The Government Update
is 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: firstname.lastname@example.org.
2022 Innovative Payments Conference
Last week IPA members traveled to Washington, D.C. from around the country to attend the 2022 Innovative Payments Conference. Attendees interacted with federal legislators and regulators, industry representatives, law enforcement, and policy experts on important and timely issues that affect our industry. We appreciated everyone who attended and participated in the event!
HFSC GOP Letter to CFPB Dir. Chopra
Rep. Blaine Luetkemeyer, Ranking Member of the HFSC Subcommittee on Consumer Protection and Financial Institutions joined Committee Ranking Member Patrick McHenry and nearly every Republican Committee Member in a letter to CFPB Director Rohit Chopra highlighting concerns with the CFPB’s “Financial Services” RFI. The letter included over a dozen questions for response, focusing on the potential for consumer harm if overdraft protection is removed as an option, the definition of “junk fee,” and the CFPB’s plans for rulemaking in this space. In addition, the IPA consulted with Luetkemeyer’s staff during the drafting of this letter, and we were pleased to see questions about existing prepaid account disclosure requirements, and fees collected by prepaid accounts.
HFSC Hearing on Overdraft Fees
The House Financial Services Committee Consumer Protection and Financial Institution Subcommittee held a hearing entitled “The End of Overdraft Fees? Examining the Movement to Eliminate the Fees Costing Consumers Billions.” The conversation on overdraft went as expected, with Democrats claiming overdraft fees more negatively affect lower-income Americans, and Republicans highlighting overdraft protection as a short-term liquidity tool that many Americans use to their advantage.
Most notably for the IPA, Subcommittee Ranking Member Blaine Luetkemeyer spent much of his opening statement criticizing the CFPB’s “junk fee” RFI and highlighting the strict disclosure requirements of the prepaid industry. His full statement can be found here.
Sen. Toomey Announces Stablecoin Regulatory Framework Bill
Sen. Pat Toomey, Ranking Member of the Senate Banking Committee, released draft legislation entitled the Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act. The proposed 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. More information, including a press release and section-by-section summary, can be found here.
FDIC Notification of Engaging in Crypto-Related Activities
The FDIC has requested information from any FDIC-supervised institutions that currently engage, or intend to engage in, crypto-related activities. The specific information requested is outlined in a Financial Institution Letter. The FDIC will review the information and provide relevant supervisory feedback.
Chairman Brown Falsely Claims Digital Banks Put Uses at Risk
Senate Banking Committee Chairman Sherrod Brown (D-OH) was recently quoted in Business Insider as saying "Fintech companies that want to act like banks–but without the consumer protections and safeguards that actual banks must adhere to–put people's hard earned money at risk. Consumers shouldn't be getting locked out of their accounts.” In response to this statement, Forbes published an article this week entitled “US Senator Falsely Claims Chime And Digital Banks ‘Make Users Vulnerable To Losing Their Money’” in which the contributor pointed out the numerous facts and data points that Chairman Brown ignored when making the statement.
New 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.
Pending Federal Bills
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 30 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.
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