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.  Upcoming IPA/FBI Events Meet the New York Field Office -- If you or your colleagues are in New York City, we will be hosting a session with the FBI at MasterCard's Tech hub on March 27. FBI agents from the New York field office will present on cyber-crime and financial crimes trends. This follows on a similar event that we did last year in Atlanta. The goal is to introduce payments teams to their local field offices to help foster cooperation. You can learn more and register here. Webinar: The Value of SARs -- In a Webinar on April 20th the FBI will present on how the information that industry provides in SARs helps law enforcement with their investigations. They will also discuss how the Internet Crime Complaint Center can be a resource for helping your customers affected by cyber-crimes. Learn more and register here. 2023 Innovative Payments Conference The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.  HFSC Republicans Send Letter to CFPB Dir. Chopra on Overdraft Republican members of the House Financial Services Committee sent a letter to CFPB Director Rohit Chopra regarding the recently released Fall Rulemaking Agenda for 2022. The letter notes the inclusion of Overdraft Fees in the pre-rule stage, and the Bureau’s abstract on the rule which states they will examine whether an overdraft fee is considered a finance charge under Regulation Z, which implements the Truth in Lending Act. The letter further states that identifying overdraft fees as a finance charge would limit, and possibly outright prevent, the ability of financial institutions to provide emergency, short term liquidity to consumers who need it most. The letter closes by urging the director to withdraw the pre-rule on overdraft. Reps. Luetkemeyer, Huizenga, and Barr Question Dir. Chopra's Schedule Reps. Blaine Luetkemeyer, Bill Huizenga, and Andy Barr, Republican leaders of the House Financial Services Committee, sent a letter to CFPB Director Rohit Chopra, questioning Director Chopra’s statement during his most recent appearance before the Committee that he has “done more industry outreach with those affected by the CFPB than both of my predecessors.” Using the publicly available Leadership Calendar, the Congressmen note that the Director’s statement is likely inaccurate, and point out that large blocks of time are either left blank, or do not identify who specifically the Director has met with. The letter concludes with several questions for response on the contents of Dir. Chopra’s public calendar and the process for making it public. Additionally, they ask for a comprehensive list of the industry outreach the Director has conducted while in office. Smith, Comer, Ways and Means Republicans Introduce Legislation to Recover Hundreds of Billions in Stolen Unemployment Benefits House Ways and Means Committee Chairman Jason Smith and House Oversight Committee Chairman James Comer, along with House Ways and Means Committee Republicans, introduced H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act, which would provide states with incentives to investigate and recover lost funds, fight and prevent future fraud, and extend the statute of limitations for prosecuting fraud. Specifically, the bill would:
CFPB Orders TitleMax to Pay a $10 Million Penalty for Unlawful Title Loans and Overcharging Military Families The CFPB fined TitleMax for violating the rights of military families and other consumers in providing auto title loans. Specifically, the CFPB found that TitleMax violated the Military Lending Act by extending prohibited title loans to military families and, oftentimes, by charging nearly three times the 36% annual interest rate cap. TitleMax then tried to hide their unlawful activities by altering the personal information of military borrowers to circumvent their protected status. The CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. The CFPB’s order ends TitleMax’s illegal activities, and requires the company to pay more than $5 million in consumer relief and a $10 million civil money penalty. Joint Regulator Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities The Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency issued a statement on the liquidity risks to banking organizations presented by certain sources of funding from crypto-asset related entities. The statement reminds banking organizations to apply existing risk management principles and provides examples of practices that could be effective. Banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation. Highlights:
FinCEN has issued an alert urging financial institutions to be vigilant in identifying and reporting check fraud schemes targeting the U.S. mail. The alert notes that despite the declining use of checks in the U.S., criminals have been increasingly targeting the U.S. mail and USPS mail carriers since the COVID-19 pandemic to commit check fraud. According to the alert, “Criminals typically steal personal checks, business checks, tax refund checks, and checks related to government assistance programs, such as Social Security payments and unemployment benefits. Following the initial theft and fraudulent negotiation of the stolen checks, criminals may continue to exploit their victims by using the personal identifiable information found in the stolen mail for future fraud schemes, such as credit card fraud or credit account fraud.” More information can be found in the FinCEN Alert or in the FinCEN press release. CFPB Highlights Public Benefit Fees The CFPB published an issue spotlight discussing fees associated with various financial products, such as prepaid cards, and how, according to the CFPB, fees associated with those products may affect individuals ability to fully access public benefits such as Social Security and unemployment compensation. This issue spotlight continues the CFPB’s recent actions, through press releases and blog posts, on fees that consumers face when using financial products and services. In this particular publication, available here, the CFPB alleges that public benefits are eroded by fees, fees can result in uneven access to benefits across states, individuals experience inadequate customer service when dealing with unrecognized charges, and consumers may be trapped by lack of choice and competition. CFPB Publishes New Findings on Financial Profiles of BNPL Borrowers The CFPB published a report analyzing the financial profiles of BNPL borrowers. A link to the report is in the agenda, but some high level findings were that 95% of BNPL borrowers had at least one other credit product; Black, Hispanic, and female consumers are more likely than average to use Buy Now, Pay Later products, along with consumers with income between $20,001-$50,000; BNPL borrowers surveyed also had lower credit scores, leading to higher rates on traditional credit products, making BNPL loans with no interest an attractive alternative. The data for this study came from a 2022 voluntary survey of anonymized credit records, and it’s interesting to point out that the CFPB specifically notes that the report cannot distinguish whether Buy Now, Pay Later usage leads to more delinquencies on other obligations or whether consumers who are already in distress are more likely to use Buy Now, Pay Later loans to pay off higher-interest debt. Democratic Senators Send Letter to Banking Regulators on Zelle Banking Committee Chairman Sherrod Brown, along with Democratic members Jack Reed, Robert Menendez, Elizabeth Warren, and Mark Warner, addressed the Federal Reserve, FDIC, NCUA, and OCC in a letter last week urging a close review and examination of the customer reimbursement and anti-money laundering practices of banks that participate in the Zelle network. Further, the letter also asks the regulators to coordinate their efforts with the CFPB. The Senators raised “concerns about the safe and sound operation of Zelle because depository institutions currently take the position that they are under no obligation under the EFTA to make their customers whole when fraudsters use the network to steal their hard-earned money.” Supreme Court Decides MoneyGram Unclaimed Property Case The U.S. Supreme Court issued its long-awaited decision in Delaware v. Pennsylvania, a case we have previously discussed involving abandoned MoneyGram funds. In a unanimous decision, the Supreme Court held that Agent Checks and Teller’s Checks are covered by the Federal Disposition Act (FDA) and, as a result, abandoned proceeds would generally escheat to the State where the instrument was purchased. In the opinion, drafted by Justice Kentanji Brown Jackson, the Court held stated “[t]he plain text of the FDA applies to not only money orders and traveler’s checks but also written instruments that are ‘similar’ to those financial products.” The Court established a two-prong test for determining if a financial instrument is sufficiently similar to a money order, and therefore falls under the FDA. First, it must be a prepaid written instrument used to transmit money to a named payee; and second, it must inequitably escheat to the holder’s state of incorporation under the federal common law’s secondary escheatment rule due to the holder’s business practice of not retaining a record of the instrument owner’s address. In the case at hand, because Moneygram does not generally collect creditor addresses as a matter of business practice, they do not have adequate records to follows the common law’s escheatment rule, the FDA applies, and the abandoned proceeds will generally escheat to the state where the product was purchased.  New Federal Bills
H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act This bill, sponsored by Rep. Jason Smith (R-MO-08), would provide financial incentives for states to recover fraudulently paid Federal and State unemployment compensation. The bill was marked up and reported favorably from the House Ways and Means Committee on 2/28/23 by a vote of 20-17. H.R. 1165, Data Privacy Act of 2023 This bill, sponsored by Rep. Patrick McHenry (R-NC-10) would create a federal data privacy standard, and would preempt preexisting state frameworks. This bill bway marked up and reported favorably by the House Financial Services Committee on 2/28/23 by a vote of 26-21.
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The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  2023 Innovative Payments Conference The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.  U.S. Court of Appeals for the D.C. Circuit Releases PayPal v. CFPB Decision The U.S. Court of Appeals for the D.C. Circuit released its highly anticipated decision in PayPal v. CFPB. The court overturned PayPal’s victory the in lawsuit challenging the CFPB’s model disclosures that companies could use to comply with the agency’s prepaid card regulation. According to the ruling, The CFPB’s prepaid card regulation didn’t mandate specific fee disclosures for digital wallet products offered by companies like PayPal. The three- judge panel ruled unanimously that the agency only provided a model that companies could use while giving them the option to develop their own, similar disclosures, bringing the regulation in line with the requirements in the Electronic Fund Transfer Act. The Court concluded at the end of its decision that “[o]n remand, the district court may consider PayPal’s other challenges to the Rule, including the APA and constitutional claims, which remain to be addressed.” Virginia Legislature Passes HB1921 and SB1217 The Virginia State Senate passed SB1917 unanimously, while the Virginia State House passed a HB1921, a companion bill, by a vote of 53-46. The House bill would create a regulatory framework for earned wage access providers in the state, while the Senate bill replaced the regulatory framework with a proposed study on earned wage access. The bills must now be reconciled before being sent back to each chamber for a final vote. The reconciled bill could include only the study, only the regulatory framework, or some type of combination of the two. CFPB Seeks Public Input on Consumer Credit Card Market The CFPB issued a request for information seeking public input on the consumer credit card market as part of a biennial review mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Specifically, the request is seeking information on:
White House Published RFI on Digital Asset Research The White House Office of Science and Technology Policy (OSTP) published a request for information (RFI) seeking feedback on a proposed National Digital Assets Research and Development Agenda. Broadly speaking, they are seeking public comments to help identify priorities for research and development related to digital assets, including various underlying technologies such as blockchain, distributed ledgers, decentralized finances (DeFi), smart contracts, and related issues such as cybersecurity and privacy. Specifically, the RFI seeks feedback on six topics:
Comments are due March 3, 2023. Fed Promotes Level Playing Field Regardless of Deposit Insurance Status The Federal Reserve Board issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement clarifies that uninsured and insured banks supervised by the Board will be subject to the same limitation on activities, including novel banking activities, such as crypto-asset-related activities. The statement also makes clear that uninsured and insured banks supervised by the Federal Reserve will be subject to the same limitations on certain activities imposed on national banks that are supervised by the OCC. Through this policy, the Federal Reserve aims to promote a level playing field and limit regulatory arbitrage. White House Issues Statement on Cryptocurrency Risk The White House released a statement describing the risks that cryptocurrencies pose to retail and institutional investors, and outlined the Administration’s roadmap to mitigating those risks while preventing harm to the broader financial system. The Administration laid out a framework for developing digital assets in a safe, responsible manner while addressing inherent risks, and encouraged federal agencies to use their authority to increase enforcement and issue guidance where needed. The statement also encouraged Congressional action to expand regulatory authority to protect customers’ assets, strengthen penalties for violating illicit finance rules, and address the risks of stablecoins. The statement closed by highlighting that the Administration supports responsible technological innovation, but that there must be safeguards to ensure they are secure and beneficial to all. FDIC Announces Extension of Comment Period for Proposed Changes to its Regulation Regarding Misrepresentations of Deposit Insurance The FDIC announced a 45-day extension of the comment period for the proposed changes to regulations relating to the FDIC’s official sign, advertising statement, misrepresentation of deposit insurance coverage, and misuse of the FDIC’s name or logo. The original due date for comments was February 21, 2023, but has now been extended to April 7, 2023. More information can be found in the original notice of proposed rulemaking. IPA/EPC Joint Letter on North Dakota SB 2217 The IPA has signed a joint letter at the invitation of the Electronic Payments Coalition (including ABA, ICBA, CUNA, etc…) to oppose North Dakota State Senate bill SB.2217, which was recently passed by the ND Senate. If enacted, SB 2217 would prohibit the collection of interchange on the sales tax portion of electronic transactions. This bill is similar to other bills the IPA has opposed that have been introduced in several other states over the last couple of years. Luetkemeyer Sends Letter to DOJ on BSA Reporting Rep. Blaine Luetkemeyer (R-MO), Chairman of the National Security, Illicit Finance, and International Financial Institutions Subcommittee, sent a letter to Attorney General Merrick Garland regarding the Department of Justice’s fulfillment of Section 6201 of the 2021 National Defense Authorization Act (NDAA), which requires the DOJ to report metrics on its use of Bank Secrecy Act (BSA) data and on the use of data derived from financial institution reports. According to Chairman Luetkemeyer’s letter, the DOJ’s report did not include statistics required under the act, including statistics on the use and impact of BSA reports. Luetkemeyer criticizes the lack of transparency into the usefulness of BSA data, and asks if burdensome BSA reporting is even worthwhile. The letter includes several questions for response on the DOJ’s process for fulfilling the requirements laid out in Section 6201 of the NDAA.  New Federal Bills
None Pending Federal Bills None The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation. CFPB Files Amicus Brief in Prepaid Card Case The CFPB filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit as part of Mohamed v. Bank of America, N.A., No. 22-1954 (4th Cir.). In the case, the plaintiff sued Bank of America for violations of the Electronic Fund Transfer Act (EFTA) when he received a prepaid government benefits card that had been fraudulently depleted of its entire $15,000 balance before he received it. Bank of America argued that EFTA does not apply to accounts loaded with unemployment assistance related to the pandemic. The CFPB’s amicus brief explains that EFTA’s protections clearly apply to prepaid card accounts used to distribute certain types of government benefits, including unemployment assistance related to the pandemic, and that to hold otherwise would be to create a new exception to the law’s regulations. More information can be found in this CFPB blog post, authored by general counsel Seth Frotman. CFPB Proposes Rule to Establish Public Registry of Contract Terms The CFPB proposed a rule which would establish a public registry of supervised nonbanks’ terms and conditions that are included in form contracts with their customers and users. According to the press release, the rule would require nonbanks to submit information on terms and conditions in form contracts that they use to waive or limit individuals rights and legal protections. The information would then be posted in an online registry that will be open to the public. The IPA is currently involved in a Chamber of Commerce coalition that is examining the effects the potential rule may have on pre-dispute arbitration clauses. The main concern seems to be the compliance burden on institutions that have many different contracts, sometimes more than one per state, the effect the registry would have on their ability to include pre-dispute arbitration clauses, and what next steps the CFPB may take after they have compiled this information. CFSA Files Brief in CFPB Funding Case The Community Financial Services Association of America (CFSA) filed its brief to the Supreme Court in their case against the CFPB. In the brief, the CFSA argued that the Supreme Court has the ability to address the validity of the CFPB’s payday lending rule without addressing the issue of the CFPB’s controversial funding mechanism. The Supreme Court is scheduled to consider the request for certiorari in a February 17th conference, after which we will know whether or not the Court will hear the case this term or next term, or will deny the request entirely. CFPB Issues Report on TransUnion, Experian, and Equifax The CFPB released its annual report on the three major credit reporting bureaus – Equifax, TransUnion, and Experian. In brief, the report analyzes how the credit bureaus respond to consumer complaints and implement aspects of the Fair Credit Reporting Act. Accordingly, the report acknowledges that the credit bureaus have taken affirmative steps to address consumer concerns and provide more substantive responses to consumer inquiries. However, the CFPB expects continued improvement in the next year and has recommended the credit bureaus implement the following changes: consider consumer burden when implementing automated processes; recognize that technology is also improving for consumers; and consider how to transition the market from control and surveillance to consumer participation Agencies Issue Joint Statement on Crypto-Asset Risks to Banking Organizations The Federal Reserve, FDIC, and OCC issued a joint statement on digital assets, expressing their concerns for banks and the use of digital assets including cryptocurrency and stablecoins. The statement describes several key risks they see associated with crypto-assets and the crypto-asset sector, including: uncertainties related to custody practices, redemptions, and ownership rights; misleading or false representations of disclosures; volatility, run risks on stablecoins; a lack of maturity and robustness in the risk management and governance practices; heightened risks associated with open or DeFi networks; and the risk of fraud. The statement also notes that the banking regulators are carefully reviewing any proposals from banking organizations to engage in activities that involve crypto-assets. OCC Releases 2022 Annual Report The OCC released its 2022 Annual Report in which they provide an overview of the condition of the federal banking system and discusses the OCC’s strategic priorities and initiatives. Specifically, the report found that the banking system remains resilient despite a recent dip in profitability with the phasing out of pandemic-related economic aid, and said that banks are still able to support their customers and the national economy. The report also highlighted the efforts of the OCC related to third-party risk management, financial inclusion, and the risks and benefits of cryptocurrency and digital assets. CFPB Blog Post on Supervision Process The CFPB published a blog post entitled “What new supervised institutions need to know about working with the CFPB”. In the blog, the CFPB outlines the supervisory activities that they conduct, the process they follow when conducting examinations, and what supervised institutions can expect following an exam or other supervisory activity. The blog post also included a link to the CFPB’s Supervision Program, and encourages supervised institutions to become more familiar with the program. House Financial Services Committee Subcommittee Chairs
House Balance of Power in the 118th Congress  Senate Balance of Power in the 118th Congress  New Federal Bills
None Pending Federal Bills None The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  The Crypto Universe: From A-Z The IPA will host a members-only event in Washington, DC on January 18, 2023. By attending this one-day seminar on digital currencies you can begin to learn more about the key questions that will impact the future of the crypto universe, including: What is a central bank digital currency? Does it matter if crypto is treated as an asset or a security? Are stablecoins actually stable and other pending questions. Whether your company is currently investing in the crypto market, or considering operating in the crypto ecosystem, you do not want to miss this opportunity to listen and learn from experts from the business, political, and regulatory realm so you can navigate the future. Registration information can be found here.  Fifth Circuit Ruling on CFPB Funding A three-judge panel from the U.S. Court of Appeals for the Fifth Circuit has ruled that the CFPB’s independent funding through the Federal Reserve violates the Constitution’s separation of powers clause. The ruling also invalidated the remaining portions of the CFPB’s 2017 Payday Lending Rule. While it will take weeks, if not months, for the full implications of the Court’s decision to be clear, it is important to remember that in the short term the ruling affects only the issues raised by the plaintiffs in the present case. In light of this ruling, West Virginia Attorney General Patrick Morrisey sent a letter to CFPB Director Rohit Chopra and argued that the CFPB cannot discharge its duties in a constitutionally permissible way due to the decision. He also wrote that “we cannot see how the Bureau intends to move on with its ‘business as usual’ attitude given that most of its operating funds derive from an unconstitutional funding scheme.” The letter requests answers to a series of questions, with a deadline for replying no later than tomorrow. CFPB Files Petition in Supreme Court The CFPB filed a petition to the Supreme Court, requesting the Court review the recent Fifth Circuit Court of Appeals ruling which held that the CFPB’s funding mechanism was unconstitutional. In the petition, the CFPB asked the Court to find the Fifth Circuit errored in their holding, and to hear the case this term. Notably, in the petition, the CFPB highlighted recent legal challenges to the CFPB’s regulations following the Fifth Circuit’s decision and said: “Those legal consequences have major practical effects. The CFPB’s critical work administering and enforcing consumer financial protection laws will be frustrated. And because the decision below vacates a past agency action based on the purported Appropriations Clause violation, the decision threatens the validity of all past CFPB actions as well. That threat raises grave concerns not just for the CFPB and consumers, but for the entire financial industry.” The Community Financial Services Association of America (CFSA) filed a request last week with the Supreme Court for a 30-day extension of filing the Brief of Opposition to the CFPB’s petition until January 13, 2023. The CFPB has not indicated any opposition to this later filing deadline. It’s not clear at the moment, but it does appear that the Court is likely to grant the extension based on recent developments. Because the Supreme Court will review the Brief of Opposition before ruling on the CFPB’s writ of certiorari, if granted, it will be at least late January until we hear if the Court will hear the case. Treasury Report on Bank-Fintech Partnerships The U.S. Department of the Treasury, in consultation with the White House Competition Council, has released a report entitled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” The report is a product of President Biden’s July 2021 Executive Order, “Promoting Competition in the American Economy.” In brief, the report calls for enhanced oversight of the consumer financial activities of non-bank firms due to increased risks, including risks related to data security and privacy. Notably, in a section on competition trends in lending, the report did a good job in distinguishing between employer-sponsored EWA programs and direct-to-consumer models, which it referred to as “Early Wage Access.” The report was not as clear on the credit implications of EWA as we would have liked, or as they have in the past. Specifically, the report stated that “the state or federal lending laws applicable to an EWA product may vary based on structure and terms.” This statement seems to conflict with the Treasury Budget Proposal that was released in March, which stated more clearly that EWA products are not a form of credit. This is just a report and not a regulatory proposal, but is something that the IPA will monitor closely. Rep. Perlmutter Draft EWA Bill Democratic Rep. Perlmutter is circulating a draft bill to regulate EWA providers. Our initial reading seems to indicate the focus of the bill is direct to consumer EWA providers. We have reviewed the bill extensively, discussed its potential implications with our members, and met with House Financial Services Committee Republican staff to relay our concerns. At the moment, we are confident the bill will not advance during the Lame Duck session, and is not likely to be introduced at all. With the upcoming Republican Majority, any proposal to regulate EWA next Congress will look vastly different than the Perlmutter proposal, and the IPA will be involved in its crafting. Party Leadership Changes for the 118th Congress Republican representatives have nominated Rep. Kevin McCarthy (R-CA-23) as Speaker of the House for the 118th Congress by a vote of 188-31. Rep. Andy Biggs (R-AZ-5), a member of the conservative House Freedom Caucus, challenged Rep. McCarthy for the nomination. Although a few House races are still undecided, Republicans have control of 218 seats- enough for a majority in the next Congress. On the Democratic side, House Speaker Nancy Pelosi announced she’ll step down as House Democratic leader after leading House Democrats for over 2 decades under 4 presidents, and becoming the first woman to serve as Speaker. Pelosi said she would remain in Congress, and Rep. Hakeem Jeffries of New York is widely considered the front runner to lead the House Democrats, potentially making him the first African-American to lead a party in Congress. Chair Waters Announces Hearing on FTX Failure Chairwoman Waters of the House Financial Services Committee announced a bipartisan hearing into the collapse of FTX and the broader consequences for the digital asset ecosystem. The Committee plans to hear from Sam Bankman-Freid, now-former CEO of FTX, as well as representatives from Alameda Research, Binance, and other related entities. It’s estimated the FTX failures has affected over one million account holders, including individual and retail investors and pension funds. Estimates are that between $1-2 billion in funds was lost, including around $600 million that vanished in an apparent insider hack. HFSC Fintech Task Force Sends Letter to OCC HFSC Ranking Member Patrick McHenry and Republican members of the FinTech Task Force sent a letter to Acting Comptroller Michael Hsu seeking clarification on the OCC’s position on bank-fintech partnerships. The letter included several questions for response on the growth of bank-fintech partnerships, the digitization of banking, regulatory burdens, and the examination of third-party risk management. Acting Comptroller Hsu Remarks at DC Fintech Week OCC Acting Comptroller Michael Hsu delivered remarks at DC Fintech Week 2022, a gathering of academics, officials, and practitioners focused on fintech and regulatory issues. Hsu focused his remarks exclusively on cryptocurrency, both through the lens of his leadership at the OCC, and as a member of FSOC. Hsu noted that although the language and online experience of owning and trading crypto may mimic that of traditional financial assets, the foundational questions of “what exactly do I own?” and “what’s the difference between possession and ownership?” must be answered by the crypto industry if they expect to mature and scale. He also noted the important differences, that some are only now learning, between deposits stored on crypto platforms and FDIC insured bank accounts. US Supreme Court Unclaimed Property Case Last month, the US Supreme Court heard the first oral arguments in an unclaimed property case in over 30 years. In Delaware v. Pennsylvania, potentially hundreds of millions of dollars of unclaimed MoneyGram funds are at stake, with Delaware claiming the funds under common law priority rules because that’s where Moneygram is incorporated, and the plaintiffs, Pennsylvania and 29 other states, arguing the checks are subject to the 1974 Federal Disposition Act which provides that unclaimed funds are to be escheated to the state where they were purchased. During the arguments many of the questions concerned skepticism about DE’s narrow reading of the priority rules. Although the case is limited to the treatment of money orders, it also implicates the rules governing which state’s unclaimed property laws apply. While we don’t expect a ruling until April, May, or June of next year, this is an issue the IPA will continue to monitor. HFSC, E&C letter to Paypal on Acceptable Use Policy Reps. McHenry, McMorris Rogers, Emmer, and Griffith, Republican leaders on the House Committees on Financial Services and Energy and Commerce, sent a letter to Paypal as a follow up to a briefing that was previously provided to the Committees on changes to Paypal’s Acceptable Use Policy that prohibited users from transactions that were “fraudulent, promote misinformation, or are unlawful.” A Paypal spokesperson has since stated the updated user agreement was an error and the reference to promoting misinformation was removed. The letter raised questions of restrictions of free speech and presented several questions for response concerning the Paypal’s process for the approval and publication of updates to their user agreement. Director Chopra Money 20/20 Remarks; CFPB Begins Rulemaking on Personal Financial Data Rights Director Chopra spoke at the Money 20/20 conference in Las Vegas and discussed the CFPB’s new approach to regulations and how, according to Director Chopra, a move away from complicated rulemakings could increase competition in the financial services marketplace. He also previewed the CFPB’s rulemaking process under Section 1033 of the Consumer Financial Protection Act that would require financial institutions offering deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up secure methods, like APIs, for data sharing; and said the CFPB will be working to stop institutions from restricting access when consumers seek to control and share their data. Only a few days after his remarks, the CFPB released their Section 1033 personal financial data rights rulemaking proposals. A link is included in today’s agenda, and they are requesting stakeholder feedback no later than January 23rd. CFPB Seeks Public Comment on Big Tech Payment Platforms The CFPB announced it is reopening a public comment period to gather additional information on the risks that consumers face while using faster payment systems. This is a follow up to a CFPB order last October that requested information from Amazon, Apple, Facebook, Google, PayPal, and Square on their data collection and use, consumer protection, and policies for removing individuals and businesses from their platforms. In this comment period, the CFPB is seeking additional input on companies’ acceptable use policies and their use of fines, liquidated damages provisions, and other penalties. More information can be found in the press release or the Federal Register Notice. CFPB Publishes Bulletin on Crypto-Asset Scams The CFPB released a compliance bulletin detailing an increase in consumer complaints related to crypto-assets. Specifically, the Bureau warned consumers of increased cases of fraud, theft, account hacks, and scams, and said other risks include romance scams, difficulty obtaining restitution after a fraud or hack, fraudulent transactions, risk of identification, and high asset volatility. The bulletin also noted that older consumers and servicemembers can be disproportionately impacted by problems with financial products and services, and can face special concerns or constraints when attempting to solve these problems. The CFPB encourages consumers to be aware of commons scams, report suspicious FDIC insurance claims, and submit complaints to the CFPB if they have an issue with a consumer financial product or service, or feel they are the victim of a scam. Nonbank Supervision Transparency Rule The CFPB finalized changes to their nonbank supervision procedural rule to increase transparency to the public and clarify which standard will applied when deciding what information is appropriate for public release. Specifically, the finalized rule states the CFPB will not publish confidential commercial information, or information which may violate personal privacy. They will also avoid publishing information which may reveal specific violations of law or specific compliance management deficiencies. The final rule will also extend the amount of time available to nonbank entities to provide input to the CFPB about what information should be released from 7 to 10 business days. Gruenberg Nominated as FDIC Chair President Biden has announced his intent to nominate Martin Gruenberg as Chair and Member of the Board of Directors of the FDIC, according to a recently released White House statement. Gruenberg joined the FDIC Board of Directors in 2005 and has served as Acting Chairman since the resignation of Jelena McWilliams at the end of last year. He previously served on the staff of the Senate Banking Committee, as Senior Counsel of the full Committee and Staff Director of the Subcommittee on International Finance and Monetary Policy.  New Federal Bills
None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  Money 20/20 Reception Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here.  Federal Reserve Finalizes Updates to Reg II The Federal Reserve Board has finalized updates to Reg II, the Board’s rule concerning debit card transactions. According the Federal Reserve the final rule is “substantially similar” to their 2021 proposed rule in which the IPA submitted a comment. The final rule will be effective July 1, 2023. In brief, the final rule specifies that debit issuers should enable at least two payment card networks to process all debit card transactions, including “card-not-present” transactions, such as online payments. According to the statement that accompanied the final rule, the Federal Reserve believes this new regulation will encourage competition between networks and incentivize them to improve fraud-prevention capabilities. The Federal Reserve also noted that many debit card issuers are already compliant with the final rule. More information, including a press release, Board memo, and dissenting statement by Governor Bowman, can be found here. CFPB Orders Regions Bank to Pay $191 Million for Overdraft Fees The CFPB announced it is ordering Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by its surprise overdraft fees. According to the CFPB, between August 2018 and July 2021, Regions Banks charged surprise overdraft fees on certain ATM and debit card transactions, even after telling customers they had sufficient funds at the time of the transaction. Specifically, the CFPB asserts Regions Bank employed “complex and counter-intuitive overdraft practices and manipulations.” More information can be found here. CFPB Sues MoneyLion for Overdraft Charges The CFPB announced it is suing MoneyLion for violations of the Military Lending Act. Specifically, the CFPB alleges that MoneyLion violated the Military Lending Act by charging more than the legally allowable 36% rate cap on loans to servicemembers and their dependents through a combination of stated interest rates and monthly membership fees. The CFPB also alleges MoneyLion required customers to join a membership program to access certain low interest loans, but did not allow them to cancel their memberships until their loans were paid. In a public response after the CFPB’s announcement, MoneyLion stated they have been cooperating with the CFPB for over three years regarding their membership offering, and accused them of prioritizing headlines over constructive dialogue. Notably, this is the CFPB’s fourth enforcement action related to the Military Lending Act in the past two years. More information can be found here. Sen. Elizabeth Warren Issues Report on Zelle Fraud Sen. Elizabeth Warren (D-MA) issued a report on fraud on the Zelle platform. The report follows letters to Early Warning Services and the bank-owners of Zelle, including JPMorgan Chase, Wells Fargo, U.S. Bank, PNC, Capital One, Bank of America, and Truist; and the recent Senate Banking Committee hearing during which Warren questioned bank CEOs about reimbursing customers who are victims of fraud on the platform. As expected, the report was highly critical of Zelle, Early Warning Services, the bank-owners of Zelle, and their fraud prevention and reimbursement policies. Notably, the report highlights that an estimated $440 million was lost by Zelle users through frauds and scams in 2021. It is also worth noting that Sen. Warren was the sole sponsor of the report, which was published through her office and not through the Banking Committee, and she was not joined in the report by Sen. Robert Menendez, who had previously co-authored letters to EWS and the bank-owners of Zelle. FSOC Report on Digital Asset Financial Stability Risks and Regulation The Financial Stability Oversight Council released its Report on Digital Asset Financial Stability Risks and Regulations in response to President Biden’s executive order, Ensuring Responsible Development of Digital Assets. The report outlines the specific financial stability risks and regulatory gaps posed by various types of digital assets and provides recommendations to address such risks. Specifically, the report identified three gaps in the regulation of crypto-asset activities in the United States:
The FSOC makes several recommendations in the report including regulatory principles, continued enforcement of existing regulatory structures, steps to address each of the above-mentioned regulatory gaps, and bolstering member agencies’ capacities related to crypto-asset data and expertise. President Biden Announces Two FDIC Nominations President Biden announced his intention to nominate Jonathan McKernan as a Member of the Board of Directors and Travis Hill as a Member and Vice Chair of the Board of Directors at the FDIC. McKernan is currently on detail from the FHFA to the Senate Banking Committee and Hill most recently served as Senior Advisor to the Chairman and Deputy to the Chairman for Policy at the FDIC. Nacha Releases Report on New Risk Management Framework Nacha released a report on its new Risk Management Framework. The report outlines a new strategy for industry participants in both the ACH Network as well as other payment systems in an effort to address fraud that increasingly make use of credit-push payments, including vendor impersonation, business email compromise, and payroll impersonation. Nacha’s strategy identifies three themes in payment risk management:
Federal Reserve Governor Jefferson Highlights Benefits of Payments Technology This week at the Technology-Enabled Disruption conference, organized by the Federal Reserve Banks of Atlanta, Dallas, and Richmond, Federal Reserve Governor Philip Jefferson highlighted the benefits of innovations in the payments system, particularly during the Covid-19 pandemic: “The payments system has also seen an acceleration in alternative online and mobile payment methods as well as contactless payment options. We all remember the onset of the pandemic, when social distancing became imperative and delivery and curbside pickup became the norm for many. Remote card payments naturally rose as in-person use fell. As stores reopened while the fear factor was still considerable, the contactless payment options that were available on cards and mobile devices received more attention. Such changes, coupled with the growing prominence of person-to-person money transfer apps, provided consumers with remote and touchless cash substitutes in their daily lives. The expanded use of those various payment options rested on the foundation of an intricate, robust payments ecosystem. That system supported a migration from in-person payment options to no-contact alternatives, helping restart the economy during a time of deep stress.” His full remarks can be found here.  New Federal Bills
None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. Compliance Boot Camp The IPA will gather in Chicago on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here. Money 20/20 Reception Please join Stinson LLP, Baird Holm LLP, The American Transaction Processors Coalition and the IPA on Monday, October 24th, for a reception during the Money 20/20 Conference. Drinks and hors d'oeuvres will be served beginning at 5 p.m. Registration information can be found here. Senate Democrats Send Letter to CFPB on P2P Fraud Senators Casey (D-PA), Blumenthal (D-CT), Warren (D-MA), Gillibrand (D-NY), all members of the Senate Special Committee on Aging, along with Sen. Cortez Masto (D-NV), sent a letter to CFPB Director Rohit Chopra expressing concern with the increased prevalence of fraud on P2P payment platforms such as Venmo, Cash App, PayPal, and Zelle, particularly targeted toward older adults. According to the letter, the CFPB is currently considering guidance to broaden the definition of unauthorized transactions, which would shift some of the burden of these losses from consumers to banks and P2P apps. The Senators encouraged the CFPB to move forward in issuing guidance to provide seniors with better tools to protect themselves and their families. Acting Comptroller Hsu Remarks on Safeguarding Trust in Banking Acting Comptroller Michael Hsu delivered remarks at The Clearing House and Bank Policy Institute’s Annual Conference. His remarks were intended to provide an update on his priorities as Acting Comptroller- guarding against complacency, addressing inequality, adapting to digitalization, and managing climate-related risk. Notably, in his remarks, Acting Comptroller Hsu compared the increase in bank-fintech partnerships to the run up to the 2008 financial crisis and said: “The “de-integration” of banking services that is taking place now has its roots in technology, data, and operations and is affecting all banks, not just the large, money center banks. My strong sense is that this process, if left to its own devices, is likely to accelerate and expand until there is a severe problem or even a crisis. Like the globalization of manufacturing and the disintermediation of credit, the efficiency gains of these changes can be enjoyed immediately, while the most material risks do not manifest for some time.” FDIC-FinCEN Digital Identity Tech Sprint FinCEN has published key takeaways on their digital identity-focused Tech Sprint, available here. Through the Tech Sprint, the FDIC and FinCEN challenged teams to develop solutions to measure the effectiveness of digital identity credentials. Specifically, the Tech Sprint asked teams to answer the following question: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?” More information on the FDIC-FinCEN Tech Sprint Program can be found here. Senate Banking Committee Hearing on New Consumer Financial Products The Senate Banking Committee held a hearing entitled “New Consumer Financial Products and the Impacts to Workers.” A recording of the hearing and witness statements can be found here. Witness statements and member questions focused on BNPL, Training Repayment Programs, student loans, and EWA. When EWA was discussed, members and witnesses focused mostly on direct-to-consumer and tip-based models. In his opening statement, Chairman Sherrod Brown was critical of tip-based models, but acknowledged that “employer-based earned wage advances with strong consumer protections can, in fact, help workers cover unexpected expenses or emergencies.” In his opening statement, Ranking Member Toomey described EWA as “an appealing alternative to payday loans for workers who want an advance on their wages. Many people don’t have savings available to pay for unexpected expenses that can arise in between pay periods….EWA can help consumers to meet such expenses and others…” He also noted that market competition is the best way to achieve consumer protection and warned against burdensome regulation that could stifle innovation. The IPA met with senior Committee staff in advance of the hearing to educate them on EWA. We were pleased to see that during the hearing members differentiated between direct-to-consumer and employer-sponsored programs and there were no overt criticisms of employer-sponsored programs. CFPB Releases Market Report on BNPL The CFPB released a market report as a follow up to its December 2021 market monitoring orders to five Buy Now Pay Later lenders. The market report summarizes the data, individual and organizational submissions to the CFPB, and publicly available sources to provide a review of the BNPL marketplace and consumer impacts. The report identifies both financial and operational benefits of BNPL loans over legacy credit products and outlines three categories of potential consumer risks: discrete consumer harms, data harvesting, and borrower overextension. CFPB Director Chopra’s remarks on the release of the BNPL market report can be found here. Treasury Releases Reports on Digital Assets As assigned in President Biden’s Executive Order on “Ensuring Responsible Development of Digital Assets, the Treasury released three reports on digital assets, individually focused on the future of money and payment systems, consumer and investor protection, and illicit finance risks. The White House also released a Fact Sheet this morning outlining the reports and announcing further steps to protecting consumers and ensuring fair play in digital assets. The reports and their recommendations can be accessed below: New Federal Bills
None New Federal Bills None Pending Federal Bills S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. S. 4760 - Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  IPA Op-Ed in Newsweek on CFPB Advisory Opinion Process Ben Jackson, Chief Operating Officer of the IPA, published an op-ed in Newsweek on the CFPB’s advisory opinion process. In it, Ben reviews the history of the CFPB’s 2020 AO on Earned Wage Access and explains the positive effect of the framework on the industry. Ben also discusses Director Chopra’s recent blog post and the potential review and/or recission of established advisory opinion. Finally, Ben encourages the CFPB and Director Chopra to meet with EWA industry representatives before taking any regulatory action to rescind, amend, or enhance the 2020 EWA Advisory Opinion. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.  DOJ Releases Opinion on Authority of FDIC Chairperson Yesterday the Department of Justice Office of Legal Counsel released an opinion, requested by the FDIC Board, on the authority of the majority of the FDIC Board to present items for vote and decision. In the opinion, the Office of Legal Counsel states that the Chairperson of the FDIC does not have the authority to prevent a majority of the FDIC Board from presenting items to the Board for a vote and decision. The opinion cites the Federal Deposit Insurance Act of 1950 as the vesting substantive and procedural powers of the FDIC in the Board, not the Chairperson. Former FDIC Chairperson Jelena McWilliams resigned from her position in December 2021 after disagreements with the majority of the FDIC over the Chairperson’s authority to control the agenda of the Board. Martin Gruenberg currently serves as acting Chairman of the FDIC. CFPB Takes Action to Protect the Public from Shoddy Data Security Practices In a circular published August 11th, the CFPB stated that financial companies may violate the Consumer Financial Protection Act if they fail to implement adequate measures to safeguard consumer data against data security incidents. The circular did not suggest any particular security practice is required under the Consumer Financial Protection Act but did note some examples where failure to implement certain practices, such as multi-factor authentication, adequate password management, and timely software updates, may increase the risk that a firm’s conduct may trigger liability. Federal Reserve Announces Final Guidelines for Master Account Access The Federal Reserve has announced final guidelines that establish a transparent, risk-based, and consistent set of factors to be used in reviewing requests to access Federal Reserve accounts and payment services. The new guidelines include a tiered review framework to provide additional clarity on the level of due diligence and scrutiny that will be applied to different types of institutions with varying degrees of risk. Ranking Member Toomey Sends Letter to FDIC on Crypto-Related Businesses Sen. Pat Toomey (R-PA), Ranking Member of the Senate Banking Committee, sent a letter to the FDIC alleging the FDIC is deterring banks from doing business with lawful crypto-related companies, even without any FDIC determination that that the companies are providing unlawful or impermissible services. The letter draws a comparison to the Obama-era Operation Choke Point, in which the FDIC encouraged banks to deny services to legal yet politically disfavored businesses. Specifically, the letter refers to whistleblower communications that allege the FDIC’s Washington, D.C. headquarters is urging FDIC field offices to send letters to multiple banks requesting they refrain from expanding relationships with crypto-related companies, and that the FDIC may be abusing its supervisory powers to the same effect. The letter includes several questions on FDIC policies related to crypto-related businesses and specific communications and memoranda. FDIC Issues Supervisory Guidance on Multiple Re-Presentment NSF Fees The FDIC issued guidance to supervised institutions addressing compliance risks associated with assessing multiple non-sufficient funds (NSF) fees as a result of the re-representment of the same unpaid transaction. According to the guidance, many financial institutions charge NSF fees when checks or ACH transactions cannot be covered by the customer’s balance. After being declined, merchants may subsequently resubmit transactions for payment, increasing the risk of additional NSF fees for the same transactions. The guidance further states that the charging of multiple NSF feeds arising from the same unpaid transaction can increase risks of violations of laws prohibiting unfair or deceptive acts or practices (UDAP), and that the FDIC will take appropriate action to address both consumer harm and violations of law regarding re-presentment NSF fee practices. CFPB Issues Public Request for Comment on Credit Card Data Survey The CFPB published a blog post and public request for comment related to their Terms of Credit Card Plans (TCCP) Survey, through which they collect data twice per year from credit card issuers. The CFPB announced in the blog post that they are considering modernizing the TCCP survey by collecting median rates by credit score tiers to give consumers more predictability before they apply for credit; gathering information on credit cards available to specific communities or groups; requiring the biggest issuers to submit information about each general purpose credit cards instead of only products with the largest number of accounts; and allowing a broader range of institutions to participate in the TCCP Survey. The CFPB encourages the public to submit comments through the Federal Register until October 17th. CFPB Alleges Block Is ‘Slow-Walking’ Cash App Investigation The CFPB has asked a federal judge to force Block to comply with demands related to investigations looking into Cash App’s handling of complaints and disputes. In mid-2020 the CFPB opened an investigation into Block’s Cash App payment tool relating to the handling of customer complaints and disputes. The investigation appears to be similar to the CFPB’s investigation into Zelle, with a focus on chargebacks and violations of Reg E. The CFPB made document requests in August 2020 and August 2021, with deadlines no later than December 2021. The CFPB has now filed a petition in mid-August asking the US District Court for the Northern District of California to enforce a civil investigative demand. In the petition, the CFPB alleges Block has failed to turn over documents requested related to six specific questions. According to Block, however, they have been in regular communication with the CFPB relating to the document requests and were waiting for a response to their most recent communication when the CFPB’s petitions was filed. Tentative Senate Banking Committee September Hearing Schedule Below is a tentative September hearing schedule for the Senate Banking Committee. EWA and/or BNPL may discussed during the listening session on the 7th and the hearing on the 13th. We will monitor hearing memoranda for topics of interest to our members. September 7, 10:30 AM- Virtual Listening Session: consumer products impact on the dignity of work (payday lending and other work related products) September 8, 10:00 AM- Full Committee State of Insurance September 13, 10:00 AM- Full Committee New Risks to Consumers September 15, 10:00 AM- Full Committee SEC Oversight w/ Chair Gensler  New Federal Bills
None Pending Federal Bills Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  IPA Comment to the CFPB regarding EWA Advisory Opinion The IPA has officially filed our comment letter in response to Director Chopra’s request for public input on the CFPB’s regulatory approach. We appreciate everyone’s comments and assistance in moving quickly through the drafting process. Protocol Article on EWA Last week, the technology industry website Protocol published an article, available here, on federal and state EWA regulatory efforts. The IPA worked with Protocol to shape the article, and IPA President Brian Tate was quoted, as were a number of IPA members. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.  Rep. Walorski (R-IN) Killed in Car Accident Rep. Jackie Walorski (R-IN) was killed in a car accident in Indiana last Wednesday, August 3rd, along with two staff members, Zach Potts and Emma Thomson, and the driver of another vehicle. After serving in the Indiana House of Representatives from 2004 to 2010, Walorski began serving in the U.S. House of Representatives in 2013 and served on the Ways and Means Committee since 2017. Most recently she served as the Ranking Member of the Worker and Family Support Subcommittee. Because her death came more than 74 days before the November election, Indiana Governor Eric Holcomb must now schedule a special election to pick her successor. Republicans will also caucus to select the candidate to run against Democrat Paul Stuery on the general election ballot on November 8th. Senate Passes Inflation Reduction Act This weekend the Senate passed a spending bill, known as the Inflation Reduction Act, on party lines with Vice President Kamala Harris casting the tie-breaker vote. The bill attempts to tackle climate change, the high cost of prescription drugs, and lower the deficit by roughly $300 billion. The bill was scaled down significantly from what Democrats previously attempted to pass in the Build Back Better Act. Notably, the legislation creates a 15% minimum tax for corporations making $1 billion or more. A proposal to narrow the carried interest loophole was removed from the bill and replaced with a 1% excise tax on stock buybacks. After opposition from West Virginia Senator Joe Manchin, an extension of the Child Tax Credit was also removed. The bill now heads to the House of Representatives, where Speaker Pelosi hopes to put the bill on the House floor before the end of the week. Sens. Stabenow and Boozman Introduce Crypto Legislation Senators Debbie Stabenow (D-MI) and John Boozman (R-AR), Chairwoman and Ranking Member of the Senate Agriculture, Nutrition, and Forestry Committee, introduced the Digital Commodities Consumer Protection Act of 2022 to give the CFTC the authority to regulate digital commodities. Specifically, the bill:
CFPB Director Chopra Prioritizes Enforcement Over Education In a speech before a fintech conference sponsored by the Philadelphia Federal Reserve Bank, CFPB Director Rohit Chopra said that, while he understands the importance of consumer financial education, under his leadership the Bureau is focusing on enforcement actions to punish bad actors. This is a change in priorities from former Trump-appointed CFPB Director Kathy Kraninger, who prioritized financial literacy and education. Chopra said that financial education can sometimes make consumers overconfident in their abilities to spot scams and risky behavior. The full text of Chopra’s remarks have not yet been published, but will likely be available in the CFPB Newsroom in the next week. CFPB Releases Report on Consumer Data Protection in Payments The CFPB released a report entitled “The Convergence of Payments and Commerce: Implications for Consumers.” The report addresses recent innovations in the payments ecosystem and the potential for misuse of consumer spending, transaction, and behavioral data in “super apps,” BNPL, and embedded commerce. According to the report, the CFPB intends to propose rules to implement required rulemaking on personal data rights pursuant to Section 1033 of the Consumer Financial Protection Act to give consumers greater control over their financial data; and will be issuing a report of findings from its BNPL market monitoring orders to determine whether regulatory interventions are appropriate. CFPB Director Chopra American Banker Interview CFPB Director Rohit Chopra sat for an interview with American Banker in which he discussed a number of topics affecting our members, including the entry of tech firms into the financial industry, banks’ reliance on overdraft fees, and his concern with real-time payment apps. In particular, Chopra expressed concern with implications for the banking system when fintech firms move outside traditional banking rails. Chopra also said the CFPB is looking at the real-time payment fraud holistically beyond one single app (Chopra would not comment specifically about fraud on the Zelle platform). A summary of the interview can be found here. FDIC Issues Fact Sheet on FDIC Deposit Insurance and Crypto Companies The FDIC issued a fact sheet to the public on FDIC insurance and crypto companies, available here. Central to the fact sheet is the statement that the FDIC only insures deposits held in insured banks and does not insure assets issued by non-bank entities, such as crypto companies. According to the press release, some crypto companies have recently made inaccurate claims to their customers that their products are eligible for FDIC deposit insurance coverage. This fact sheet follows a final rule, approved in May, implementing their its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance.  New Federal Bills
Digital Commodities Consumer Protection Act of 2022 Summary: The bill would give the CFTC the authority to regulate digital commodities. Status: Introduced on August 8, 2022 and referred to the Senate Committee on Agriculture, Nutrition and Forestry. Sponsor: Rep. Debbie Stabenow (D-MI) Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.  Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud Prevention, and Cryptocurrency. Registration information can be found here.   FDIC Issues Update on Brokered Deposits The FDIC published an update to the Brokered Deposit page on their Banker Resource Center. As you recall, the Final Rule had two exceptions: 1) the “25 percent test,” which provides that an entity will not be considered a deposit broker if less than 25 percent of the total assets that the agent has under administration for its customers, in a particular business line, is placed at an Insured Depository Institutions (IDI), and 2) the “Enabling Transactions Test,” which provides that an entity will not be considered a deposit broker if 100 percent of depositors’ funds that the third party places at IDIs are placed into transactional accounts that do not pay any fees or interest to the depositor. Our initial thoughts are that FDIC’s statement does not appear to substantively change the “Enabling Transactions” exception. Rather it seems to be focused on companies availing themselves of the “25 Percent Test.” It appears that the FDIC believes that some companies are using the 25 Percent Test as a cover that they are conducting matchmaking activities and not reporting properly to the FDIC. NY State Credit Card Reward Points Bill Goes Takes Effect in December NY Senate Bill S133B, which was signed into law by New York Governor Kathy Hochul, will take effect this December. The bill will provide a 90-day grace period for the use of credit card reward points before an account is modified, cancelled, closed, or terminated. While the bill does not contain any specific penalty provisions, it does amend New York’s general business law, so both private plaintiffs and the state attorney general could have standing to bring actions to ensure compliance. CFPB Sues ACE Cash Express for Concealing No-Cost Repayment Plans and Improperly Withdrawing Consumers’ Funds The CFPB filed a lawsuit against payday lender Ace Cash Express, accusing the lender of concealing free repayment plans from borrowers. According to the press release, individual borrowers paid hundreds or thousands of dollars in fees when they were eligible for free repayment plans. This generated at least $240 million in fees for ACE. ACE also withdrew money from borrowers’ bank accounts in violation of contracts. CFPB Director Chopra Blog Post on Competition in Financial Markets CFPB Director Rohit Chopra published a blog post highlighting the actions the CFPB has taken over the last year to promote competition in financial markets. Specifically, Director Chopra discussed CFPB efforts to identify obstacles for consumers to refinance or switch financial providers, and roadblocks that small financial institutions and new entrants face when challenging larger financial institutions. Director Chopra also highlighted CFPB’s recent initiatives related to the fee RFI and their rulemaking to address credit card late fees. Michael Barr confirmed as Fed Vice Chair for Supervision Michael Barr was confirmed as the Fed Vice Chair of Supervision with bipartisan support and a vote of 66-28. Barr is a former senior Treasury Department official who played a role in shaping the Dodd-Frank Act. The Fed Vice Chair for Supervision position has been vacant since late last year. In this role, Barr will oversee day-to-day oversight of the nation’s largest financial institutions and will play a role in the development of financial regulatory policies. Federal Regulators Fine Bank of America $225 Million Over Botched Disbursement of State Unemployment Benefits The CFPB is fining Bank of America $100 million for botching the disbursement of state unemployment benefits during the pandemic. Separately, the OCC is fining the bank $125 million. The CFPB alleges the bank froze accounts of consumers using a faulty fraud prevention program, and then provided little recourse when there was, in fact, no fraud. In addition to the fine, Bank of America must pay back the money they wrongfully denied consumers and provide a lump sum consequential harm payment. Additional information on the OCC’s fine can be found here. Sen. Kennedy introduces CFPB transparency bill Sen. John Kennedy (R-LA) introduced the Transparency in CFPB Cost-Benefit Analysis Act. The bill would, in part, require the CFPB to conduct a cost benefit analysis of all proposed regulations, including compliance costs, effects on economic activity, efficiency, competition and capital formation; regulatory and administrative costs; and costs imposes on state, local, and tribal entities. More information on the bill can be found here. CFPB blog post on overdraft/NSF fee revenues Last week the CFPB published a blog post on banks’ reliance on overdraft and NSF fees. Specifically, their research found that overdraft/NSF fee revenues continued to be depressed in 2021 and stayed below their 2019 volume by 27.4 percent. In the first quarter of 2022, overdraft/NSF fee revenues stopped their decline and reversed somewhat and were 20.1 percent below their corresponding 2019 levels.  New Federal Bills
None. Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis issued by the Innovative Payments Association twenty times a year as a service to members. Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. Summer of Learning Schedule Continues to Grow The IPA continues to add interesting and informative webinars to our Summer of Learning Series. We currently have the following scheduled:
Compliance Boot Camp The IPA will gather in Chicago, IL on September 29th for our Compliance Boot Camp. Topics to be discussed include Regulation E, EWA, BNPL, Paypal v. CFPB, Fraud/Government Benefits, and Cryptocurrency. Registration information can be found here. New Member Q&A with Nico Simko CEO & Co-Founder, Clair IPA COO Ben Jackson conducted a Q&A with Nico Simko, CEO & Co-Founder of Clair. You can learn more about this digital banking platform and their services here. Proliferation of Email Scams Warrant Increased Diligence IPA Head of Government Relations Chris Stromberg was targeted in an email spoof scam co-starring IPA President Brian Tate. You can read more about his experience and get tips on avoiding similar scams here. CFPB Rescinds Sandbox Approval Order for Payactiv The CFPB issued an order terminating Payactiv’s Sandbox Approval Order relating to their earned wage access product. The approval order had been in effect since December 2020, and Payactiv requested its termination on June 21st. Notably, the press release states that the CFPB has received requests for clarification regarding its advisory opinion on EWA, and that they plan on issuing further guidance to provide clarity on the definition of “credit” under TILA and Regulation Z. Joint Statement on the Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence The Federal Reserve, FDIC, FinCEN, NCUA, and OCC issued a joint statement to remind banks of the risk-based approach to customer due diligence. In the statement, the Agencies reinforced their position that no customer type presents a single level of uniform risk or a particular risk profile related to money laundering, terrorist financing, or any other illicit financial activity. Further, a risk-based approach to customer due diligence should be used to develop the initial risk profile and conduct ongoing monitoring to identify and report suspicious transactions and to update customer information. Waters Announces July House Financial Services Committee Schedule Chairwoman Waters announced the House Financial Services Committee’s July hearing schedule. Notably, the Committee will hold a hearing on CRA reform and a legislative markup on the 27th. The committee also will hold a hearing on mass shootings, and oversight hearings for the SEC Division of Enforcement and the Federal Housing Finance Agency CFPB Issues Advisory on Sharing Credit and Background Reports The CFPB issued an advisory to ensure that companies that use and share credit and background reports have a permissible purpose under the Fair Credit Reporting Act (FCRA), and reminds covered entities of potential criminal liability for certain misconduct. The advisory notes that FCRA section 604 identifies an exclusive list of permissible purposes for which consumer reporting agencies may provide consumer reports, and agencies may not provide reports for any other purpose. Some common permissible purposes include using consumer reports for credit, insurance, housing, or employment decisions. Treasury Releases Fact Sheet on International Engagement on Digital Assets The Department of Treasury released a fact sheet on the framework for interagency engagement with forum counterparts that they, in partnership with the Departments of State and Commerce, and the U.S. Agency for International Development, developed as directed in the President’s Executive Order on digital assets. Specifically, the fact sheet outlined a framework for engagement with the G7, G20, Financial Stability Board (FSB), Financial Action Task Force (FATF), Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), the World Bank, other standard-setting bodies, and regional and bilateral engagements. Senators Send Letter to Zelle to Crack Down on Fraud Eight Democratic Senators, led by Sens. Bob Menendez, Elizabeth Warren, and Jack Reed, sent letters to Capitol One, Wells Fargo, PNC Bank, JPMorgan Chase, US Bank, Bank of America, and Truist, owners of Zelle through parent company Early Warning Services. The letter criticized the banks for not doing more for customers defrauded by scammers on Zelle. The letter follows a similar letter sent by senators in April to Early Warning Services. In response to that letter, the company said they have already made changes such as real-time alerts to ask users to consider if they know and trust the recipient before initiating a transaction using the service. The letters include five questions for response on the prevalence of fraud on the Zelle platform and the banks’ policies for detecting, eliminating, and mitigating the effects of fraud. New Federal Bills
None. Pending Federal Bills Financial Data Privacy Bill Discussion Draft Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used. Status: Discussion Draft released. Not officially introduced. Sponsor: Rep. Patrick McHenry (R-NC) S. 4356 Responsible Financial Innovation Act Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law. Status: Introduced in Senate on June 7, 2022, Referred to the Committee on Finance. Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY) The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act Summary: The bill would require that payment stablecoin issuers choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities. Status: Proposed, but not yet introduced. The Stablecoin Innovation and Protection Act Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin. Status: Proposed, but not yet introduced. Sponsor: Rep. Josh Gottheimer (D-NJ) H.R. 6415 To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes. Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers. Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022. Sponsor: Rep. Tom Emmer (R-MN) H.R. 4773 – Consumer Financial Protection Commission Act Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate. Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021. Sponsor: Rep. Blaine Luetkemeyer (R-MO) H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22. Sponsor: Rep. Hank Johnson (D-GA) H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes. Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement. Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21. Sponsor: Rep. David Scott (D-GA) H.R. 1996 – SAFE Banking Act Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system. Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21. Sponsor: Rep. Ed Perlmutter (D-CO) H.R. 3968 - Municipal IDs Acceptance Act Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer. Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23. Sponsor: Rep. Richie Torres (D-NY) H.R. 4277 – Overdraft Protection Act of 2021 Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs. Status: Introduced and referred to the House Financial Services Committee on 6/30/21. Sponsor: Rep. Carolyn Maloney (D-NY) IV. U.S. Congress Members Not Seeking Re-Election in 2022 The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. |
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