June 29, 2022

The Government Update

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

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:

• July 6th — California’s Regulatory Landscape with the CA DFPI. 
• July 20th  — Stablecoin Update with Davis, Wright, Tremaine’s Alex Barrage 

 
Digital Wallets – Peer-to-Peer “P2P” Payment Systems
Rachel Gittlemen of the Consumer Federation of America has published a blog posthighlighting the popularity of the mobile payment and peer-to-peer payment systems, lack of FDIC deposit insurance and regulatory oversight, and consumer data privacy concerns. 

Financial Services Committee Passes 10 Bills
During a legislative markup last week the Financial Services Committee passed 10 bills and sent them to the House floor for consideration. Notable bills include a measure to provide whistleblower incentives and protections, which passed by a voice vote; and a bill which would eliminate a regulatory exemption that allows firms to operate FDIC- insured banks as industrial loan companies without being subject to traditional supervision requirements. Rep. Carolyn Maloney’s (D-NY) Overdraft Protection Act was initially noticed in the markup announcement but was not considered during the actual markup.
 
Data Privacy Bill Passes Subcommittee
The American Data Privacy and Protection Act was reported favorably by the House Energy and Commerce Committee, Subcommittee on Consumer Protection and Commerce. The bill has been sent to the full Committee for consideration. The bill would give consumers more control over their online data and would require companies to minimize the amount of information they collect. The bill would preempt all but 15 state privacy laws and would create a private right of action.
 
Sen. Warren Request OCC Block TD Bank Merger
Sen. Elizabeth Warren sent a letter to the Office of the Comptroller of the Currency requesting they block TD Bank’s acquisition of Tennessee-based First Horizon until allegations of customer fraud at the bank are investigated. Warren cited a May 4th report by Capitol Forum which alleged TD Bank incentivized employees to enroll customers in new accounts and services such as overdraft protection without their consent. These allegations of fraud and abuse were investigated by the OCC in 2017,but Acting Comptroller Noreika refused to publicly reprimand or fine the bank. The letter asks that the OCC release the result of the 2017 investigation into TD bank, review Norieka’s decision to forego penalties, and prevent the proposed merger and any future mergers until the allegations are addressed. 
 
CFPB Launches Initiative to Improve Customer Service at Big Banks
The CFPB has issued a Request for Information in an attempt to improve customer service at big banks. Specifically, the CFPB is interested in customer services challenges that customers face, and the effect on their ability to access financial products and services. 
 
CFPB Blog Post on BNPL and Credit Reporting
This morning the CFPB published a blog post  about the inclusion of Buy Now Pay Later payments in consumer credit scores. The blog notes that the three largest nationwide consumer reporting companies, Equifax, Experian, and TransUnion, have described plans to accept BNPL payment data, but that inconsistent treatment may limit the potential benefits to consumers and the credit reporting system. The Bureau pledged to monitor the progress of BNPL providers and consumer reporting agencies as the market grows and more payment data is provided.
 
CFPB Blog Post on Overdraft
The CFPB has published a blog post on the impact of overdraft programs on consumers. The blog post did not reveal any new information but reminded readers of two December 2021 research reports on overdraft fees, described a supervision effort to collect information on overdraft from over 20 financial institutions, and highlighted CFPB efforts to encourage banks to reduce or eliminate overdraft fees.
 
CFPB Director Chopra Blog Post on Financial Regulation
The CFPB has published a blog post authored by Director Rohit Chopra, outlining the Bureau’s efforts to simplify rules and regulations, and to increase the amount of guidance provided to the financial industry.

Director Chopra also noted several rulemaking priorities, including those related to consumer access to their financial records, increasing transparency in the small business lending marketplace, and implementing quality control standards for automated valuation models. Notably, Director Chopra also highlighted that the CFPB is considering utilizing Congressional authority to register certain nonbank financial companies to identify potential scammers and those that repeatedly violate the law. 
​
Rep. Himes Publishes Proposal for CBDC
Rep. Jim Himes (D-CT), has published a whitepaper entitled “Winning the Future of Money: A Proposal for a U.S. Central Bank Digital Currency” with the goal of beginning a dialogue and debate that will lead to draft legislation to create a U.S.-issued Central Bank Digital Currency (CBDC). The whitepaper outlines the advantages of a CBDC over a privately issued stablecoins and highlights that a CBDC should not be thought of a replacement for legacy payment systems and currencies but as an alternative for consumers and businesses.
 
CFPB Announces Review of Credit Card Company Late Fees
The CFPB has issued an Advanced Notice of Proposed Rulemaking (ANPRM) seeking information on credit card late fees, asking credit card issuers, consumer groups, and the public to provide answers to several questions related to late fees and late payments. The deadline for submitting comments is July 22, 2022.
 
McHenry Releases Discussion Draft of Financial Data Privacy Bill
Rep. Patrick McHenry (R-NC), Ranking Member of the House Financial Services Committee, released a discussion draft of a financial data privacy bill. The bill would grant consumers control over their personal information, and would ensure consumers have the right to terminate collection of their data and/or request deletion of their data at any time. The bill would also create a national standard to reduce compliance burden and provide certainty to consumers and entities that handle financial data.  
 
NY State Legislature Passes A266
NY Assembly Bill 266 has passed the Assembly and Senate and is now awaiting the Governor’s signature. The bill would require notice of potential gift card scams to be displayed wherever gift cards are sold. The bill as introduced was initially very prescriptive and gave the exact language of the notice but, as passed, the bill only requires a conspicuous notice at or near the physical location where the sale occurs.

​New Federal Bills
Financial Data Privacy Bill Discussion Draft
 
Summary: The bill would modernize financial data privacy laws and give consumers more control over how their personal information is collected and used.
 
Status: Discussion Draft released. Not officially introduced.
 
Sponsor: Rep. Patrick McHenry (R-NC)
 
Pending Federal Bills
 
S. 4356 Responsible Financial Innovation Act
 
Summary: The bill would create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.
 
Status: Introduced in Senate on June 7, 2022
 
Sponsors: Senators Kristen Gillibrand (D-NY) and Cynthia Lummis (R-WY)
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would provide that payment stablecoin issuers must choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank, and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415- To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 31 Democratic and 18 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.