Key Takeaways
- •The committee advanced H.R. 7688 to modernize the Defense Production Act, marking the first major bipartisan update to the 75-year-old national security law since the COVID-19 pandemic.
- •Rep. Warren Davidson (R, OH-8) stated that the DPA must be modernized to prioritize preparedness over reactionary crisis response while establishing clear guardrails on government equity investments.
- •Rep. Sam Liccardo (D, CA-16) proposed AI safety guardrails for the DPA, but Rep. J. Hill (R, AR-2) argued the amendment would undermine accountability and national security interests.
- •Rep. Maxine Waters (D, CA-43) and committee Democrats opposed the Main Street Capital Access Act, labeling it a sweeping deregulatory package that would gut consumer financial protections.
- •While the DPA modernization efforts maintain bipartisan support for floor action, the banking deregulation measures face significant Democratic opposition that may stall progress in the Senate.
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Hearing Analysis
Overview
The House Financial Services Committee met on March 4, 2026, to mark up several legislative measures aimed at modernizing national defense production, deregulating community banking, and streamlining capital markets. Chaired by Rep. J. Hill (R, AR-2), the hearing focused on advancing "America-first" economic policies. The primary vehicles for discussion were H.R. 7688, the Defense Production Act Modernization Act of 2026, and H.R. 6955, the Main Street Capital Access Act. While the committee achieved a degree of bipartisan consensus on the core reauthorization of the Defense Production Act (DPA), sharp partisan divisions emerged regarding artificial intelligence (AI) safety, energy policy, and the extent of banking deregulation.
The hearing began with the consideration of H.R. 7688, introduced by Rep. Warren Davidson (R, OH-8). The bill seeks to reauthorize and modernize the DPA of 1950, which grants the President authority to prioritize industrial production for national security. Rep. Davidson emphasized that the bill would shift the DPA from a reactive crisis-response tool to a proactive strategy for supply chain resilience, particularly concerning critical minerals and shipbuilding. Key components of the package include the FORCE Act, introduced by Rep. Zachary Nunn (R, IA-3), which establishes a National Defense Executive Reserve of private-sector experts; the ARSENAL Act, which creates a real-time dashboard for DPA funding transparency; and the CLEAR Act to improve interagency coordination.
Policy Proposals
A significant portion of the DPA debate centered on an amendment offered by Rep. Sam Liccardo (D, CA-16) regarding AI safety. Rep. Liccardo highlighted a reported conflict between the United States Department of Defense (DOD) and the AI company Anthropic PBC. He alleged that the Pentagon had pressured Anthropic to remove safety guardrails that prevent AI from being used for mass surveillance or autonomous killing machines, even threatening to use DPA authorities to commandeer the software. Rep. Liccardo’s amendment sought to prevent the DPA from being used to punish companies for implementing human-harm risk mitigations. Republicans, led by Rep. Davidson and Rep. Hill, opposed the amendment, arguing it was premature to regulate AI within a DPA bill and that the government must maintain the authority to compel contractors during emergencies. The amendment was not adopted, with Republicans suggesting a separate bipartisan task force for AI regulation.
Energy policy also sparked a notable exchange when Rep. Andy Barr (R, KY-6) introduced an amendment to create an Energy Security Trust Fund. This proposal aimed to provide "political risk insurance" for baseload power plants, such as coal-fired facilities, protecting them from financial losses caused by sudden federal regulatory changes. Rep. Barr argued that the United States is facing an energy crisis that threatens AI leadership, noting that the People's Republic of China continues to build coal plants while the U.S. retires them. Rep. Sean Casten (D, IL-6) countered that coal's decline is driven by market competition rather than regulation, calling the amendment "anti-market." Rep. Barr ultimately withdrew the amendment, citing a need for further technical assistance from the United States Department of Energy (DOE) and the United States Department of Commerce.
Overview
The committee then turned to H.R. 6955, the Main Street Capital Access Act, introduced by Rep. Hill. This bill represents a major effort to reduce the regulatory burden on community banks. It proposes indexing asset thresholds for inflation, streamlining the de novo bank chartering process, and reforming the bank examination process to remove "reputation risk" as a supervisory criterion. Rep. Barr and Rep. Roger Williams (R, TX-25) argued that community banks are being "squeezed" by regulations intended for global megabanks, leading to industry consolidation.
Policy Proposals
Ranking Member Maxine Waters (D, CA-43) and Rep. Bill Foster (D, IL-11) expressed strong opposition to the banking package, characterizing it as the most sweeping deregulation since before the 2008 financial crisis. Rep. Waters argued the bill would undermine the Consumer Financial Protection Bureau (CFPB) and ignore the lessons of the Silicon Valley Bank (SVB) failure. She specifically criticized provisions that would hamper the CFPB’s ability to issue new rules against financial scams. Despite the opposition, Rep. Hill and Rep. Barr noted support from organizations like the Opportunity Finance Network (OFN) and the National Bankers Association, arguing the bill helps minority-owned and community development financial institutions (CDFIs).
Overview
Other measures mentioned during the session included the Restoring Secondary Trading Market Act by Rep. Daniel Meuser (R, PA-9), the SEED Act by Rep. Andrew Garbarino (R-NY) to assist small issuers with micro-offerings, and the Save Our Shrimpers Act by Rep. Troy Nehls (R-TX). The hearing concluded with the postponement of recorded votes on the contested amendments to the DPA bill.
Transcript
The committee will come to order. Without objection the chair is authorized to declare a recess of the committee at any time, without objection all members shall have five legislative days within which to submit additional materials to the chair for inclusion in the record. I now recognize myself for five minutes for an opening statement. Today we will advance a series of bills aimed at strengthening our economy and supporting small businesses and American families. At last week's State of the Union address, President Trump spoke about the strength and resilience of the U.S. economy. After years of economic hardship brought on by the Biden administration, marked by runaway federal spending, historic inflation, rising interest rates, and burdensome regulations, the American people are finally seeing a return to stability, renewed growth, and policies that put American workers and families first. Prices are coming down. Inflation is cooling, energy costs have eased. Investors are putting capital back to work with renewed confidence in the strength and stability of the economy. The bills before us today reflect President Trump and Republicans' shared commitment to promoting pro-growth, America First policies. We're working to strengthen Main Street, expand access to capital, support American businesses, and ensure that our financial system is the most dynamic in the world. Committee Republicans are dedicated to fighting every day for American families, which is why we are advancing today the Main Street Capital Access Act. Co-led by our Subcommittee on Financial Institutions Chair Andy Barr of Kentucky, this bill simplifies outdated regulatory requirements that have crippled our community banks and local lenders over the past few decades. Giving them the flexibility they need to get back to lending in our communities throughout the country, ensuring that small businesses and potential homebuyers have the financing they need to prosper. Expanding access to capital strengthens local economies and keeps opportunity within reach so that businesses can grow and American families can achieve greater financial security. We will also review the chairman of our Subcommittee on Oversight and Investigation Dan Meuser's Restoring Secondary Trading Market Act. This important bill amends the Securities Act of 1933 to preempt state blue sky laws for certain off-exchange secondary trading transactions. By streamlining the regulatory framework for off-exchange trading, this bill promotes greater uniformity and efficiency in our markets, reduces unnecessary compliance burdens, and strengthens investors' confidence so that our capital markets remain competitive and effective in supporting economic growth. We're also eager to advance Representative Garbarino's Small Entrepreneurs Empowerment and Development Act, the SEED Act, which also amends the Securities Act of 1933 to allow small issuers to conduct limited micro-offerings without being subject to costly disclosure and filing requirements. By easing these regulatory burdens, this bill gives startups and small businesses greater flexibility to raise early-stage capital, empowering them to grow and innovate while preserving strong anti-fraud protections to safeguard investors and maintain confidence in our markets. As we all know, a strong national defense relies on a resilient industrial base, which is why we're working hard to advance today Chairman Davidson's bipartisan Defense Production Act Modernization Act to reform and reauthorize the DPA. Updating and extending the DPA ensures the United States has robust supply chains to support domestic manufacturing and reduce reliance on foreign adversaries. We also have for consideration today Representative Troy Nehls' Save Our Shrimpers Act, which supports our domestic shrimping industry and the hardworking men and women in our coastal communities. The bills we're reviewing today address the real challenges by Americans, by reducing unnecessary regulatory burdens, expanding access to capital, and reinforcing critical industries, we're working hard to protect the integrity and security of the financial system. I look forward to today's discussion of these important bills that I believe will benefit the American people. I yield back the balance of my time and recognize the ranking member for her opening statement.
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