The Government Update
is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: firstname.lastname@example.org.
Podcast: Expect the Unexpected in 2022
In the latest episode of the IPA Payments Pod, Brian Tate, the IPA’s CEO, discusses the impact of some of the biggest stories from the past year and what they might mean for 2022.
We cover the PayPal lawsuit, which could change the way the prepaid products can offer credit, and the types of disclosures they need to provide.
We talk about earned wage access and buy-now-pay-later products. These products have drawn interest from Congress and Brian testified in front of the House Financial Services Committee on earned wage access products.
We discuss how the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation are at odds over a request for public comment on the Bank Merger Act.
We also cover the nomination of Saule Omarova to be comptroller of the currency, routing requirements, and even what might happen with Crypto.
You can listen to the podcast on your favorite podcast app or at our site: Podcast - Innovative Payments Association (ipa.org). Make sure to subscribe and leave us a review.
IPA Joins a Coalition to Comment on the FTC Provision of the Build Back Better Bill
The U.S. Chamber of Commerce has invited the IPA to sign a joint trade letter opposing the FTC penalty provisions in the reconciliation bill. In brief, Sections 35501 and 35502 of the bill would give the FTC authority to obtain first-time civil penalties against companies that engage in unfair or deceptive trade practices. Please note the bill is being supported by the National Consumer Law Center and other consumer groups.
Chris Stromberg Joins IPA as Director of Government Relations
Chris Stromberg has joined the Innovative Payments Association as Director of Government Relations. Most recently, Chris served in the office of U.S. Representative French Hill (R-AR) as Financial Services Fellow assisting the Congressman with his financial services portfolio. Prior to his time on Capitol Hill, Chris held government relations positions as JPMorgan Chase & Co., and the bipartisan federal lobbying firm Capitol Counsel. Chris is excited to begin working on behalf of the IPA and its members and is looking forward to meeting people in person at the April conference. Chris lives in the Washington, DC metro area with his wife and three kids, and enjoys spending time with his family in the great outdoors. Don’t hesitate to reach out to Chris at CStromberg@IPA.org with any questions, concerns, or just to chat!
Jelena McWilliams Steps Down as FDIC Chair
On December 31st, FDIC Chairman Jelena McWilliams announced her intention to step down from her role effective February 4th. McWilliams’s term was set to expire in 2023, and FDIC board member Martin Gruenberg, a Democrat, is set to become acting chair. McWilliams’s announcement comes after her unusual confrontation with Gruenberg and CFPB Director Rohit Chopra. Gruenberg and Chopra announced that the two agencies planned to launch a review of bank mergers and sought public comment on the issue. McWillaims followed with her own statement on behalf of the FDIC, saying the FDIC hadn’t approved the review. The dust-up spurred speculation that the Biden administration might try to push McWilliams out. Her departure paves the way for Democrats to gain control of the agency’s agenda in the coming weeks, potentially leading to more stringent requirements around bank mergers, climate change, and more.
Powell and Brainard Face Confirmation Hearings; Raskin, Cook, and Jefferson Nominated to Fed Board
Chairman Jerome Powell testified before the Senate Banking Committee on January 11th in his reconfirmation hearing. While his confirmation by the Senate is expected, he faced tough questions from both sides of the aisle on inflation and his track record on enforcement. Sen. Elizabeth Warren, for example, said she opposes Powell for his “failures on regulation, climate and ethics.”
Meanwhile, Federal Reserve Governor Lael Brainard faced the Senate Banking Committee on the 13th for her confirmation hearing to be the Fed’s new Vice Chair. In her confirmation hearing, she was pressed on a range of issues, including inflation, climate change, and the independence of the Federal Reserve. Like Powell, her confirmation is likely.
On the 14th, Biden nominated former Fed Governor and onetime deputy Treasury Secretary Sarah Bloom Raskin as Vice Chair of Supervision, as well as Lisa Cook and Philip Jefferson to the Federal Reserve Board of Governors. If confirmed, Cook will be the first Black woman to serve as a Fed Governor, and Jefferson would be the fourth black man to serve in the Fed’s history
CFPB Seeks Public Comment on Buy Now Pay Later
Last week the CFPB issued request for public comment on BNPL. Specifically, they have asked anyone interested in the market, including families, small businesses, and international regulators, to submit answers to the following questions:
Notable State Issues
New Jersey Passes Gift Card Fraud Bill
Like many state legislatures, New Jersey concluded its 2021 session last week, but not before considering a number of important bills. Notably, both the Senate and Assembly passed a bill which would require every retail establishment that displays gift cards for sale to train employees on how to identify and respond to gift card fraud. The bill was signed by Governor Phil Murphy on January 18th and will take effect four months after enactment.
New Jersey Senate Passes EWA Bill
The New Jersey Senate also passed a bill that would require earned wage access (EWA) providers to register with state regulators, have contracts directly with employers, verify earned income before making an advance, and to secures employee’s consent before obtaining information about the employee from the employer. The bill passed the Senate with amendments on January 10th, but was not considered by the Assembly before the session concluded.
New York Introduces Gift Card Bill
The New York State Assembly has introduced a bill that would require sellers of gift cards to provide the public with certain notices regarding scams. The bill requires the notice to be posted in a conspicuous manner in the location where the sale occurs, or on the screen of an electronic payment system. A companion bill has been filed in the Senate and is currently pending before the Senate Consumer Protection Committee.
New Federal Bills
Rep. Tom Emmer (R-MN) has proposed a bill which would amend the Federal Reserve Ace and prohibit the Federal Reserve from offering products and services directly to an individual, maintain an account on behalf of an individual, or issue a central bank digital currency (CBDC). Although the bill has not been formally introduced, bill text is available here.
Pending Federal Bills
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 House 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 Judiciary Committee on November 3.
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)
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