Aligning Sec Regulations for the World Bank's International Development Association Act

Floor Speech

Mr. Speaker, I rise in support of my bill, H.R. 1764, the Aligning SEC Regulations for the World Bank's International Development Act.

The International Development Association, IDA, is an example of both the value of our multilateral institutions and America's leadership in these organizations. The IDA is the World Bank's lending arm, and it is one of the most effective tools we have to combat poverty and instability worldwide.

The IDA offers grants and low-cost or no-cost lending to help the poorest nations to invest in their futures, improve the lives of their citizens, and create more prosperous communities for the long term.

The United States, as the largest donor to the IDA, helps to direct where and how these funds are used. My bill would exempt IDA securities from Securities and Exchange Commission regulations, just as other World Bank arms have been exempt for decades. This ensures that the IDA can continue raising capital efficiently, allowing it to direct resources that are needed the most.

This is needed because in April 2018, the IDA began issuing securities on the bond market which are also distributed in the United States. These securities are not exempted from the SEC's registration and regulatory framework.

Congress passed legislation in 1945 and 1955, exempting other arms of the World Bank, including the International Bank for Reconstruction and Development and the International Finance Corporation, from SEC's regulations.

Importantly, this gave the SEC the ability to recall these exemptions if the SEC finds that they are harmful to U.S. investors. Moreover, many other multilateral development banks of which the U.S. is a member are exempt from the SEC regulations.

SEC exemptions for these securities are warranted as they are backed by the commitments, or equities, of the largest economies of the world including the United States.

These securities tend to be AAA rated which is the highest investment grade, making them safe investments for all investors.

Harmonizing the exemption regime available for MDBs with that of the IDA would enhance the IDA's ability to raise capital in the United States without weakening investor protection. In turn, it will be able to use these proceeds to provide increased funding for the world's poorest countries. Importantly, too, the bill retains the SEC's ability to revoke these exemptions should it find them harmful to U.S. investors.

One additional but important note is this bill comes to the floor as we await the 6-month review mandated by Donald Trump's February 4 executive order directing the Secretary of State to determine in which international organizations the U.S. should continue or from which it should withdraw. Inexplicably, that includes World Bank among other international financial institutions.

The United States has long been a leader in IFIs like the World Bank. Our leadership in these institutions provides us with a strong voice to improve global economic stability, decrease poverty, and boost prosperity.

Through our membership, we advocate for high standards, push for transparency, and drive economic reforms that benefit not only developing nations but our own national security, too. It is wrong, even unconscionable, that Donald Trump would put America's leadership in question. It is the kind of thing that only one beholden to Russia and China would do.

Mr. Speaker, I urge my Republican colleagues to speak out against the President's suggestion that we retreat from the world stage and loudly oppose any outcome of this review that will harm America's economic leadership across the globe.

Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, this bill simply exempts IDA securities from SEC regulations, aligning with other World Bank arms which have been exempt for decades.

By making IDA securities equal to similar funds, the World Bank will have additional funds that can be applied to its mission to help the poorest of nations.

The United States has long been a leader in the international financial institutions, and this is one way that we can protect our leadership and stretch the value of our contributions to the World Bank.

Mr. Speaker, I urge my colleagues to support this bill, and I yield back the balance of my time.

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