August 10, 2022
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.
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.
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