ban information that MAGA Republicans don't agree with, and block the
government agency responsible for protecting our capital markets, the
Securities and Exchange Commission, from directing public companies to
report critical information that impacts their bottom line, including
climate risk, company diversity, and employee welfare.
This bill flies in the face of the 80 percent of investors who want
companies to disclose these metrics, known as environmental, social,
and governance, or ESG, policies. Companies that prioritize these
metrics perform better financially than their peers that do not.
Many studies have shown that companies that embrace the diversity of
the United States outperform those that do not. Indeed, companies with
the highest percentages of women board directors outperformed those the
least by 53 percent when it comes to shareholder returns.
If we think about it, this is just common sense. When a company
includes the views and perspectives that reflect the diversity of
America, all of America is likely to see the value of that company.
When I was chairwoman of the committee, I created the first of its
kind Subcommittee on Diversity and Inclusion. We received countless
hours of testimony from researchers who confirmed that embracing
diversity and inclusion is not just the right thing to do but is also
good for the bottom line. It is good management.
Let me go through in more detail what this bill does.
First, H.R. 4790 strips American investors of their legal right to
vote on and offer proposals that can influence the direction of the
companies they own, particularly those related to ESG policies. The
bill does this by giving management, rather than the SEC, the final say
on whether a proposal gets included on the ballot at a company's annual
shareholder meeting.

{time} 1345

The effect of this bill would deprive investors of what is today,
right now, a legal right to have proposals of any kind included.
There is a long history of shareholders pushing America's
corporations to adopt practices that most of us take for granted today.
This includes majority-independent boards, say-on-pay executive
compensation, and annual director elections.
Today, investors are pushing companies to report ESG metrics, board
diversity, and how workers are treated. Being able to offer, and then
vote on these proposals, is a legal right of investors under current
law. That is right. Shareholders are the legal owners of the companies
they invest in and corporate executives work at their pleasure.
Mr. Speaker, it seems that my colleagues on the other side of the
aisle, who are so concerned about socialism, might need a refresher
about how capitalism really works.
Second, H.R. 4790 undermines another critical component of our equity
markets. The bill limits independent analysis and research by impeding
key providers that investors use known as proxy advisers.
Proxy advisers are neutral third parties that provide shareholders
and their representatives with independent analysis about items that
are up for a vote on the corporate ballot. Proxy advisers also solve an
important problem by doing the research on thousands of corporate votes
that investors would otherwise have to do themselves. Management simply
does not want ordinary investors to have this information as it may not
align with their recommendations.
To be clear, investors pay for these services and do so because they
don't just want to take management's word, and they shouldn't. By
restricting what analysis and research ordinary investors can purchase
and use, H.R. 4790 is effectively another MAGA book ban.
Third, H.R. 4790 severely limits the SEC's authority to direct
companies to report data about their climate risks, diversity hiring,
and employee welfare.
Instead of allowing the SEC to determine what information investors
should see, as is currently settled law, under this bill, companies
themselves would make this determination.
It shouldn't surprise anyone that a company's management is not
inclined to share more than it has to, and if it gets too close, one
can imagine that companies wouldn't share much of anything.

[[Page H5488]]

Congress authorized the SEC to be the arbiter of what is disclosed
because our markets only work when investors--investors--have
sufficient information to make informed investment decisions.
Finally, H.R. 4790 undermines the government's ability to coordinate
with international partners and take commonsense steps to address
financial risks like those posed by climate change. In fact, if the
Federal Reserve hears from a European counterpart that requiring
companies to guard against wildfire risk is important, the Fed would
have to jump through several new hurdles before it could implement it,
even in an emergency.
This extreme measure would even make it harder for our bank
regulators to encourage banks to expand small business lending, an
issue I tried to fix through an amendment but was blocked.
To be clear, this bill doesn't just have one or two poison pills in
it. When each bill was separately considered in committee, not a single
Democratic member voted for them.
H.R. 4790 strips the right of investors to vote and offer their own
proposals to strengthen the companies they own, strips their access to
independent research and analysis about the companies they own, and
strips the government regulator of its authority to compel those
companies to provide the market with critical information.
Is this America?
Mr. Speaker, I reserve the balance of my time.
Mr. HUIZENGA. Mr. Speaker, I will just note that, yes, it is America,
and I will note that the ranking member voted against a continuing
resolution just yesterday to keep government open. However, I am sure,
Mr. Speaker, that she will have another opportunity very, very soon.
Mr. Speaker, I yield 5 minutes to the gentleman from Georgia (Mr.
Loudermilk).
Mr. LOUDERMILK. Mr. Speaker, I rise in strong support of H.R. 4790,
the Prioritizing Economic Growth Over Woke Policies Act. Not only is
this bill important to restoring sound financial practices within the
financial services sector, it includes two provisions that originated
from legislation I introduced in this Congress. The most significant is
my bill, H.R. 4823, the American Financial Institution Regulatory
Sovereignty and Transparency Act of 2023, better known as the American
FIRST Act.
The short title is an apt description of the bill's aim: to put
American interests first in bank supervision and remove misguided
political influence from our banking system. The American FIRST Act has
three important key elements:
First, it removes undue political influence from banking regulations.
In recent years, Mr. Speaker, we have seen bank policy used by
regulators to further their political interests, not for what is best
for banks or their customers. Bank regulators have proposed sweeping
supervisory changes without critically evaluating the models they use
to forecast climate-related financial risk. When nonbinding FSOC
proposals are written into binding regulation, they deserve a high
degree of scrutiny from lawmakers.
The truth is that the banking system shouldn't be a race to fill
supervisory roles with partisan loyalists. It should be about
safeguarding the financial system with a sober eye for objectivity.
Hastily pushing through regulations without a thorough economic
analysis can have significant unintended consequences, especially on
the average consumer.
According to the U.S. Chamber of Commerce, aggressive climate
regulations like those proposed by FSOC could have catastrophic effects
on our energy sector. Small businesses and families in energy-producing
States could face higher energy costs and reduced credit access.

My provisions in this bill will ensure that any regulatory action
proposed by FSOC, or the executive branch undergoes a full review
process so that the public better understands the trade-offs that they
are making.
My colleagues across the aisle call these reporting requirements
hoops that regulators will be forced to jump through, but in reality,
they are arguing against increased transparency and good governance in
banking regulation.
Second, it ensures that bank regulators fall under U.S. authority.
Bank supervisors at the Federal Reserve, FDIC, OCC, and others have
consistently put the interest of large foreign banks ahead of our own.
These policies aren't just abstract. They have significant implications
for the stability of our financial system and for American
competitiveness abroad.
For example, on May 22, 2022, the Basel Committee on Banking
Supervision, a European-based, international organization, lowered
transnational footprint standards for the largest European banks, which
disadvantaged U.S. banks of the same size. Federal Reserve officials
actually endorsed the changes, which put American banks and their
borrowers at a significant disadvantage.
My bill addresses this problem by requiring U.S. financial regulators
to periodically report on how they engage with their foreign
counterparts. It also requires them to conduct a robust analysis before
implementing any rule to conform with the recommendations of an
international body. Specifically, it mandates that they conduct a
thorough economic analysis, projecting the effects on credit markets,
employment, and the broader economy before implementing any rules
originating from a foreign nongovernment organization.
Third, it depoliticizes Federal Reserve supervision. The American
FIRST Act calls for the elimination of the vice chairman for
supervision at the Federal Reserve. This role was intended to
centralize supervisory power within the Fed, but it has added another
layer of complexity. Last year we experienced a significant banking
crisis on the Fed's watch, which is hardly evidence that the system is
more stable with another powerful bureaucrat in the mix. At worst, the
position has unnecessarily politicized bank supervision allowing
unchecked partisan bureaucrats to channel credit away from politically
disfavored sectors.
Finally, I would also like to highlight another provision in this
bill, previously introduced as H.R. 4649. This provision would require
transparency from America's largest asset managers when voting the
shares entrusted to them.
These large firms have historically relied on external proxy advisory
firms to guide how they vote the shares they manage for other
investors. Some of these proxy firms are actually foreign owned and
managed entities which do not have the soundness of the U.S. economy as
their primary interest.
This bill would require these large firms to disclose how often they
vote in line with proxy advisory firms and to ensure that their votes
are in the best interests of their shareholders.
Once again, Mr. Speaker, I urge my colleagues to vote for
transparency and good governance and vote ``yes'' on H.R. 4790.
Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from
California (Mr. Vargas), who is a member of the Committee on Financial
Services and the co-chair of the Congressional Sustainable Investment
Caucus.
Mr. VARGAS. Mr. Speaker, I thank the ranking member for yielding.
Mr. Speaker, I rise in opposition to this bill.
As co-chairman of the Congressional Sustainable Investment Caucus, I
am glad to join Ranking Member Waters and other colleagues here to talk
about protecting the freedom to invest.
Americans want their pensions and retirement savings to be invested
responsibly.
Additionally, recent studies have shown that 80 percent of investors
want to invest in companies that consider climate risks, diversity
hiring, and employee welfare.
That is because investors understand that these factors have huge
implications for the value of their investments and depend on
disclosures to make informed choices.
Corporations are spending up to $500,000 a year to evaluate their
sustainable business practices because investors are asking for this
information. Many of these investors manage pensions and retirement
savings for teachers, firefighters, police officers, and other
hardworking Americans.
However, House leadership is bringing legislation to the floor that
limits access to the very information that investors want.

[[Page H5489]]

I submitted an amendment that would have protected the right of
investors to access these disclosures. Unfortunately, this amendment
and others intended to increase transparency were rejected.
Mr. Speaker, the bill we are voting on today would make it more
difficult for investors to maximize the returns on your retirement
savings.
Why?
It is because House leadership is trying to make it more difficult to
consider risk factors that they simply don't like.
According to a 2023 Statehouse Report, retirees' pension funds stand
to lose billions of dollars due to Republican bills attacking
sustainable and profitable investment practices.
Mr. Speaker, if you really believe in the free market and capitalism,
then you need to give investors the freedom to make their own
decisions.
We need to grow pension and retirement savings, not force them into
shortsighted, riskier investments.
I know that giving responsible investors more information is a good
thing. It is not a bad thing.
Evidence shows that bills targeting sustainable business practices
directly harm taxpayers, investors, and hardworking Americans'
retirement funds.
We should be giving investors the information they need to continue
growing pensions and retirement funds. This bill would do the opposite.
Mr. Speaker, what was interesting in the introduction and the
comments so far is they haven't talked about the markets. They were
saying that we were going to be in a recession. In fact, just the
opposite has happened.
In fact, Chairman Gensler and this administration have done such a
good job that we saw the Dow Jones shoot past 40,000 points and now
over 42,000 points.
Why?
It is because they are doing a good job. It is because they are
giving the information to the investors that the investors want, and
they are making good decisions.
However, they, again, want to burn the books when it comes to
information.
Is this America?
Mr. Speaker, I rise in opposition, and I thank the leader, again, for
yielding me time.

{time} 1400

Mr. HUIZENGA. Mr. Speaker, I yield 5 minutes to the gentleman from
Wisconsin (Mr. Steil) to speak on his work on protecting Americans'
retirement savings from politics.
Mr. STEIL. Mr. Speaker, I rise in support of this bill, which will
protect retirement savings from political interference by activists and
their proxy adviser allies.
Mr. Speaker, I thank the chairman for including my legislation in
this comprehensive package. My bill, the Protecting Americans'
Retirement Savings from Politics Act, reins in proxy advisers and puts
a stop to the political takeover of retirement investments.
Names like ISS and Glass Lewis may not make the headlines every day,
but these two firms constitute a powerful proxy adviser duopoly. They
are fueling a movement to weaponize Americans' retirement funds to push
their political agenda. This hurts workers, our economy, and the
returns on Americans' hard-earned retirement savings.
Under Chairman Gensler, the Biden SEC gutted safeguards that were
meant to provide proxy advisers with accountability and transparency.
The SEC has also given a green light to activists to inject politics
into the boardroom by changing the rules and empowering unaccountable
SEC staff. This has predictably led to a huge spike in politically
motivated shareholder proposals.
ISS and Glass Lewis control 97 percent of the proxy adviser market,
advising virtually all professional investors. ISS offers companies
consulting services to address the same activist proposals they make
recommendations on, which is an obvious conflict of interest.
My bill prevents this conflict and enforces the disclosure of other
potential conflicts of interest.
On top of that, the proxy adviser firms don't bear any costs or
responsibility or accountability for their misguided recommendations.
Some of these proposals clearly harm shareholders' value. In some
cases, they have even directed companies to do things that are against
the law.
Hardworking Americans saving for retirement shouldn't bear these
costs. Many, I think, would be shocked to learn that their investments
aren't always being maximized to provide a secure retirement. Instead,
they are being hijacked for political impact.
Congress needs to rein that in and prevent that abuse. My bill
addresses this in several key ways.
First, it reforms the proxy process to reduce the number of
duplicative, repetitive, and politically motivated shareholder
proposals. Second, it establishes a registration process for proxy
advisory firms, requiring them to disclose their conflicts of interest
and methodologies, and restricting their ability to offer consulting
services.
It also reimposes liability on proxy advisers for getting things
wrong. It ends robovoting, the process that autofills proxy advisers'
recommendations. This practice can magnify proxy advisers' errors and
biases.
Third, the bill places requirements on institutional investors to
ensure they are voting with Americans' best economic interests in mind.
They can't just outsource judgment to conflicted proxy advisers.
Retirement security is far too important.
The Protecting Americans' Retirement Savings from Politics Act is an
essential part of this comprehensive and commonsense legislation. We
need to step up to empower investors, restore transparency and
accountability, and enhance competition.
Mr. Speaker, I urge my colleagues to support this legislation.
Ms. WATERS. Mr. Chairman, I yield 3 minutes to the gentleman from
California (Mr. Sherman), who is also the ranking member of the
Subcommittee on Capital Markets.
Mr. SHERMAN. Mr. Speaker, our capital markets and our capitalist
system are the envy of the world.
How does that system work? Investors decide how to allocate capital,
not the government. Investors control the corporation through voting,
not the corporate insiders, not the board, and not the executives.
This bill is designed, with a Marxist tint in mind perhaps, to blind
and cripple the capitalists of America, the shareholders, the
investors.
Let's say an investor agrees with Republicans on how to allocate
their money. That is fine, but some investors may care about the
environment, or they may just believe that investing in low carbon is
more profitable and investing in resilient companies is more
profitable.
This bill blinds them. It says: You are just the investor, and the
government has decided what criteria you are going to use, and we are
going to blind you and not give you the information to make a decision
based on carbon footprint. You don't decide. The government decides.
There is more for the Marxists here in this room. Not only does this
deprive capitalists of the right to allocate capital, but it
specifically helps the Chinese Communist Party because American
corporations are going to have to decide, in many cases, do they sell
their artificial intelligence secrets to the highest bidder in
Shanghai? If the corporation wants to, its shareholders now can come
forward and say: No, we care about America. We are patriots. Do not
sell.

Under this bill, the shareholders cannot stop their company from
selling AI to the Chinese Communist Party.
There is a lot here, not only for Marxists in general, but for the
Chinese Communist Party in particular. They achieve that by blinding
investors, by not giving them information, and crippling investors'
ability to control their corporations.
It has obviously come to a low point here in Washington that you need
a member of the Progressive Caucus to defend capitalism from the
Republican Party, but I believe in a system in which investors have the
information they want and get to vote on how the corporation behaves.
Instead, we will see. Investors can only make decisions based on the
information that the Republican Party is willing to let them have, and
investors can't stop their corporations from selling out our technology
knowing that the insiders, the corporate board and

[[Page H5490]]

the executives, might have a giant payday, a huge bonus, a huge run-up
in money, and they might sell our artificial intelligence secrets to
Beijing, and the investors are blocked by this bill.
Marx would vote ``yes.'' I am voting ``no.''
Mr. HUIZENGA. Mr. Speaker, I will note that, for some, the louder and
longer they say something, they hope people will believe it.
Mr. Speaker, I yield 2 minutes to the gentlewoman from Missouri (Mrs.
Wagner), the chairwoman of the Subcommittee on Capital Markets.
Mrs. WAGNER. Mr. Speaker, I thank the chairman and congratulate him
on this compilation of 20 fantastic bills that were favorably reported
out of Financial Services.
Mr. Speaker, I rise today in support of this package, which includes
a bill of mine, H.R. 4662, the Corporate Governance Examination Act.
Too often, politically or socially motivated shareholders' proposals
cause investors to shoulder increased and unnecessary costs. My
legislation will examine whether the proposal process has become
unnecessarily politicized and help ensure these proposals don't deter
future investors or endanger current investors.
This important legislation would require the SEC to conduct
comprehensive studies on shareholders' proposals, proxy advisory firms,
and proxy process.
These studies will address key problems in politically and socially
motivated proposals, such as financial incentives and obligations of
involved parties, the impact on long-term retail investors, the
influence of proxy advisory firms, and the costs incurred by companies
in response to shareholders' proposals.
These studies will provide data-driven insights to enhance
shareholders' value and promote transparent corporate governance
practices.
I thank the Members who have bills in this package today for their
incredible work toward upholding our capitalist society and urge my
colleagues to support this package.
Ms. WATERS. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Green), who is the ranking member of the Subcommittee on
Oversight and Investigations.
Mr. GREEN of Texas. Mr. Speaker, I thank the gentlewoman for
yielding.
Still I rise, and I rise today in strong opposition to this
legislation. On the subject of climate change, acknowledging the
dangers posed by climate change benefits corporate America, as climate
change is a threat to our financial system, as well as the global
economy.
If insurance companies and their investors do not account for climate
risk, they will either have to go bankrupt or exit certain markets,
exacerbating the recent trend wherein some of the largest insurance
companies are choosing to withdraw coverage from certain States.
Further, a 2023 study conducted by asset manager Nuveen found that
more than 73 percent of U.S. investors said they were more likely to
invest in a company that communicates its plans for effectively
managing ESG-related risk.
Now on the question of diversity. When it comes to diversity,
diversity is a benefit, not a detriment. Diversity benefits corporate
shareholders by improving a company's performance.
A 2023 McKinsey report found that companies in the top 25 percent for
both gender and ethnic diversity in their executive teams are, on
average, 9 percent more likely to outperform their peers.
On the other hand, McKinsey found that companies in the bottom 25
percent for both gender and ethnic diversity are 66 percent less likely
to outperform their peers.
In truth, this isn't about minorities and women not being qualified.
In truth, it is about the fact that they are minorities and women in a
society that has historically discriminated against them. Minorities
and women are good for business.

Mr. HUIZENGA. Mr. Speaker, I note that this bill is absolutely
neutral on climate change and doesn't even reference it.
Mr. Speaker, I yield 2 minutes to the gentleman from Kentucky (Mr.
Barr), who is the chairman of the Subcommittee on Financial
Institutions and Monetary Policy.
Mr. BARR. Mr. Speaker, I rise in support of the Prioritizing Economic
Growth Over Woke Policies Act, sponsored by the gentleman from Michigan
(Mr. Huizenga), my good friend.
This important act includes two of my bills, the Protecting Retail
Investors' Savings Act and the Banking Regulator International
Reporting Act, to protect capitalism from the politicization of capital
allocation and to curtail the Biden-Harris regulators' efforts to
circumvent Congress and use regulation to force leftist climate
policies down the throats of the American people.
In recent years, we have witnessed an alarming rise in asset managers
favoring green and politically favored investments that deliver lower
returns.
According to data from Morningstar last year, sustainable U.S. equity
funds underperformed the broader S&P 500 Index by 5 percentage points.
In 2022, the average sustainable ESG fund was down 19\1/2\ percent.
This stands to reason because ESG funds are, by design, less
diversified. Studies show that fees for ESG funds average as much as 43
percent higher than non-ESG funds, further eroding investor returns.
Too often, retail investors unwittingly sacrificed financial returns to
advance the ESG movement.
It is time to stand up for American investors against the fraud of
ESG. My bill would require investment advisers to prioritize financial
performance over these nonpecuniary and political factors.
Additionally, the Federal banking agencies, in coordination with the
Biden-Harris administration, are working with global governance bodies
outside of our country and climate activists to put climate policies
into supervision of U.S. financial institutions under the guise of
concerns about safety, soundness, and stability.
When Congress questions their motives and actions, they claim they
are just abiding by international standards in secret board meetings
abroad. Congress and the American people deserve transparency and
robust information on these meetings between U.S. regulators and
foreign global governance groups, some of which include officials from
our adversaries.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HUIZENGA. Mr. Speaker, I yield an additional 30 seconds to the
gentleman from Kentucky.
Mr. BARR. Mr. Speaker, regulators' independence is being severely
threatened, as they are being politicized to achieve the dreams of the
Green New Deal. For the safety of our economy and for the retirement
security of our constituents, we must pass this legislation to end the
politicization of capital allocation, not to harm capitalism, but to
depoliticize capitalism, to take the government out of capitalism.
Mr. Speaker, that is why I urge my colleagues to support the passage
of this legislation.

{time} 1415

Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
Ohio (Mrs. Beatty), who is also the ranking member of the Subcommittee
on National Security, Illicit Finance, and International Financial
Institutions.
Mrs. BEATTY. Mr. Speaker, I rise today in strong opposition to H.R.
4790, a package of partisan, harmful financial services bills that
would harm American investors and consumers.
Study after study has proven that diversity and racial equity in the
workplace significantly improve company performance, leading to greater
profits and enhanced levels of innovation. Failing to address these
issues at a firm directly affects stock value and investment risk.
Therefore, investors should unquestionably have this data about the
companies they are investing in. Shareholders ought to have a
meaningful opportunity to bring these issues to the attention of
management through the shareholder proposal and proxy statement
process.
The bottom line is, diversity matters, diversity disclosures matter,
and investors have the right to access the information they need to
make informed investment decisions based on their own judgment of which
factors indicate long-term value.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Ms. WATERS. Mr. Speaker, I yield an additional 30 seconds to the
gentlewoman from Ohio.

[[Page H5491]]

Mrs. BEATTY. Mr. Speaker, dismissing certain disclosures as
nonmaterial or irrelevant takes that decision out of the hands of the
investor and impedes the asset managers' ability to mitigate risks to
clients.
Lastly, instead of empowering investors and consumers, this majority
has prioritized dismantling diversity and inclusion programs and a
full-scale war on environmental, social, and governance policies that
investors themselves are demanding.
Mr. Speaker, I implore my colleagues to oppose this bill.
Mr. HUIZENGA. Mr. Speaker, I yield 1 minute to the gentleman from
Wisconsin (Mr. Fitzgerald), who has been putting a lot of effort into
this.
Mr. FITZGERALD. Mr. Speaker, I rise today in support of H.R. 4790.
This bill is an important step toward ensuring the information
required to be disclosed to the Securities and Exchange Commission by
issuers be material to voting or investment decisions. It also contains
several other measures to push back on activist ESG shareholder
proposals.
While shareholder engagement remains an important aspect of corporate
governance, the consideration of shareholder proposals that deviate
from the company's strategic direction or long-term goals has
transformed boardrooms into partisan platforms.
Although the number of shareholder proposals is increasing, support
is declining across the board. A 2009 study noted that costs directly
incurred by companies due to such proposals were estimated to be about
$87,000 per proposal, totaling $90 million annually.
The Performance over Politics Act, which is included in this package,
would allow issuers to defer the resubmission of shareholder proposals
for 3 years if those proposals are similar in nature.
These thresholds would respect the decisions of the majority of
shareholders.
Ms. WATERS. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Casten), who is a member of the Financial Services
Committee and the co-chair of the Congressional Sustainable Investment
Caucus.
Mr. CASTEN. Mr. Speaker, I rise today as a former CEO who would have
personally benefited from this legislation. I rise in strong, dare I
say, vehement, opposition to this legislation.
Let me be very clear. The job of a CEO, especially in capital-
intensive businesses like the one I used to run, is to be a prudent and
responsible steward of other people's capital.
I should also be candid and say that sometimes investors can be a
pain in the butt. When you are the CEO, you are managing their money.
They may call you, and they may ask questions about wanting to dig into
the details of your hiring policies. They may want to dig into the
details of your internal governance policies. They may want to
understand the degree to which your company is hedged out against
future risks, ESG or otherwise.
It is very tempting in those moments, from my personal experience as
a CEO, to say: ``You all don't understand this business as well as I
do. I am so much smarter than you. I am going to ignore your questions
because they are not material,'' and hang up the phone.
That is a great way to become an ex-CEO, which is exactly as it
should be. When you tell them that they don't understand what I know
about my company, they are inclined to correct you and say: ``No. It is
not your company. It is my company.''
My Republican colleagues are doing exactly that with this bill. They
are telling investors and shareholders that they do not have a right to
decide what is material in their interest in these companies. Maybe
that is an individual investor. Maybe that is a pension fund. They are
saying that they don't matter.
Mr. Speaker, let me tell you, our Nation's CEOs thank my Republican
colleagues for their service, for looking out for them.
Now, we will always have a few lousy, self-interested CEOs who would
like to fleece their investors, who would like to hide their
liabilities, who would like to tell you to shut up and pound sand
because you don't understand their business.
It is sad to me to see the Republican Party choose to associate with
them and say we have their backs. I am proud to stand with our Nation's
good CEOs and, more importantly, with all of our Nation's investors in
strong opposition to this antimarket, antigrowth legislation.
Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from
Iowa (Mr. Nunn), who is a member of our Financial Services Committee.

Mr. NUNN of Iowa. Mr. Speaker, I rise in support of H.R. 4790, and I
thank our chairman, the gentleman from Michigan (Mr. Huizenga), for
leading this very important bill.
The rising cost of living and inflation are making it hard for
everyone, particularly those in ag States like Iowa. Over half of
Iowans rely on some type of retirement account just to plan for their
future--their kids' future, their future retirement, their ability to
buy a first-time home.
However, some investment managers are now letting politics guide
their decisions, not free market principles. They are working not to
improve returns for their investors, retirees, or every American, but
working in a way to align their politics before actual market-based
principles.
That is why I believe we must pass this bill, which includes my
Protecting Americans' Savings Act, and eliminate these tragic conflicts
of interest. We cannot allow unelected bureaucrats, administrators, or
political activists to gamble with Americans' hard-earned and well-
invested future. The retirement savings that are being led here ensure
that our companies do what is best for all Americans, including my
constituents back home in Iowa, not the political motivations of a few.
Mr. Speaker, I urge passage of this legislation. I thank Mr. Huizenga
for his strong leadership and work in making sure that this can come to
the floor and pass.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
Texas (Ms. Garcia), who is also the vice ranking member of the
Committee on Financial Services.
Ms. GARCIA of Texas. Mr. Speaker, this bill is just another extreme
MAGA political stunt to undermine the safety and soundness of our banks
and financial system.
Rather than focus on economic growth, it pushes extremist policies,
stripping away critical environmental, social, and governance
initiatives and disclosures.
Let's be clear: Climate risk is financial risk, and diversity is good
business.
Just look at a recent McKinsey report: Top companies grow more when
they consider climate risk and embrace diversity and inclusion than
when they only look at the bottom line.
Let's make this simple. Why do Republicans want to take power away
from shareholders? Why are they doing away with decades of progress in
corporate transparency? Why do they want less information?
This is not an effort to secure economic growth for our Nation. It is
an effort to deny reality, something that extreme Republicans are
experts at.
The SPEAKER pro tempore (Mr. Norman). The time of the gentlewoman has
expired.
Ms. WATERS. Mr. Speaker, I yield an additional 30 seconds to the
gentlewoman from Texas.
Ms. GARCIA of Texas. Mr. Speaker, I, too, ask: Is this America?
Mr. HUIZENGA. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Pennsylvania (Mr. Meuser), my good friend and a member of the
Financial Services Committee.
Mr. MEUSER. Mr. Speaker, I thank my good friend, the chairman of the
subcommittee and a great leader in Financial Services, for yielding.
Mr. Speaker, I rise today in support of H.R. 4790, the Prioritizing
Economic Growth Over Woke Policies, as introduced by Mr. Huizenga.
This bill, Mr. Speaker, limits the disclosures that securities
issuers must provide to the SEC, ensuring they only report information
that is material to investors' decisionmaking.
H.R. 4790 also includes my bill, H.R. 4653, the Protecting U.S.
Business Sovereignty Act.
My legislation defends American businesses from the overreach of
foreign regulations like the EU's Corporate Sustainability Due
Diligence Directive, which threatens U.S. businesses by imposing costly
compliance

[[Page H5492]]

burdens on U.S. businesses for participating even in a minor way in the
EU.
Republicans are not against ESG, Mr. Speaker, as an investment
choice. If individual investors want to prioritize environmental,
social, or governance factors, that is their freedom. What we oppose is
when these ideological views are mandated, when investors are forced to
comply with burdensome regulations that prioritize political ideology
over profitability, prioritize ideology over outcomes, which harms the
economy and undermines the freedom to invest one's own wealth.
Mr. Speaker, I urge my colleagues to support this legislation. Let's
choose economic growth and the freedom of choice for American
investors.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
Michigan (Ms. Tlaib), who is also the vice ranking member of the
Subcommittee on Housing and Insurance.
Ms. TLAIB. Mr. Speaker, the so-called ESG debate is a fabricated
political issue funded by corporate interests that are trying to
protect their short-term profits at the expense of our workers, our
retirees, and our communities.
The stakes are real, and hardworking families' retirement security is
on the line.
Just look at the impacts at the State level, Mr. Speaker. Indiana's
budget office, for example, has estimated that forcing their State
pension system to divest from firms or funds that use ESG factors could
reduce returns by $6.7 billion.
Public funding is also at stake. Let's look at Texas. It passed anti-
ESG legislation at the State level, disrupting the municipal bond
market. Public borrowing costs have now increased by roughly $400
million in Texas.
Anti-ESG efforts shield companies from accountability, put families'
retirement savings at risk, and cost the public money.
All this is for corporate profits. Pensioners and retirees deserve
better.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Ms. WATERS. Mr. Speaker, I yield an additional 30 seconds to the
gentlewoman from Michigan.
Ms. TLAIB. Mr. Speaker, I want everyone to admit that this is all for
corporate profits and that the American people deserve better.
These are retirees who worked incredibly hard, and we have to do
everything we can to protect their investments. They deserve better.
They deserve the transparency that these factors produce.
Mr. HUIZENGA. Mr. Speaker, I simply note that if this was about
protecting investors and maximizing their profit, we wouldn't force
them to go into a lower return product like my colleagues are trying to
do.
Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr.
Rose), my friend and colleague, a member of the Financial Services
Committee.
Mr. ROSE. Mr. Speaker, I thank the chairman, my friend from Michigan,
for yielding me time to speak in support of this legislative package
that includes my bill, H.R. 4657.
Mr. Speaker, under the Biden-Harris administration, economic growth
has been sacrificed to pursue a woke agenda detrimental to Tennesseans.
This is one of the many reasons I rise in support of my Michigan
colleague's legislation, H.R. 4790.
The Tennesseans I represent can be assured that I will continue to
prioritize working families over the woke socialist agenda known as ESG
that far-left progressives are inserting into retirement accounts.

{time} 1430

My bill that is included in this package, would protect retail
investors and retirement savings from leftwing, activist shareholders
and socially directed investment funds from abusing the shareholder
process to advance their progressive political agendas.
Activist investors that force companies to take social positions on
issues like abortion and climate change shouldn't be making business
decisions.
My bill would offer companies respite from these harmful and
extremist shareholder proposals, which is why my bill is referred to as
the RESPITE Act in the Senate.
Tennesseans know firsthand how woke priorities don't align with our
values or our financial interests. That is why we stood up to Tractor
Supply Company and forced them to care about people again and not
politics.
When the Securities and Exchange Commission came after our farmers to
collect ESG-related information, the Tennessee Attorney General's
office sued the SEC to remind them that they were overstepping by
engaging in environmental policy.
Tennessee is proud to lead the charge against the woke agenda
championed by the Biden-Harris administration.
That is why, Mr. Speaker, I urge Members to join me in voting ``yes''
on H.R. 4790, so that we can turn the focus back on promoting economic
growth and not social wokeness.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentleman from
Illinois (Mr. Casten), a member of the Financial Services Committee and
the co-chair of the Congressional Sustainable Investment Caucus.
Mr. CASTEN. Mr. Speaker, again, I oppose H.R. 4790 because it impedes
shareholders' engagement with the companies they own, limits visibility
into corporate decisionmaking, and ultimately weakens the foundation of
America's strong free market.
For this reason, at the appropriate time, I will offer a motion to
recommit this bill back to committee. If the House rules had permitted,
I would have offered this motion with an important amendment to this
bill.
My amendment would require companies to disclose when they abandon
commitments to diversity, equity and inclusion, or DEI.
DEI initiatives at companies lead to more innovative and productive
organizational cultures. Establishing a diverse workforce helps
companies attract and retain top talent and ultimately drives better
business outcomes.
I ask unanimous consent to include in the Record the text of this
amendment immediately prior to the vote on the motion to recommit.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
There was no objection.
Mr. CASTEN: I hope that my colleagues will join me in voting for the
motion to recommit.
Mr. HUIZENGA. Mr. Speaker, I yield 1 minute to the gentleman from
Nebraska (Mr. Flood).
Mr. FLOOD. Mr. Speaker, I support Mr. Huizenga's bill, H.R. 4790, the
Prioritizing Economic Growth Over Woke Policies Act, and I thank him
and Chairman McHenry for their leadership on this issue.
In particular, I highlight my bill within this larger package. It is
called the Stop Executive Capture of Banking Regulators Act.
This bill applies a requirement to the Federal Reserve, the OCC, the
FDIC, the NCUA, and the FHFA to report to Congress when they plan to
implement a nonbinding recommendation from an executive order, or FSOC.
All the regulators I just listed are independent. Independent
regulators are supposed to act according to their respective expertise.
They shouldn't just adopt recommendations from the President or
Treasury without their own due diligence.
This bill says that if they do choose to implement a nonbinding
directive from the executive branch, they should tell Congress and the
American people what they are planning to do and why. That is a
commonsense requirement, and, frankly, this shouldn't be a partisan
issue.
Mr. HUIZENGA. Mr. Speaker, may I inquire as to how much time is
remaining.
The SPEAKER pro tempore. The gentleman from Michigan has 4 minutes
remaining. The gentlewoman from California has 6 minutes remaining.
Mr. HUIZENGA. Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me be clear. We all want our investments to grow.
Investors want to be able to compare ESG metrics across companies
because there is substantial research showing that companies that are
actively managing their climate risk and promoting diversity, equity,
and inclusion are more profitable, not less.

Consistent and transparent disclosure on these metrics are critical
for investors who are looking to maximize their investment growth, not
just for

[[Page H5493]]

investors who are looking to put their money toward good causes.
This is not just about doing the right thing for the Earth or for
employees. It is about doing the right thing for a company's bottom
line, the right thing for the growth of our investments, and the right
thing for investor choice.
My colleague has claimed that nothing in this bill would prevent an
individual from investing in companies with ESG policies, but let's
take a look at the facts.
This bill would make it harder for investors to access clear and
consistent disclosures from companies on ESG metrics.
How can an investor make informed decisions without that information?
They cannot, and that is why this bill is so harmful.
It is taking away investor rights and investor choice in order to
force MAGA policies on all of us at the expense of investors. It is
unacceptable.
Mr. Speaker, I reserve the balance of my time.
Mr. HUIZENGA. Mr. Speaker, I am prepared to close.
Meanwhile, I again reiterate that the law requires any material
information, including climate information, must be disclosed
currently, if it is material.
I will continue to reserve the balance of my time until the
gentlewoman is prepared to close.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this bill has been opposed by the Biden-Harris
administration. In fact, this Statement of Administration Policy states
that this bill ``would severely limit the ability of Federal financial
regulators to protect consumers and investors.''
It also ``would disempower stakeholders and investors. . . .''
I include the Statement of Administration Policy in the Record.

Statement of Administration Policy

h.r. 4790--prioritizing economic growth over woke policies act

The Administration opposes H.R. 4790, which would severely
limit the ability of Federal financial regulators to protect
consumers and investors.
Since 1934, the Securities and Exchange Commission (SEC)
has worked to protect investors, safeguard markets, and
enhance access to capital. Central to these efforts are the
SEC's disclosure rules, which require companies that offer
securities to the public to provide investors the information
they need to make informed decisions. The changes proposed in
H.R. 4790 would fundamentally limit the SEC's ability to
fulfill its mission by prohibiting the agency from requiring
companies to provide certain disclosures of information
material to investment decisions, and instead allowing the
regulated companies themselves the discretion to determine
what must be disclosed.
The SEC also exists to ensure that companies are responsive
to shareholder and investor concerns. However, H.R. 4790
would disempower stakeholders and investors, including by
preventing the SEC from compelling companies to notify
investors of other shareholders' proposals and by limiting
the types of proposals that shareholders can introduce.
Finally, the bill also limits some independent agencies,
including the Federal Reserve, from working to influence
standards proposed by specified international organizations
that work to improve the financial system, curtailing the
Nation's ability to coordinate with international
counterparts in the face of threats to the global economy.
Ms. WATERS. Mr. Speaker, I also point out that this bill is opposed
by over 40 organizations and investor advocates. I include in the
Record the letter these groups signed indicating their opposition to
H.R. 4790.
September 17, 2024.
Re Opposition to anti-ESG bills that threaten workers'
retirement security and our financial system, and weaken
tools of corporate accountability.

Hon. Mike Johnson,
House of Representatives, Washington, DC.
Hon. Hakeem Jeffries,
Minority Leader, House of Representatives, Washington, DC.
Dear Speaker Johnson and Minority Leader Jeffries:
Americans for Financial Reform (AFR) and the 39 undersigned
organizations write in opposition to Prioritizing Economic
Growth Over Woke Policies Act (H.R. 4790) and the Protecting
Americans' Investments from Woke Policies Act (H.R. 5339),
which are packages of several bills that are part of a
broader, unpopular campaign against common sense investment
practices. This campaign seeks to both force financial actors
to ignore a slew of financial risks to the detriment of
workers' retirement security and the integrity of our
financial system, and weaken tools of corporate
accountability. The bills at issue were marked up by the
House Financial Services Committee (HFSC) and the House
Committee on Education and the Workforce. If passed, they
would represent a giveaway to corporations at the expense of
workers, investors, and the public.
The bills marked up by HFSC in July of last year were the
culmination of what the committee's majority publicly
characterized as ``ESG month''--a series of six hearings and
a markup designed to discourage financial actors from taking
into account environmental, social, and governance (ESG)
factors in their investment decision-making and undermine
corporate accountability. The bills can be categorized based
on the effects they would have: (1) undermine regulations
that would equip investors with more information to make
better investment decisions (H.R. 4790); (2) insulate the
management of public companies from investor input and
accountability, including by eliminating fundamental investor
rights to file shareholder proposals (H.R. 4767 and H.R.
4655); and (3) hamstring the ability of federal banking
regulators to respond effectively to micro- and macro-
prudential risks to the financial system (H.R. 4823). For a
more detailed discussion of these bills, see AFR's letter of
opposition submitted ahead of the markup.
The bills marked up by the House Committee on Education and
the Workforce in September would amend the Employee
Retirement Income Security Act (ERISA) with the effect of
undermining workers' retirement security. Two of the bills--
H.R. 5339 and H.R. 5337--have a longer history, mirroring two
Trump-era Department of Labor (DOL) rules. Those rules were
widely criticized and have since been rescinded because they
produced significant confusion about what fiduciaries are
allowed to consider when making investment decisions, and had
a chilling effect on the consideration of financially
relevant information--thereby putting workers' retirement
security at risk. The other two bills would also harm workers
saving for retirement, H.R. 5338 by interfering with efforts
to increase diversity among asset managers managing workers'
savings and H.R. 5340 by mandating confusing and misleading
information be sent to investors. For a more detailed
discussion of these bills, see AFR's letter of opposition
submitted ahead of the markup.
Congress should not lend support to an effort that would
harm the public interest and has triggered fierce and
effective opposition from a broad coalition of diverse
stakeholders. For example, state-level anti-ESG legislation--
which included 161 pieces of legislation introduced in 28
states this year--faced significant pushback from public
pension beneficiaries, retirement system officials, bank and
local business associations, and unions. As a result, the
vast majority of the bills were defeated. A strong coalition
has also opposed past anti-ESG congressional actions.
Voters overwhelmingly oppose measures like these. Although
the anti-ESG campaign is well-funded, polling decidedly shows
a strong majority of voters do not support its goals. For
example, 63% of voters do not believe the government should
set limits on corporate ESG investments. And when it comes to
how companies should operate in our society, ``most voters
(76%) feel companies play a vital role in society and should
be held accountable to make a positive impact on the
communities in which they operate.'' This includes both the
majority of Republicans (69%) and the majority of Democrats
(82%), reflecting strong bipartisan support. Additionally, a
recent poll by Public Citizen found that voters oppose
Congress passing legislation to limit the type of information
about a corporation's business record that is disclosed to
pension and retirement fund managers, investors, and the
public, and that voters would reward an elected official who
favors requiring corporations to disclose environmental,
social, and governance information about their business
dealings to investors and the public.
For all the reasons stated above, the undersigned
organizations urge you to oppose these anti-ESG bills. Thank
you for your consideration of our perspective. Please do not
hesitate to contact Natalia Renta if have any questions.
Sincerely,
Americans for Financial Reform; 17 Communications; 350.org;
Adrian Dominican Sisters, Portfolio Advisory Board; AFL-CIO;
Alabama Interfaith Power & Light; American Federation of
State, County and Municipal Employees (AFSCME); American
Federation of Teachers; Center for Popular Democracy;
ClientEarth USA; Communications Workers of America;
Congregation of St. Joseph; Daughters of Charity, Province of
St. Louise.
Environmental Defense Fund; For the Long Term; Global
Reporting Initiative (GRI); Green America; Interfaith Center
on Corporate Responsibility; International Brotherhood of
Teamsters, Invest Vegan; League of Conservation Voters;
Majority Action; Mercy Investment Services, Inc.; National
Education Association; National Women's Law Center; NETWORK
Lobby for Catholic Social Justice; Oxfam America.
Private Equity Stakeholder Project; Public Citizen; RFK
Human Rights; Rhia Ventures; Rise Economy (formerly
California Reinvestment Coalition); Sierra Club; SOC
Investment Group; Stance Capital; Strong Economy For All
Coalition; Take on Wall Street; The People's Justice Council;
Tulipshare, Sustainable Investment Fund; Unlocking America's
Future.

Ms. WATERS. Mr. Speaker, I reserve the balance of my time.

[[Page H5494]]

Mr. HUIZENGA. Mr. Speaker, I continue to reserve the balance of my
time until the gentlewoman is prepared to close.
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, we have talked a lot during this debate about investors,
and I want to be clear that when I say ``investor,'' I am talking about
people saving for retirement, their children's education, and to
purchase a home. I am talking about Americans who have saved a few
dollars in a mutual fund or purchased a few stocks.
These are the investors, and it is their rights that this bill
tramples on. It tramples on their right to vote on and to offer
proposals to strengthen companies they own, their right to information
to evaluate their investment, and it undermines the regulator who works
to protect investor rights.
This is taking us back. This is undoing the traditional investor
rights that we have enjoyed for so long that are now being stripped
while there is an attempt to undo what we are trying to do with climate
change.
Well, I know that they don't believe in the science and what is
happening with climate change, but this is going way beyond what I
thought any of my colleagues on the opposite side of the aisle would
do.
I understand that large public corporations want this bill because it
would allow them to take investors' money but ignore them in every
respect.
Shareholders are the legal owners of these companies, not the
executives. Mr. Speaker, I think the executives simply forgot who they
work for.
The shareholders are the ones who invest their hard-earned dollars in
the company and deserve the right to participate in this small way.
This bill is a blatant denial of climate change and insulting to
communities all across this country that have been burned by historical
wildfires, flattened by monster hurricanes, and parched by record heat
waves and droughts.
This bill is an attempt to make us see our neighbor as a threat
rather than as a friend. It suggests wanting companies to reflect the
diversity of America is itself un-American.
I know that there are those who don't like to see people like me in
the boardrooms, who don't like to see people of color in the
boardrooms, who don't like to see LGBT in the boardrooms.
We are not going back, Mr. Speaker. We are going to continue to fight
this fight, and we are going to fight for the investors.
With that type of thinking, it leads the politicians to share
fearmongering lies, like people eating pets rather than seeing that our
diversity of people, ideas, backgrounds, and religions is our greatest
strength and what sets America apart from the rest of the world.
Mr. Speaker, I yield back the balance of my time.
Mr. HUIZENGA. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I thank all of my colleagues, the Members who spoke here
today, as well as the 20 Members who included their bills in this
particular package.
We have heard a lot of rhetoric. We have heard a lot of hyperbole. We
have heard a lot of fearmongering, charged rhetoric, and, frankly, even
some falsehoods today from my colleagues across the aisle.
I want to be clear, Mr. Speaker, that again, the law requires any
material information, including climate, and all these other things
that have been discussed today, must be disclosed to investors, if it
is material.
Now, in 1976, the great Thurgood Marshall established standards of
materiality in the TSC v. Northway case.
Thurgood Marshall realized, as did the rest of the Supreme Court,
that having just arbitrary and capricious and sort of willy-nilly rules
surrounding what should or shouldn't be disclosed and what should and
shouldn't be informative to the reasonable investor--his words and
their words--to the reasonable investor, they needed to put guardrails
around that. In 1976, Thurgood Marshall did that.
This administration, after nearly 50 years, and their puppets in the
supposedly independent agencies have turned that concept on its head.
We see this time and time again because they cannot do this through
the legislative process. They are turning to those regulators who are
abusing their situations.
Here are the facts. Unelected bureaucrats have hijacked and
overhauled the public company shareholder proxy process.
Here are the facts. They have adopted rules and guidance that exceeds
their statutory authority, and by the way, those same courts have been
putting them back in their place.
Here are the facts. They have redefined the materiality standard.
They have ceded authority over American financial regulation to global
governance bodies.
Why would we do this? Why would we do this when the U.S. capital
markets are the envy of the world? Capital comes to the United States
because of our strength. Yet, they want to undermine and weaken it.
In response, our bill, H.R. 4790, the Prioritizing Economic Growth
Over Woke Policies Act, will prevent regulatory overreach.
It will restore the materiality standard. It will restore the SEC's
proxy voting process. It will hold large proxy advisory firms
accountable.
It will block regulators from injecting ESG and other initiatives
into our financial system. It will reassert sovereignty over American
financial regulation to American regulators, not international bodies.
Again, Mr. Speaker, the law requires any material information be
included to the reasonable investor.
Let's seize this opportunity to protect workers, to create jobs, to
protect those job creators and everyday investors from radical ESG
initiatives that put leftwing political goals above American
prosperity.
Let's ensure our financial system remains the envy of the world, Mr.
Speaker. Let's vote ``yes''.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 1455, the previous question is ordered
on the bill, as amended.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.

Motion to Recommit

Mr. CASTEN. Mr. Speaker, I have a motion to recommit at the desk.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:

Mr. Casten of Illinois moves to recommit the bill H.R. 4790
to the Committee on Financial Services.

The material previously referred to by Mr. Casten is as follows:

Mr. Casten moves to recommit the bill H.R. 4790 to the
Committee on Financial Services with instructions to report
the same back to the House forthwith, with the following
amendment:

Add at the end the following:

DIVISION E--DISCLOSURES

SEC. 5001. PUBLIC COMPANY DISCLOSURES WHEN ELIMINATING
EMPLOYEES AND OFFICES THAT PROMOTE DIVERSITY,
EQUITY, AND INCLUSION.

(a) In General.--Section 13 of the Securities Exchange Act
of 1934 (15 U.S.C. 78m) is amended by adding at the end the
following:
``(t) Elimination of Employees and Offices That Promote
Diversity, Equity, and Inclusion.--Each issuer required to
make quarterly reports under this section shall include in
such report whether the issuer, during the reporting period,
eliminated any employees or offices tasked with enhancing the
issuer's commitment to promoting diversity, equity, and
inclusion within the workforce and business practices of the
issuer.''.
(b) Initial Report.--Each issuer required to make reports
under section 13 of the Securities Exchange Act of 1934 shall
file a Form 8-K with the Securities and Exchange Commission
stating whether the issuer has eliminated any employees or
offices tasked with enhancing the issuer's commitment to
promoting diversity, equity, and inclusion within the
workforce and business practices of the issuer.

The SPEAKER pro tempore. Pursuant to clause 2(b) of rule XIX, the
previous question is ordered on the motion to recommit.
The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. HUIZENGA. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.

[[Page H5495]]

____________________