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.
0 Comments
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. 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 Payments Pod: Talking Taxes, Fees, and Fintech Regulation with Brian and Brian In the latest episode of the IPA Payments Pod we take a deep dive into some of the most recent regulatory activity with Brian Tate, the IPA’s CEO, and Brian Axell, of Axell Law, who has worked on compliance with Fintechs, issuing banks, and a variety of companies across the value chain. We look at the Consumer Financial Protection Bureau’s recent Request for Information on Fees, and their assertion of power to regulate Fintechs. We get into the Biden Administrations proposal on tax reporting for Earn Wage Access, and we even dip our toes back into the Interchange waters. You can find the podcast at the link below or wherever you get your podcasts. Please subscribe and leave us a review to help others find the show. Podcast - Innovative Payments Association (ipa.org  FDIC Issues Final Rule Regarding Misrepresentations About Insured Status The FDIC approved a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. The final rule implements section 18(a)(4) of the Federal Deposit Insurance Act, which prohibits any person from misusing the name or logo of the FDIC or from engaging in false advertising or making knowing misrepresentations about deposit insurance. Although the FDIC has broad authority in this area, they have never actually issued specific regulations regarding false representations or misuse of the FDIC name or logo. The final rule clarifies procedures for identifying, investigating, and taking formal and informal action to address potential violations. The regulation also establishes a point-of-contact for receiving complaints and inquiries regarding potential misrepresentations. The rule notes that although they are not required to enact regulations to implement section 18(a)(4), the FDIC believes that doing so will increase transparency and promote stability and confidence in FDIC insurance. Acting Chairman Gruenberg noted in his statement that they have seen circumstances where certain non-banks were making unsubstantiated claims about deposits insurance. The final rule requires non-banks to support this claims and identify the bank or banks with which they have existing business relationships and into which consumers’ deposits may be places. This will enable the consumers, and the FDIC, to evaluate the accuracy of claims about deposit insurance. Warren, Maloney, and Booker Send Letters to Banks on Overdraft Senators Elizabeth Warren and Cory Booker, and Rep. Carolyn Maloney sent letters calling on the Presidents of JPMorgan Chase, Bank of America, and Wells Fargo to eliminate overdraft and non-sufficient fund fees. The letters noted that in recent months large banks such as Capital One and Citigroup have eliminated these fees, and referred to overdraft fees as one of the “most common exploitative mechanisms big banks use to target the poor.” The letter asked the recipients to respond to questions on recent revenue from overdraft fees, disclosures about overdraft policies, waiting periods, and overdraft fees on debit transactions and ATM withdrawals. OCC to Host Virtual Innovation Office Hours The Office of the Comptroller of the Currency has announced Virtual Innovation Office Hours on June 14-15th. According to the press release, participants may discuss fintech, new products or services, partnering with a bank or fintech company, or other matters related to the responsible innovation in the financial services. Interested parties must request a session by May 20th. HFSC Chair Waters Releases May Hearing Schedule House Financial Services Committee Chair Maxine Waters has released the Committee’s May hearing schedule. Of particular note to IPA members will be a May 26th hearing on the benefits and risks of a Central Bank Digital Currency. Remaining hearings on the schedule include:
 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 32 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. 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. Payments Forum May 16-18 Payments Forum will take place May 16-18th in Phoenix, AZ. IPA President and CEO Brian Tate will be speaking, and IPA members can receive 30% off tickets using the promo code “IPA.” HFSC FinTech Task Force Holds Hearing on Digital Wallets The House Financial Services Committee held a hearing last week entitled “What’s in Your Digital Wallet? A Review of Recent Trends in Mobile Banking and Payments.” Although the hearing was shortened by votes on the House floor, a number of topics of interest to the IPA were discussed. The IPA is specifically reviewing exchanges between Task Force members and witnesses on the subjects of pass-through insurance and Regulation E, and preparing a letter to Task Force members offering clarifications. CFPB Director Rohit Chopra Testifies in the House and Senate CFPB Director Rohit Chopra delivered testimony before the House Financial Services and Senate Banking Committees last week, his first appearance since a number of RFIs, press release, and statements relating to the payments industry. Based on his statements in both committees, Director Chopra has a wide view of his authority and intends to use it. Republicans on both committees criticized him for the Fee RFI, attempting regulation by press release, and the recent announcement that the CFPB would be using dormant authority to oversee non-bank institutions. Democrats were generally pleased with the expanding authority of the CFPB and Director Chopra’s recent announcement that the CFPB would reduce enforcement for smaller institutions in favor of going after repeat offenders. As expected, Zelle fraud was mentioned by members in both committees, but Chopra declined to comment on the specific case, only saying that fraud is something they continuously monitor. CFPB Invokes Dormant Authority to Examine Nonbank Companies Posing Risks to Consumers The Consumer Financial Protection Bureau announced its intention to use a previously-unused authority to examine nonbank financial companies that, in its view, pose a risk to consumers. The authority will cover any nonbank institution regardless of which consumer financial products or services are provided. According to the CFPB, doing so will level the playing field between bank and nonbank institutions. This move has the potential to considerably expand the scope and type of companies the CFPB supervises to companies offering consumer financial products that are not explicitly part of its mandate. Top HFSC Republicans Send Letter to USPS on Postal Banking Pilot Top Republicans on the House Financial Services Committee, Patrick McHenry, top Republican on the Oversight and Reform Committee, James Comer, and the top Republican on the Consumer Protection and Financial Institutions Subcommittee, Blaine Luetkemeyer sent a letter to Postmaster General Louis DeJoy criticizing the USPS for overstepping its statutory authority by extending the failed postal banking pilot program. The original pilot program, which ran from September 12, 2021 to January 12, 2022, was used by only 6 customers and brought in only $35.70 in fees to the Postal Service. In spite of the program’s failure, it was extended on or around April 1, 2022. The letter states the program extension violates language in the Consolidated Appropriations Act, 2022, signed into law on April 6, 2022, which specifically prohibits taxpayer funds for pilot programs related to non-banking financial services, and requests the Postmaster General provide any related material that the USPS has submitted to the PRC related to the pilot program. Sens. Warren and Menendez Question Zelle Over Fraud Democratic Senators Elizabeth Warren and Bob Menendez sent a letter to Early Warning, operator of Zelle, and criticized Zelle’s handling of recent consumer scams. Warren and Menendez said reports of rising fraud were disturbing and asked Early Warning what steps it had taken to protect consumers from the proliferation of sophisticated scams. The letter also asks Early Warning for details on the number of fraud complaints it has received and how the banks that use Zelle choose which customers will receive refunds. Financial Health Network FinHealth Spend Report 2022 The Financial Health Network has released their FinHealth Spend Report 2022, which examines how American households managed their finances and used credit during 2021. The report analyzed year-over-year trends for more than two dozen financial products and services. Among these product and services are BNPL, credit cards, and prepaid cards. The report also analyzed recent trends in overdraft fees. McHenry and Emmer Send CFPB Document Retention Letters After failing to receive satisfactory responses to recent letters sent to CFPB Director Rohit Chopra on automobile repossessions and the Fee RFI, HFSC Ranking Member Patrick McHenry and Ranking Member of the Subcommittee on Oversight and Investigations Tom Emmer have sent letters to the Director Chopra requesting the CFPB retain all documents and communications and communications related to the actions in questions. The letters state it may be necessary for the HFSC to seek answers to their original questions using these documents and communications, and they request a written response from the Director as to how he will ensure all relevant records will be preserved. The letter related to the automobile repossession can be found here, and the letter related to the RFI can be found here. New Federal Bills
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 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. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
October 2022
Categories |
RSS Feed