The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.  CFPB Files Amicus Brief in Prepaid Card Case The CFPB filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit as part of Mohamed v. Bank of America, N.A., No. 22-1954 (4th Cir.). In the case, the plaintiff sued Bank of America for violations of the Electronic Fund Transfer Act (EFTA) when he received a prepaid government benefits card that had been fraudulently depleted of its entire $15,000 balance before he received it. Bank of America argued that EFTA does not apply to accounts loaded with unemployment assistance related to the pandemic. The CFPB’s amicus brief explains that EFTA’s protections clearly apply to prepaid card accounts used to distribute certain types of government benefits, including unemployment assistance related to the pandemic, and that to hold otherwise would be to create a new exception to the law’s regulations. More information can be found in this CFPB blog post, authored by general counsel Seth Frotman. CFPB Proposes Rule to Establish Public Registry of Contract Terms The CFPB proposed a rule which would establish a public registry of supervised nonbanks’ terms and conditions that are included in form contracts with their customers and users. According to the press release, the rule would require nonbanks to submit information on terms and conditions in form contracts that they use to waive or limit individuals rights and legal protections. The information would then be posted in an online registry that will be open to the public. The IPA is currently involved in a Chamber of Commerce coalition that is examining the effects the potential rule may have on pre-dispute arbitration clauses. The main concern seems to be the compliance burden on institutions that have many different contracts, sometimes more than one per state, the effect the registry would have on their ability to include pre-dispute arbitration clauses, and what next steps the CFPB may take after they have compiled this information. CFSA Files Brief in CFPB Funding Case The Community Financial Services Association of America (CFSA) filed its brief to the Supreme Court in their case against the CFPB. In the brief, the CFSA argued that the Supreme Court has the ability to address the validity of the CFPB’s payday lending rule without addressing the issue of the CFPB’s controversial funding mechanism. The Supreme Court is scheduled to consider the request for certiorari in a February 17th conference, after which we will know whether or not the Court will hear the case this term or next term, or will deny the request entirely. CFPB Issues Report on TransUnion, Experian, and Equifax The CFPB released its annual report on the three major credit reporting bureaus – Equifax, TransUnion, and Experian. In brief, the report analyzes how the credit bureaus respond to consumer complaints and implement aspects of the Fair Credit Reporting Act. Accordingly, the report acknowledges that the credit bureaus have taken affirmative steps to address consumer concerns and provide more substantive responses to consumer inquiries. However, the CFPB expects continued improvement in the next year and has recommended the credit bureaus implement the following changes: consider consumer burden when implementing automated processes; recognize that technology is also improving for consumers; and consider how to transition the market from control and surveillance to consumer participation Agencies Issue Joint Statement on Crypto-Asset Risks to Banking Organizations The Federal Reserve, FDIC, and OCC issued a joint statement on digital assets, expressing their concerns for banks and the use of digital assets including cryptocurrency and stablecoins. The statement describes several key risks they see associated with crypto-assets and the crypto-asset sector, including: uncertainties related to custody practices, redemptions, and ownership rights; misleading or false representations of disclosures; volatility, run risks on stablecoins; a lack of maturity and robustness in the risk management and governance practices; heightened risks associated with open or DeFi networks; and the risk of fraud. The statement also notes that the banking regulators are carefully reviewing any proposals from banking organizations to engage in activities that involve crypto-assets. OCC Releases 2022 Annual Report The OCC released its 2022 Annual Report in which they provide an overview of the condition of the federal banking system and discusses the OCC’s strategic priorities and initiatives. Specifically, the report found that the banking system remains resilient despite a recent dip in profitability with the phasing out of pandemic-related economic aid, and said that banks are still able to support their customers and the national economy. The report also highlighted the efforts of the OCC related to third-party risk management, financial inclusion, and the risks and benefits of cryptocurrency and digital assets. CFPB Blog Post on Supervision Process The CFPB published a blog post entitled “What new supervised institutions need to know about working with the CFPB”. In the blog, the CFPB outlines the supervisory activities that they conduct, the process they follow when conducting examinations, and what supervised institutions can expect following an exam or other supervisory activity. The blog post also included a link to the CFPB’s Supervision Program, and encourages supervised institutions to become more familiar with the program. House Financial Services Committee Subcommittee Chairs
House Balance of Power in the 118th Congress  Senate Balance of Power in the 118th Congress   New Federal Bills
None Pending Federal Bills None
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The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  The Crypto Universe: From A-Z The IPA will host a members-only event in Washington, DC on January 18, 2023. By attending this one-day seminar on digital currencies you can begin to learn more about the key questions that will impact the future of the crypto universe, including: What is a central bank digital currency? Does it matter if crypto is treated as an asset or a security? Are stablecoins actually stable and other pending questions. Whether your company is currently investing in the crypto market, or considering operating in the crypto ecosystem, you do not want to miss this opportunity to listen and learn from experts from the business, political, and regulatory realm so you can navigate the future. Registration information can be found here.  Fifth Circuit Ruling on CFPB Funding A three-judge panel from the U.S. Court of Appeals for the Fifth Circuit has ruled that the CFPB’s independent funding through the Federal Reserve violates the Constitution’s separation of powers clause. The ruling also invalidated the remaining portions of the CFPB’s 2017 Payday Lending Rule. While it will take weeks, if not months, for the full implications of the Court’s decision to be clear, it is important to remember that in the short term the ruling affects only the issues raised by the plaintiffs in the present case. In light of this ruling, West Virginia Attorney General Patrick Morrisey sent a letter to CFPB Director Rohit Chopra and argued that the CFPB cannot discharge its duties in a constitutionally permissible way due to the decision. He also wrote that “we cannot see how the Bureau intends to move on with its ‘business as usual’ attitude given that most of its operating funds derive from an unconstitutional funding scheme.” The letter requests answers to a series of questions, with a deadline for replying no later than tomorrow. CFPB Files Petition in Supreme Court The CFPB filed a petition to the Supreme Court, requesting the Court review the recent Fifth Circuit Court of Appeals ruling which held that the CFPB’s funding mechanism was unconstitutional. In the petition, the CFPB asked the Court to find the Fifth Circuit errored in their holding, and to hear the case this term. Notably, in the petition, the CFPB highlighted recent legal challenges to the CFPB’s regulations following the Fifth Circuit’s decision and said: “Those legal consequences have major practical effects. The CFPB’s critical work administering and enforcing consumer financial protection laws will be frustrated. And because the decision below vacates a past agency action based on the purported Appropriations Clause violation, the decision threatens the validity of all past CFPB actions as well. That threat raises grave concerns not just for the CFPB and consumers, but for the entire financial industry.” The Community Financial Services Association of America (CFSA) filed a request last week with the Supreme Court for a 30-day extension of filing the Brief of Opposition to the CFPB’s petition until January 13, 2023. The CFPB has not indicated any opposition to this later filing deadline. It’s not clear at the moment, but it does appear that the Court is likely to grant the extension based on recent developments. Because the Supreme Court will review the Brief of Opposition before ruling on the CFPB’s writ of certiorari, if granted, it will be at least late January until we hear if the Court will hear the case. Treasury Report on Bank-Fintech Partnerships The U.S. Department of the Treasury, in consultation with the White House Competition Council, has released a report entitled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” The report is a product of President Biden’s July 2021 Executive Order, “Promoting Competition in the American Economy.” In brief, the report calls for enhanced oversight of the consumer financial activities of non-bank firms due to increased risks, including risks related to data security and privacy. Notably, in a section on competition trends in lending, the report did a good job in distinguishing between employer-sponsored EWA programs and direct-to-consumer models, which it referred to as “Early Wage Access.” The report was not as clear on the credit implications of EWA as we would have liked, or as they have in the past. Specifically, the report stated that “the state or federal lending laws applicable to an EWA product may vary based on structure and terms.” This statement seems to conflict with the Treasury Budget Proposal that was released in March, which stated more clearly that EWA products are not a form of credit. This is just a report and not a regulatory proposal, but is something that the IPA will monitor closely. Rep. Perlmutter Draft EWA Bill Democratic Rep. Perlmutter is circulating a draft bill to regulate EWA providers. Our initial reading seems to indicate the focus of the bill is direct to consumer EWA providers. We have reviewed the bill extensively, discussed its potential implications with our members, and met with House Financial Services Committee Republican staff to relay our concerns. At the moment, we are confident the bill will not advance during the Lame Duck session, and is not likely to be introduced at all. With the upcoming Republican Majority, any proposal to regulate EWA next Congress will look vastly different than the Perlmutter proposal, and the IPA will be involved in its crafting. Party Leadership Changes for the 118th Congress Republican representatives have nominated Rep. Kevin McCarthy (R-CA-23) as Speaker of the House for the 118th Congress by a vote of 188-31. Rep. Andy Biggs (R-AZ-5), a member of the conservative House Freedom Caucus, challenged Rep. McCarthy for the nomination. Although a few House races are still undecided, Republicans have control of 218 seats- enough for a majority in the next Congress. On the Democratic side, House Speaker Nancy Pelosi announced she’ll step down as House Democratic leader after leading House Democrats for over 2 decades under 4 presidents, and becoming the first woman to serve as Speaker. Pelosi said she would remain in Congress, and Rep. Hakeem Jeffries of New York is widely considered the front runner to lead the House Democrats, potentially making him the first African-American to lead a party in Congress. Chair Waters Announces Hearing on FTX Failure Chairwoman Waters of the House Financial Services Committee announced a bipartisan hearing into the collapse of FTX and the broader consequences for the digital asset ecosystem. The Committee plans to hear from Sam Bankman-Freid, now-former CEO of FTX, as well as representatives from Alameda Research, Binance, and other related entities. It’s estimated the FTX failures has affected over one million account holders, including individual and retail investors and pension funds. Estimates are that between $1-2 billion in funds was lost, including around $600 million that vanished in an apparent insider hack. HFSC Fintech Task Force Sends Letter to OCC HFSC Ranking Member Patrick McHenry and Republican members of the FinTech Task Force sent a letter to Acting Comptroller Michael Hsu seeking clarification on the OCC’s position on bank-fintech partnerships. The letter included several questions for response on the growth of bank-fintech partnerships, the digitization of banking, regulatory burdens, and the examination of third-party risk management. Acting Comptroller Hsu Remarks at DC Fintech Week OCC Acting Comptroller Michael Hsu delivered remarks at DC Fintech Week 2022, a gathering of academics, officials, and practitioners focused on fintech and regulatory issues. Hsu focused his remarks exclusively on cryptocurrency, both through the lens of his leadership at the OCC, and as a member of FSOC. Hsu noted that although the language and online experience of owning and trading crypto may mimic that of traditional financial assets, the foundational questions of “what exactly do I own?” and “what’s the difference between possession and ownership?” must be answered by the crypto industry if they expect to mature and scale. He also noted the important differences, that some are only now learning, between deposits stored on crypto platforms and FDIC insured bank accounts. US Supreme Court Unclaimed Property Case Last month, the US Supreme Court heard the first oral arguments in an unclaimed property case in over 30 years. In Delaware v. Pennsylvania, potentially hundreds of millions of dollars of unclaimed MoneyGram funds are at stake, with Delaware claiming the funds under common law priority rules because that’s where Moneygram is incorporated, and the plaintiffs, Pennsylvania and 29 other states, arguing the checks are subject to the 1974 Federal Disposition Act which provides that unclaimed funds are to be escheated to the state where they were purchased. During the arguments many of the questions concerned skepticism about DE’s narrow reading of the priority rules. Although the case is limited to the treatment of money orders, it also implicates the rules governing which state’s unclaimed property laws apply. While we don’t expect a ruling until April, May, or June of next year, this is an issue the IPA will continue to monitor. HFSC, E&C letter to Paypal on Acceptable Use Policy Reps. McHenry, McMorris Rogers, Emmer, and Griffith, Republican leaders on the House Committees on Financial Services and Energy and Commerce, sent a letter to Paypal as a follow up to a briefing that was previously provided to the Committees on changes to Paypal’s Acceptable Use Policy that prohibited users from transactions that were “fraudulent, promote misinformation, or are unlawful.” A Paypal spokesperson has since stated the updated user agreement was an error and the reference to promoting misinformation was removed. The letter raised questions of restrictions of free speech and presented several questions for response concerning the Paypal’s process for the approval and publication of updates to their user agreement. Director Chopra Money 20/20 Remarks; CFPB Begins Rulemaking on Personal Financial Data Rights Director Chopra spoke at the Money 20/20 conference in Las Vegas and discussed the CFPB’s new approach to regulations and how, according to Director Chopra, a move away from complicated rulemakings could increase competition in the financial services marketplace. He also previewed the CFPB’s rulemaking process under Section 1033 of the Consumer Financial Protection Act that would require financial institutions offering deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up secure methods, like APIs, for data sharing; and said the CFPB will be working to stop institutions from restricting access when consumers seek to control and share their data. Only a few days after his remarks, the CFPB released their Section 1033 personal financial data rights rulemaking proposals. A link is included in today’s agenda, and they are requesting stakeholder feedback no later than January 23rd. CFPB Seeks Public Comment on Big Tech Payment Platforms The CFPB announced it is reopening a public comment period to gather additional information on the risks that consumers face while using faster payment systems. This is a follow up to a CFPB order last October that requested information from Amazon, Apple, Facebook, Google, PayPal, and Square on their data collection and use, consumer protection, and policies for removing individuals and businesses from their platforms. In this comment period, the CFPB is seeking additional input on companies’ acceptable use policies and their use of fines, liquidated damages provisions, and other penalties. More information can be found in the press release or the Federal Register Notice. CFPB Publishes Bulletin on Crypto-Asset Scams The CFPB released a compliance bulletin detailing an increase in consumer complaints related to crypto-assets. Specifically, the Bureau warned consumers of increased cases of fraud, theft, account hacks, and scams, and said other risks include romance scams, difficulty obtaining restitution after a fraud or hack, fraudulent transactions, risk of identification, and high asset volatility. The bulletin also noted that older consumers and servicemembers can be disproportionately impacted by problems with financial products and services, and can face special concerns or constraints when attempting to solve these problems. The CFPB encourages consumers to be aware of commons scams, report suspicious FDIC insurance claims, and submit complaints to the CFPB if they have an issue with a consumer financial product or service, or feel they are the victim of a scam. Nonbank Supervision Transparency Rule The CFPB finalized changes to their nonbank supervision procedural rule to increase transparency to the public and clarify which standard will applied when deciding what information is appropriate for public release. Specifically, the finalized rule states the CFPB will not publish confidential commercial information, or information which may violate personal privacy. They will also avoid publishing information which may reveal specific violations of law or specific compliance management deficiencies. The final rule will also extend the amount of time available to nonbank entities to provide input to the CFPB about what information should be released from 7 to 10 business days. Gruenberg Nominated as FDIC Chair President Biden has announced his intent to nominate Martin Gruenberg as Chair and Member of the Board of Directors of the FDIC, according to a recently released White House statement. Gruenberg joined the FDIC Board of Directors in 2005 and has served as Acting Chairman since the resignation of Jelena McWilliams at the end of last year. He previously served on the staff of the Senate Banking Committee, as Senior Counsel of the full Committee and Staff Director of the Subcommittee on International Finance and Monetary Policy.  New Federal Bills
None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  Money 20/20 Reception Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here.  Federal Reserve Finalizes Updates to Reg II The Federal Reserve Board has finalized updates to Reg II, the Board’s rule concerning debit card transactions. According the Federal Reserve the final rule is “substantially similar” to their 2021 proposed rule in which the IPA submitted a comment. The final rule will be effective July 1, 2023. In brief, the final rule specifies that debit issuers should enable at least two payment card networks to process all debit card transactions, including “card-not-present” transactions, such as online payments. According to the statement that accompanied the final rule, the Federal Reserve believes this new regulation will encourage competition between networks and incentivize them to improve fraud-prevention capabilities. The Federal Reserve also noted that many debit card issuers are already compliant with the final rule. More information, including a press release, Board memo, and dissenting statement by Governor Bowman, can be found here. CFPB Orders Regions Bank to Pay $191 Million for Overdraft Fees The CFPB announced it is ordering Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by its surprise overdraft fees. According to the CFPB, between August 2018 and July 2021, Regions Banks charged surprise overdraft fees on certain ATM and debit card transactions, even after telling customers they had sufficient funds at the time of the transaction. Specifically, the CFPB asserts Regions Bank employed “complex and counter-intuitive overdraft practices and manipulations.” More information can be found here. CFPB Sues MoneyLion for Overdraft Charges The CFPB announced it is suing MoneyLion for violations of the Military Lending Act. Specifically, the CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents through a combination of stated interest rates and monthly membership fees. The CFPB also alleges MoneyLion required customers to join a membership program to access certain low interest loans, but did not allow them to cancel their memberships until their loans were paid. In a public response after the CFPB’s announcement, MoneyLion stated they have been cooperating with the CFPB for over three years regarding their membership offering, and accused them of prioritizing headlines over constructive dialogue. Notably, this is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years. More information can be found here. Sen. Elizabeth Warren Issues Report on Zelle Fraud Sen. Elizabeth Warren (D-MA) issued a report on fraud on the Zelle platform. The report follows letters to Early Warning Services and the bank-owners of Zelle, including JPMorgan Chase, Wells Fargo, U.S. Bank, PNC, Capital One, Bank of America, and Truist; and the recent Senate Banking Committee hearing during which Warren questioned bank CEOs about reimbursing customers who are victims of fraud on the platform. As expected, the report was highly critical of Zelle, Early Warning Services, the bank-owners of Zelle, and their fraud prevention and reimbursement policies. Notably, the report highlights that an estimated $440 million was lost by Zelle users through frauds and scams in 2021. It is also worth noting that Sen. Warren was the sole sponsor of the report, which was published through her office and not through the Banking Committee, and she was not joined in the report by Sen. Robert Menendez, who had previously co-authored letters to EWS and the bank-owners of Zelle. FSOC Report on Digital Asset Financial Stability Risks and Regulation The Financial Stability Oversight Council released its Report on Digital Asset Financial Stability Risks and Regulations in response to President Biden’s executive order, Ensuring Responsible Development of Digital Assets. The report outlines the specific financial stability risks and regulatory gaps posed by various types of digital assets and provides recommendations to address such risks. Specifically, the report identified three gaps in the regulation of crypto-asset activities in the United States:
The FSOC makes several recommendations in the report including regulatory principles, continued enforcement of existing regulatory structures, steps to address each of the above-mentioned regulatory gaps, and bolstering member agencies’ capacities related to crypto-asset data and expertise. President Biden Announces Two FDIC Nominations President Biden announced his intention to nominate Jonathan McKernan as a Member of the Board of Directors and Travis Hill as a Member and Vice Chair of the Board of Directors at the FDIC. McKernan is currently on detail from the FHFA to the Senate Banking Committee and Hill most recently served as Senior Advisor to the Chairman and Deputy to the Chairman for Policy at the FDIC. Nacha Releases Report on New Risk Management Framework Nacha released a report on its new Risk Management Framework. The report outlines a new strategy for industry participants in both the ACH Network as well as other payment systems in an effort to address fraud that increasingly make use of credit-push payments, including vendor impersonation, business email compromise, and payroll impersonation. Nacha’s strategy identifies three themes in payment risk management:
Federal Reserve Governor Jefferson Highlights Benefits of Payments Technology This week at the Technology-Enabled Disruption conference, organized by the Federal Reserve Banks of Atlanta, Dallas, and Richmond, Federal Reserve Governor Philip Jefferson highlighted the benefits of innovations in the payments system, particularly during the Covid-19 pandemic: “The payments system has also seen an acceleration in alternative online and mobile payment methods as well as contactless payment options. We all remember the onset of the pandemic, when social distancing became imperative and delivery and curbside pickup became the norm for many. Remote card payments naturally rose as in-person use fell. As stores reopened while the fear factor was still considerable, the contactless payment options that were available on cards and mobile devices received more attention. Such changes, coupled with the growing prominence of person-to-person money transfer apps, provided consumers with remote and touchless cash substitutes in their daily lives. The expanded use of those various payment options rested on the foundation of an intricate, robust payments ecosystem. That system supported a migration from in-person payment options to no-contact alternatives, helping restart the economy during a time of deep stress.” His full remarks can be found here.  New Federal Bills
None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. Compliance Boot Camp The IPA will gather in Chicago on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here. Money 20/20 Reception Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here. Senate Democrats Send Letter to CFPB on P2P Fraud Senators Casey (D-PA), Blumenthal (D-CT), Warren (D-MA), Gillibrand (D-NY), all members of the Senate Special Committee on Aging, along with Sen. Cortez Masto (D-NV), sent a letter to CFPB Director Rohit Chopra expressing concern with the increased prevalence of fraud on P2P payment platforms such as Venmo, Cash App, PayPal, and Zelle, particularly targeted toward older adults. According to the letter, the CFPB is currently considering guidance to broaden the definition of unauthorized transactions, which would shift some of the burden of these losses from consumers to banks and P2P apps. The Senators encouraged the CFPB to move forward in issuing guidance to provide seniors with better tools to protect themselves and their families. Acting Comptroller Hsu Remarks on Safeguarding Trust in Banking Acting Comptroller Michael Hsu delivered remarks at The Clearing House and Bank Policy Institute’s Annual Conference. His remarks were intended to provide an update on his priorities as Acting Comptroller- guarding against complacency, addressing inequality, adapting to digitalization, and managing climate-related risk. Notably, in his remarks, Acting Comptroller Hsu compared the increase in bank-fintech partnerships to the run up to the 2008 financial crisis and said: “The “de-integration” of banking services that is taking place now has its roots in technology, data, and operations and is affecting all banks, not just the large, money center banks. My strong sense is that this process, if left to its own devices, is likely to accelerate and expand until there is a severe problem or even a crisis. Like the globalization of manufacturing and the disintermediation of credit, the efficiency gains of these changes can be enjoyed immediately, while the most material risks do not manifest for some time.” FDIC-FinCEN Digital Identity Tech Sprint FinCEN has published key takeaways on their digital identity-focused Tech Sprint, available here. Through the Tech Sprint, the FDIC and FinCEN challenged teams to develop solutions to measure the effectiveness of digital identity credentials. Specifically, the Tech Sprint asked teams to answer the following question: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?” More information on the FDIC-FinCEN Tech Sprint Program can be found here. Senate Banking Committee Hearing on New Consumer Financial Products The Senate Banking Committee held a hearing entitled “New Consumer Financial Products and the Impacts to Workers.” A recording of the hearing and witness statements can be found here. Witness statements and member questions focused on BNPL, Training Repayment Programs, student loans, and EWA. When EWA was discussed, members and witnesses focused mostly on direct-to-consumer and tip-based models. In his opening statement, Chairman Sherrod Brown was critical of tip-based models, but acknowledged that “employer-based earned wage advances with strong consumer protections can, in fact, help workers cover unexpected expenses or emergencies.” In his opening statement, Ranking Member Toomey described EWA as “an appealing alternative to payday loans for workers who want an advance on their wages. Many people don’t have savings available to pay for unexpected expenses that can arise in between pay periods….EWA can help consumers to meet such expenses and others…” He also noted that market competition is the best way to achieve consumer protection and warned against burdensome regulation that could stifle innovation. The IPA met with senior Committee staff in advance of the hearing to educate them on EWA. We were pleased to see that during the hearing members differentiated between direct-to-consumer and employer-sponsored programs and there were no overt criticisms of employer-sponsored programs. CFPB Releases Market Report on BNPL The CFPB released a market report as a follow up to its December 2021 market monitoring orders to five Buy Now Pay Later lenders. The market report summarizes the data, individual and organizational submissions to the CFPB, and publicly available sources to provide a review of the BNPL marketplace and consumer impacts. The report identifies both financial and operational benefits of BNPL loans over legacy credit products and outlines three categories of potential consumer risks: discrete consumer harms, data harvesting, and borrower overextension. CFPB Director Chopra’s remarks on the release of the BNPL market report can be found here. Treasury Releases Reports on Digital Assets As assigned in President Biden’s Executive Order on “Ensuring Responsible Development of Digital Assets, the Treasury released three reports on digital assets, individually focused on the future of money and payment systems, consumer and investor protection, and illicit finance risks. The White House also released a Fact Sheet this morning outlining the reports and announcing further steps to protecting consumers and ensuring fair play in digital assets. The reports and their recommendations can be accessed below: New Federal Bills
None New Federal Bills None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  IPA Op-Ed in Newsweek on CFPB Advisory Opinion Process Ben Jackson, Chief Operating Officer of the IPA, published an op-ed in Newsweek on the CFPB’s advisory opinion process. In it, Ben reviews the history of the CFPB’s 2020 AO on Earned Wage Access and explains the positive effect of the framework on the industry. Ben also discusses Director Chopra’s recent blog post and the potential review and/or recission of established advisory opinion. Finally, Ben encourages the CFPB and Director Chopra to meet with EWA industry representatives before taking any regulatory action to rescind, amend, or enhance the 2020 EWA Advisory Opinion. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.  DOJ Releases Opinion on Authority of FDIC Chairperson Yesterday the Department of Justice Office of Legal Counsel released an opinion, requested by the FDIC Board, on the authority of the majority of the FDIC Board to present items for vote and decision. In the opinion, the Office of Legal Counsel states that the Chairperson of the FDIC does not have the authority to prevent a majority of the FDIC Board from presenting items to the Board for a vote and decision. The opinion cites the Federal Deposit Insurance Act of 1950 as the vesting substantive and procedural powers of the FDIC in the Board, not the Chairperson. Former FDIC Chairperson Jelena McWilliams resigned from her position in December 2021 after disagreements with the majority of the FDIC over the Chairperson’s authority to control the agenda of the Board. Martin Gruenberg currently serves as acting Chairman of the FDIC. CFPB Takes Action to Protect the Public from Shoddy Data Security Practices In a circular published August 11th, the CFPB stated that financial companies may violate the Consumer Financial Protection Act if they fail to implement adequate measures to safeguard consumer data against data security incidents. The circular did not suggest any particular security practice is required under the Consumer Financial Protection Act but did note some examples where failure to implement certain practices, such as multi-factor authentication, adequate password management, and timely software updates, may increase the risk that a firm’s conduct may trigger liability. Federal Reserve Announces Final Guidelines for Master Account Access The Federal Reserve has announced final guidelines that establish a transparent, risk-based, and consistent set of factors to be used in reviewing requests to access Federal Reserve accounts and payment services. The new guidelines include a tiered review framework to provide additional clarity on the level of due diligence and scrutiny that will be applied to different types of institutions with varying degrees of risk. Ranking Member Toomey Sends Letter to FDIC on Crypto-Related Businesses Sen. Pat Toomey (R-PA), Ranking Member of the Senate Banking Committee, sent a letter to the FDIC alleging the FDIC is deterring banks from doing business with lawful crypto-related companies, even without any FDIC determination that that the companies are providing unlawful or impermissible services. The letter draws a comparison to the Obama-era Operation Choke Point, in which the FDIC encouraged banks to deny services to legal yet politically disfavored businesses. Specifically, the letter refers to whistleblower communications that allege the FDIC’s Washington, D.C. headquarters is urging FDIC field offices to send letters to multiple banks requesting they refrain from expanding relationships with crypto-related companies, and that the FDIC may be abusing its supervisory powers to the same effect. The letter includes several questions on FDIC policies related to crypto-related businesses and specific communications and memoranda. FDIC Issues Supervisory Guidance on Multiple Re-Presentment NSF Fees The FDIC issued guidance to supervised institutions addressing compliance risks associated with assessing multiple non-sufficient funds (NSF) fees as a result of the re-representment of the same unpaid transaction. According to the guidance, many financial institutions charge NSF fees when checks or ACH transactions cannot be covered by the customer’s balance. After being declined, merchants may subsequently resubmit transactions for payment, increasing the risk of additional NSF fees for the same transactions. The guidance further states that the charging of multiple NSF feeds arising from the same unpaid transaction can increase risks of violations of laws prohibiting unfair or deceptive acts or practices (UDAP), and that the FDIC will take appropriate action to address both consumer harm and violations of law regarding re-presentment NSF fee practices. CFPB Issues Public Request for Comment on Credit Card Data Survey The CFPB published a blog post and public request for comment related to their Terms of Credit Card Plans (TCCP) Survey, through which they collect data twice per year from credit card issuers. The CFPB announced in the blog post that they are considering modernizing the TCCP survey by collecting median rates by credit score tiers to give consumers more predictability before they apply for credit; gathering information on credit cards available to specific communities or groups; requiring the biggest issuers to submit information about each general purpose credit cards instead of only products with the largest number of accounts; and allowing a broader range of institutions to participate in the TCCP Survey. The CFPB encourages the public to submit comments through the Federal Register until October 17th. CFPB Alleges Block Is ‘Slow-Walking’ Cash App Investigation The CFPB has asked a federal judge to force Block to comply with demands related to investigations looking into Cash App’s handling of complaints and disputes. In mid-2020 the CFPB opened an investigation into Block’s Cash App payment tool relating to the handling of customer complaints and disputes. The investigation appears to be similar to the CFPB’s investigation into Zelle, with a focus on chargebacks and violations of Reg E. The CFPB made document requests in August 2020 and August 2021, with deadlines no later than December 2021. The CFPB has now filed a petition in mid-August asking the US District Court for the Northern District of California to enforce a civil investigative demand. In the petition, the CFPB alleges Block has failed to turn over documents requested related to six specific questions. According to Block, however, they have been in regular communication with the CFPB relating to the document requests and were waiting for a response to their most recent communication when the CFPB’s petitions was filed. Tentative Senate Banking Committee September Hearing Schedule Below is a tentative September hearing schedule for the Senate Banking Committee. EWA and/or BNPL may discussed during the listening session on the 7th and the hearing on the 13th. We will monitor hearing memoranda for topics of interest to our members. September 7, 10:30 AM- Virtual Listening Session: consumer products impact on the dignity of work (payday lending and other work related products) September 8, 10:00 AM- Full Committee State of Insurance September 13, 10:00 AM- Full Committee New Risks to Consumers September 15, 10:00 AM- Full Committee SEC Oversight w/ Chair Gensler  New Federal Bills
None Pending Federal Bills Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  IPA Comment to the CFPB regarding EWA Advisory Opinion The IPA has officially filed our comment letter in response to Director Chopra’s request for public input on the CFPB’s regulatory approach. We appreciate everyone’s comments and assistance in moving quickly through the drafting process. Protocol Article on EWA Last week, the technology industry website Protocol published an article, available here, on federal and state EWA regulatory efforts. The IPA worked with Protocol to shape the article, and IPA President Brian Tate was quoted, as were a number of IPA members. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.  Rep. Walorski (R-IN) Killed in Car Accident Rep. Jackie Walorski (R-IN) was killed in a car accident in Indiana last Wednesday, August 3rd, along with two staff members, Zach Potts and Emma Thomson, and the driver of another vehicle. After serving in the Indiana House of Representatives from 2004 to 2010, Walorski began serving in the U.S. House of Representatives in 2013 and served on the Ways and Means Committee since 2017. Most recently she served as the Ranking Member of the Worker and Family Support Subcommittee. Because her death came more than 74 days before the November election, Indiana Governor Eric Holcomb must now schedule a special election to pick her successor. Republicans will also caucus to select the candidate to run against Democrat Paul Stuery on the general election ballot on November 8th. Senate Passes Inflation Reduction Act This weekend the Senate passed a spending bill, known as the Inflation Reduction Act, on party lines with Vice President Kamala Harris casting the tie-breaker vote. The bill attempts to tackle climate change, the high cost of prescription drugs, and lower the deficit by roughly $300 billion. The bill was scaled down significantly from what Democrats previously attempted to pass in the Build Back Better Act. Notably, the legislation creates a 15% minimum tax for corporations making $1 billion or more. A proposal to narrow the carried interest loophole was removed from the bill and replaced with a 1% excise tax on stock buybacks. After opposition from West Virginia Senator Joe Manchin, an extension of the Child Tax Credit was also removed. The bill now heads to the House of Representatives, where Speaker Pelosi hopes to put the bill on the House floor before the end of the week. Sens. Stabenow and Boozman Introduce Crypto Legislation Senators Debbie Stabenow (D-MI) and John Boozman (R-AR), Chairwoman and Ranking Member of the Senate Agriculture, Nutrition, and Forestry Committee, introduced the Digital Commodities Consumer Protection Act of 2022 to give the CFTC the authority to regulate digital commodities. Specifically, the bill:
CFPB Director Chopra Prioritizes Enforcement Over Education In a speech before a fintech conference sponsored by the Philadelphia Federal Reserve Bank, CFPB Director Rohit Chopra said that, while he understands the importance of consumer financial education, under his leadership the Bureau is focusing on enforcement actions to punish bad actors. This is a change in priorities from former Trump-appointed CFPB Director Kathy Kraninger, who prioritized financial literacy and education. Chopra said that financial education can sometimes make consumers overconfident in their abilities to spot scams and risky behavior. The full text of Chopra’s remarks have not yet been published, but will likely be available in the CFPB Newsroom in the next week. CFPB Releases Report on Consumer Data Protection in Payments The CFPB released a report entitled “The Convergence of Payments and Commerce: Implications for Consumers.” The report addresses recent innovations in the payments ecosystem and the potential for misuse of consumer spending, transaction, and behavioral data in “super apps,” BNPL, and embedded commerce. According to the report, the CFPB intends to propose rules to implement required rulemaking on personal data rights pursuant to Section 1033 of the Consumer Financial Protection Act to give consumers greater control over their financial data; and will be issuing a report of findings from its BNPL market monitoring orders to determine whether regulatory interventions are appropriate. CFPB Director Chopra American Banker Interview CFPB Director Rohit Chopra sat for an interview with American Banker in which he discussed a number of topics affecting our members, including the entry of tech firms into the financial industry, banks’ reliance on overdraft fees, and his concern with real-time payment apps. In particular, Chopra expressed concern with implications for the banking system when fintech firms move outside traditional banking rails. Chopra also said the CFPB is looking at the real-time payment fraud holistically beyond one single app (Chopra would not comment specifically about fraud on the Zelle platform). A summary of the interview can be found here. FDIC Issues Fact Sheet on FDIC Deposit Insurance and Crypto Companies The FDIC issued a fact sheet to the public on FDIC insurance and crypto companies, available here. Central to the fact sheet is the statement that the FDIC only insures deposits held in insured banks and does not insure assets issued by non-bank entities, such as crypto companies. According to the press release, some crypto companies have recently made inaccurate claims to their customers that their products are eligible for FDIC deposit insurance coverage. This fact sheet follows a final rule, approved in May, implementing their its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance.  New Federal Bills
Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.   FDIC Issues Update on Brokered Deposits The FDIC published an update to the Brokered Deposit page on their Banker Resource Center. As you recall, the Final Rule had two exceptions: 1) the “25 percent test,” which provides that an entity will not be considered a deposit broker if less than 25 percent of the total assets that the agent has under administration for its customers, in a particular business line, is placed at an Insured Depository Institutions (IDI), and 2) the “Enabling Transactions Test,” which provides that an entity will not be considered a deposit broker if 100 percent of depositors’ funds that the third party places at IDIs are placed into transactional accounts that do not pay any fees or interest to the depositor. Our initial thoughts are that FDIC’s statement does not appear to substantively change the “Enabling Transactions” exception. Rather it seems to be focused on companies availing themselves of the “25 Percent Test.” It appears that the FDIC believes that some companies are using the 25 Percent Test as a cover that they are conducting matchmaking activities and not reporting properly to the FDIC. NY State Credit Card Reward Points Bill Goes Takes Effect in December NY Senate Bill S133B, which was signed into law by New York Governor Kathy Hochul, will take effect this December. The bill will provide a 90-day grace period for the use of credit card reward points before an account is modified, cancelled, closed, or terminated. While the bill does not contain any specific penalty provisions, it does amend New York’s general business law, so both private plaintiffs and the state attorney general could have standing to bring actions to ensure compliance. CFPB Sues ACE Cash Express for Concealing No-Cost Repayment Plans and Improperly Withdrawing Consumers’ Funds The CFPB filed a lawsuit against payday lender Ace Cash Express, accusing the lender of concealing free repayment plans from borrowers. According to the press release, individual borrowers paid hundreds or thousands of dollars in fees when they were eligible for free repayment plans. This generated at least $240 million in fees for ACE. ACE also withdrew money from borrowers’ bank accounts in violation of contracts. CFPB Director Chopra Blog Post on Competition in Financial Markets CFPB Director Rohit Chopra published a blog post highlighting the actions the CFPB has taken over the last year to promote competition in financial markets. Specifically, Director Chopra discussed CFPB efforts to identify obstacles for consumers to refinance or switch financial providers, and roadblocks that small financial institutions and new entrants face when challenging larger financial institutions. Director Chopra also highlighted CFPB’s recent initiatives related to the fee RFI and their rulemaking to address credit card late fees. Michael Barr confirmed as Fed Vice Chair for Supervision Michael Barr was confirmed as the Fed Vice Chair of Supervision with bipartisan support and a vote of 66-28. Barr is a former senior Treasury Department official who played a role in shaping the Dodd-Frank Act. The Fed Vice Chair for Supervision position has been vacant since late last year. In this role, Barr will oversee day-to-day oversight of the nation’s largest financial institutions and will play a role in the development of financial regulatory policies. Federal Regulators Fine Bank of America $225 Million Over Botched Disbursement of State Unemployment Benefits The CFPB is fining Bank of America $100 million for botching the disbursement of state unemployment benefits during the pandemic. Separately, the OCC is fining the bank $125 million. The CFPB alleges the bank froze accounts of consumers using a faulty fraud prevention program, and then provided little recourse when there was, in fact, no fraud. In addition to the fine, Bank of America must pay back the money they wrongfully denied consumers and provide a lump sum consequential harm payment. Additional information on the OCC’s fine can be found here. Sen. Kennedy introduces CFPB transparency bill Sen. John Kennedy (R-LA) introduced the Transparency in CFPB Cost-Benefit Analysis Act. The bill would, in part, require the CFPB to conduct a cost benefit analysis of all proposed regulations, including compliance costs, effects on economic activity, efficiency, competition and capital formation; regulatory and administrative costs; and costs imposes on state, local, and tribal entities. More information on the bill can be found here. CFPB blog post on overdraft/NSF fee revenues Last week the CFPB published a blog post on banks’ reliance on overdraft and NSF fees. Specifically, their research found that overdraft/NSF fee revenues continued to be depressed in 2021 and stayed below their 2019 volume by 27.4 percent. In the first quarter of 2022, overdraft/NSF fee revenues stopped their decline and reversed somewhat and were 20.1 percent below their corresponding 2019 levels.  New Federal Bills
None. Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud/Government Benefits, and Cryptocurrency. Registration information can be found here. New Member Q&A with Nico Simko CEO & Co-Founder, Clair IPA COO Ben Jackson conducted a Q&A with Nico Simko, CEO & Co-Founder of Clair. You can learn more about this digital banking platform and their services here. Proliferation of Email Scams Warrant Increased Diligence IPA Head of Government Relations Chris Stromberg was targeted in an email spoof scam co-starring IPA President Brian Tate. You can read more about his experience and get tips on avoiding similar scams here. CFPB Rescinds Sandbox Approval Order for Payactiv The CFPB issued an order terminating Payactiv’s Sandbox Approval Order relating to their earned wage access product. The approval order had been in effect since December 2020, and Payactiv requested its termination on June 21st. Notably, the press release states that the CFPB has received requests for clarification regarding its advisory opinion on EWA, and that they plan on issuing further guidance to provide clarity on the definition of “credit” under TILA and Regulation Z. Joint Statement on the Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence The Federal Reserve, FDIC, FinCEN, NCUA, and OCC issued a joint statement to remind banks of the risk-based approach to customer due diligence. In the statement, the Agencies reinforced their position that no customer type presents a single level of uniform risk or a particular risk profile related to money laundering, terrorist financing, or any other illicit financial activity. Further, a risk-based approach to customer due diligence should be used to develop the initial risk profile and conduct ongoing monitoring to identify and report suspicious transactions and to update customer information. Waters Announces July House Financial Services Committee Schedule Chairwoman Waters announced the House Financial Services Committee’s July hearing schedule. Notably, the Committee will hold a hearing on CRA reform and a legislative markup on the 27th. The committee also will hold a hearing on mass shootings, and oversight hearings for the SEC Division of Enforcement and the Federal Housing Finance Agency CFPB Issues Advisory on Sharing Credit and Background Reports The CFPB issued an advisory to ensure that companies that use and share credit and background reports have a permissible purpose under the Fair Credit Reporting Act (FCRA), and reminds covered entities of potential criminal liability for certain misconduct. The advisory notes that FCRA section 604 identifies an exclusive list of permissible purposes for which consumer reporting agencies may provide consumer reports, and agencies may not provide reports for any other purpose. Some common permissible purposes include using consumer reports for credit, insurance, housing, or employment decisions. Treasury Releases Fact Sheet on International Engagement on Digital Assets The Department of Treasury released a fact sheet on the framework for interagency engagement with forum counterparts that they, in partnership with the Departments of State and Commerce, and the U.S. Agency for International Development, developed as directed in the President’s Executive Order on digital assets. Specifically, the fact sheet outlined a framework for engagement with the G7, G20, Financial Stability Board (FSB), Financial Action Task Force (FATF), Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), the World Bank, other standard-setting bodies, and regional and bilateral engagements. Senators Send Letter to Zelle to Crack Down on Fraud Eight Democratic Senators, led by Sens. Bob Menendez, Elizabeth Warren, and Jack Reed, sent letters to Capitol One, Wells Fargo, PNC Bank, JPMorgan Chase, US Bank, Bank of America, and Truist, owners of Zelle through parent company Early Warning Services. The letter criticized the banks for not doing more for customers defrauded by scammers on Zelle. The letter follows a similar letter sent by senators in April to Early Warning Services. In response to that letter, the company said they have already made changes such as real-time alerts to ask users to consider if they know and trust the recipient before initiating a transaction using the service. The letters include five questions for response on the prevalence of fraud on the Zelle platform and the banks’ policies for detecting, eliminating, and mitigating the effects of fraud. New Federal Bills
None. Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Digital Wallets – Peer-to-Peer “P2P” Payment Systems Rachel Gittlemen of the Consumer Federation of America has published a blog posthighlighting the popularity of the mobile payment and peer-to-peer payment systems, lack of FDIC deposit insurance and regulatory oversight, and consumer data privacy concerns. Financial Services Committee Passes 10 Bills During a legislative markup last week the Financial Services Committee passed 10 bills and sent them to the House floor for consideration. Notable bills include a measure to provide whistleblower incentives and protections, which passed by a voice vote; and a bill which would eliminate a regulatory exemption that allows firms to operate FDIC- insured banks as industrial loan companies without being subject to traditional supervision requirements. Rep. Carolyn Maloney’s (D-NY) Overdraft Protection Act was initially noticed in the markup announcement but was not considered during the actual markup. Data Privacy Bill Passes Subcommittee The American Data Privacy and Protection Act was reported favorably by the House Energy and Commerce Committee, Subcommittee on Consumer Protection and Commerce. The bill has been sent to the full Committee for consideration. The bill would give consumers more control over their online data and would require companies to minimize the amount of information they collect. The bill would preempt all but 15 state privacy laws and would create a private right of action. Sen. Warren Request OCC Block TD Bank Merger Sen. Elizabeth Warren sent a letter to the Office of the Comptroller of the Currency requesting they block TD Bank’s acquisition of Tennessee-based First Horizon until allegations of customer fraud at the bank are investigated. Warren cited a May 4th report by Capitol Forum which alleged TD Bank incentivized employees to enroll customers in new accounts and services such as overdraft protection without their consent. These allegations of fraud and abuse were investigated by the OCC in 2017,but Acting Comptroller Noreika refused to publicly reprimand or fine the bank. The letter asks that the OCC release the result of the 2017 investigation into TD bank, review Norieka’s decision to forego penalties, and prevent the proposed merger and any future mergers until the allegations are addressed. CFPB Launches Initiative to Improve Customer Service at Big Banks The CFPB has issued a Request for Information in an attempt to improve customer service at big banks. Specifically, the CFPB is interested in customer services challenges that customers face, and the effect on their ability to access financial products and services. CFPB Blog Post on BNPL and Credit Reporting This morning the CFPB published a blog post about the inclusion of Buy Now Pay Later payments in consumer credit scores. The blog notes that the three largest nationwide consumer reporting companies, Equifax, Experian, and TransUnion, have described plans to accept BNPL payment data, but that inconsistent treatment may limit the potential benefits to consumers and the credit reporting system. The Bureau pledged to monitor the progress of BNPL providers and consumer reporting agencies as the market grows and more payment data is provided. CFPB Blog Post on Overdraft The CFPB has published a blog post on the impact of overdraft programs on consumers. The blog post did not reveal any new information but reminded readers of two December 2021 research reports on overdraft fees, described a supervision effort to collect information on overdraft from over 20 financial institutions, and highlighted CFPB efforts to encourage banks to reduce or eliminate overdraft fees. CFPB Director Chopra Blog Post on Financial Regulation The CFPB has published a blog post authored by Director Rohit Chopra, outlining the Bureau’s efforts to simplify rules and regulations, and to increase the amount of guidance provided to the financial industry. Director Chopra also noted several rulemaking priorities, including those related to consumer access to their financial records, increasing transparency in the small business lending marketplace, and implementing quality control standards for automated valuation models. Notably, Director Chopra also highlighted that the CFPB is considering utilizing Congressional authority to register certain nonbank financial companies to identify potential scammers and those that repeatedly violate the law. Rep. Himes Publishes Proposal for CBDC Rep. Jim Himes (D-CT), has published a whitepaper entitled “Winning the Future of Money: A Proposal for a U.S. Central Bank Digital Currency” with the goal of beginning a dialogue and debate that will lead to draft legislation to create a U.S.-issued Central Bank Digital Currency (CBDC). The whitepaper outlines the advantages of a CBDC over a privately issued stablecoins and highlights that a CBDC should not be thought of a replacement for legacy payment systems and currencies but as an alternative for consumers and businesses. CFPB Announces Review of Credit Card Company Late Fees The CFPB has issued an Advanced Notice of Proposed Rulemaking (ANPRM) seeking information on credit card late fees, asking credit card issuers, consumer groups, and the public to provide answers to several questions related to late fees and late payments. The deadline for submitting comments is July 22, 2022. McHenry Releases Discussion Draft of Financial Data Privacy Bill Rep. Patrick McHenry (R-NC), Ranking Member of the House Financial Services Committee, released a discussion draft of a financial data privacy bill. The bill would grant consumers control over their personal information, and would ensure consumers have the right to terminate collection of their data and/or request deletion of their data at any time. The bill would also create a national standard to reduce compliance burden and provide certainty to consumers and entities that handle financial data. NY State Legislature Passes A266 NY Assembly Bill 266 has passed the Assembly and Senate and is now awaiting the Governor’s signature. The bill would require notice of potential gift card scams to be displayed wherever gift cards are sold. The bill as introduced was initially very prescriptive and gave the exact language of the notice but, as passed, the bill only requires a conspicuous notice at or near the physical location where the sale occurs. New Federal Bills
Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) Pending Federal Bills S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022 Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would provide that payment stablecoin issuers must choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank, and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415- To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022 Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021 Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
 Lummis-Gillibrand Responsible Innovation Act The long-anticipated text of the "Lummis-Gillibrand Responsible Innovation Act” sponsored by U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) was released on June 6th. In brief, the bill attempts to build a framework around the cryptocurrency ecosystem by, amongst other things, mandating requirements for stablecoins; formally defining terms; outlining a clear distinction between digital assets that are commodities or securities by examining the rights or powers conveyed to the consumer via disclosures; underscores that existing law requires the Federal Reserve banks to make available payment, clearing and settlement services to any depository institution chartered under State or Federal law; and by establishing an Advisory Committee on Financial Innovation with the goal of studying and reporting to regulators on the evolving digital asset market. The specific sections of the bill are outlined below:
House Energy and Commerce Committee Releases Bipartisan Privacy Bill the House Committee on Energy and Commerce regarding their bipartisan Discussion Draft of Comprehensive Data Privacy legislation. You can also find a section-by-section breakdown of the Discussion Draft here. At this time the Discussion Draft is expected to the focus of a hearing by the E&C Committee on June 14th. Lastly, attached above is a Senate version of the bill that was authored by U.S. Senator Maria Cantwell (D-WA). HFSC Advances Eight Bills The House Financial Services Committee held a legislative markup and passed the Payment Choice Act of 2022 by a bipartisan vote, which would require retail establishments to accept cash payments for goods and services in amounts less than $2,000. It also passed the Expanding Financial Access for Underserved Communities Act, which would expand the field of membership for all federal credit unions. A bill which would eliminate a regulatory exemption for industrial loan companies was withdrawn. McHenry, Luetkemeyer Send Letter to Chopra on Expanded UDAAP Policy House Financial Services Committee Ranking Member Patrick McHenry and Subcommittee on Consumer Protection and Financial Institutions Ranking Member Blaine Luetkemeyer sent a letter with 17 of their Republican colleagues to CFPB Director Rohit Chopra to express concern with the CFPB’s recently released unfair, deceptive, or abusive acts and practices (UDAAP) supervisory policy and recent changes to the rule governing CFPB administrative adjudications. The new UDAAP policy will allow the CFPB to target discrimination, whether intentional or unintentional, as an “unfair” practice in all consumer financial products and services. While the Congressmen acknowledged there is no place for discrimination in financial services, they criticized the move as an expansion of CFPB’s statutory authority done outside of the typical notice and comment process. The letter included several questions for response focused on the rulemaking and enforcement of the expanded policy. CFPB Clarifies State Enforcement Authority The CFPB issued an interpretive rule that clarified states’ roles in the enforcement of the Consumer Financial Protection Act of 2010. Specifically, the interpretive rule affirms that states can enforce the Consumer Financial Protection Act, including the provision making it unlawful for covered persons or service providers to violate any provision of the federal consumer financial protection law. It also says that nothing in the Consumer Financial Protection Act precludes complementary enforcement activities on the national and state level and it outlines the broad cross-section of companies and individuals against which a state can purse claims. CFPB Issues Blog Post on Nonbank Supervision As a follow up to their recent announcement that they will increase supervision of nonbank institutions, the CFPB has released a blog post with additional details that may be helpful to institutions when assessing whether or not they may be subject to additional CFPB supervision. The post answers several questions related to CFPB’s supervisory authority and examinations, and provides useful links. CFPB Issues Press Release on Black-Box Credit Models The CFPB issued a Consumer Financial Protection Circular that outlines a company’s responsibilities when denying a credit application or taking any other adverse actions using complex algorithms or black-box credit models. The Circular notes that use of artificial intelligence in credit decisions does not absolve a company from adverse action notice requirements under the Equal Credit Opportunity Act (ECOA), and that noncompliance with ECOA notification requirements cannot be justified on the mere fact that the technology used to make the credit decision is too complicated or opaque for the applicant to understand. HFSC Chair Waters Announces June Committee Schedule House Financial Services Committee Chair Maxine Waters has announced the Committee’s June hearing schedule. Notably, Federal Reserve Board Chair Jerome Powell will appear before the Committee on June 23rd for a hearing on monetary policy and the state of the economy. Bank of America Hit With Class-Action Lawsuit Related to Zelle Fraud Bank of America is facing a class action lawsuit related to the fraud on the Zelle platform. IPA is still reviewing the complaint, but paragraph five should be of particular interest to our members: “BofA prominently touts Zelle to its accountholders as a secure, free, and convenient was to make money transfers. However, it misrepresents and omits a key fact about the service that is unknown to accountholders: that there is virtually no recourse for consumers to recoup losses due to fraud. Indeed, unlike virtually every other payment method commonly used by American consumers—debit cards, credit cards, and checks—there is no protection for accountholders who are victims of fraud, and virtually no recourse for accountholders attempting to recoup losses due to fraud.” CA DFPI Issues Invitation for Comments on Crypto-Related Financial Products and Services As a follow-up to Governor Newsom’s recent Executive Order on blockchain development, the California Department of Financial Protection and Innovation has issued an invitation for comments from stakeholders and the public on the development of regulatory clarity in the offering of crypto asset-related financial products and services. More information, including a link to submit comments, can be found here. CA DFPI Releases Consumer Complaint Proposal The IPA has recently learned that the California’s Department of Financial Protection and Innovation (DFPI) has released a Notice of Proposed Rulemaking to implement, interpret, clarify, and make specific, certain sections of the California Consumer Financial Protection Law (CCFPL) that impose requirements on covered companies to respond to consumer complaints and report information about those complaints and responses to the DFPI. Specifically, the DFPI is proposing to make explicit what it means to provide a timely response to consumers and to the Department regarding complaints against or inquiries concerning a covered person. Covered persons are expected to have appropriate procedures to review, investigate, respond to, track, and report consumer complaints and inquiries. Notably, these proposed procedures apply to complaints received directly by a company — they are not limited to complaints submitted to the DFPI. For each complaint, covered persons must provide the complainant with a written acknowledgement of receipt. The deadline to submit comments to the CA DPFI is July 5th. FinCEN Issues ANPRM For No-Action Letters The Financial Crimes Enforcement Network (FinCEN) has issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on questions related to the implementation of a no-action letter process at FinCEN. A June 28, 2021 FinCEN report to Congress concluded that FinCEN should undertake a rulemaking to establish a no-action letter process to supplement the existing regulatory guidance and relief that parties may request from FinCEN. Several benefits of no-action letters were noted, including encouraging dialogue with the public, promoting a culture of compliance, and enhancing transparent enforcement of the Bank Secrecy Act.  New Federal Bills
None. Pending Federal Bills The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would provide that payment stablecoin issuers must choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank, and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415- To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022 Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021 Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 17 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. |
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