March 16, 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: gr@ipa.org.

IPA Op-Ed in Newsweek
 
IPA COO Ben Jackson has published an op-ed in Newsweek entitled “How Financial Innovators and Regulators Can Work Together,” detailing ways in which the financial services industry and regulator can work together to create regulatory frameworks that benefit both the industry and consumers.
 
Payments 3.0: How Free Checking Dogs Financial Services
 
IPA COO Ben Jackson has published an article in Digital Transactions outlining the unintended consequences of banks providing free checking to account holders. 

​President Biden Issues Executive Order on Digital Assets
The White House released the Executive Order on Ensuring Responsible Development of Digital Assets. The EO calls for measures to protect consumers, investors, and business; mitigate systemic risks and illicit finance; support technological advances and access to safe and affordable financial services; and the exploration of a U.S. central bank digital currency (CBDC). The report did not make any specific policy or regulatory proposals and called for reports from various regulatory agencies on the development and implementation of digital assets, including a report from the Secretary of the Treasury within 6 months on the implications of a U.S. CBDC. Notably the EO calls for a “whole of government” approach, with 13 of 23 Cabinet departments, all major financial services regulators, several science and technology offices, economic and policy officials, the intelligence community, and even the EPA playing a role in forming a crypto regulatory framework. 
 
The EO follows the President’s Working Group on Financial Markets Report of Stablecoins, the Federal Reserve’s Report on CBDC, and numerous legislative proposals from both sides of the aisle.
 
President Biden Signs $1.5 Trillion Omnibus Spending Bill
Last Friday, President Biden signed a $1.5 trillion omnibus appropriations bill to fund the federal government for the remainder of FY 2022.  The bill includes a 7% percent increase in domestic spending, a 6% percent increase in defense spending, and nearly $14 billion for Ukraine humanitarian and security assistance.  Also included in the bill were new cybersecurity provisions requiring critical infrastructure operators to report cyberattacks to the federal government. The new law gives the Cybersecurity and Infrastructure Security Agency (CISA) the authority to subpoena companies that it believes are withholding information that they’re required to report.
 
After the House leaders were forced to remove $15.6 billion in extra pandemic funding from the omnibus bill last week, the plan is for the House to pass a standalone pandemic funding bill sometime this week.
 
Sarah Bloom Raskin Withdraws Candidacy for Fed Vice Chair of Supervision
After weeks of opposition from Republicans on the Senate Banking Committee, Sarah Bloom Raskin withdrew her candidacy to be the Fed Vice Chair of Supervision in a letter to President Biden on Tuesday. Chairman Brown scheduled repeated business meetings in an attempt to hold her confirmation vote, but questions surrounding her private sector lobbying before the Kansas City Fed, and her evasiveness in responding to questions from Banking Committee Republicans proved to great an obstacle. Notably, Sen. Manchin (D-WV) has publicly stated his opposition to her confirmation. His opposition could deny Raskin enough votes on the Senate floor unless a Republican agrees to support her confirmation. To date, no Senate Republican has publicly supported her confirmation.
 
Joint Cybersecurity Advisory on Russian State-Sponsored Cyber Threats
The Cybersecurity and Infrastructure Security Agency (CISA) has issued an updated Cybersecurity Advisory which provides an overview of Russian state-sponsored cyber operations; commonly observed tactics, techniques, and procedures; detections actions; incident response guidance; and mitigations. We encourage you and your organizations to review the advisory, found here.
 
Treasury and IRS Announce Plans to Reduce Tax Return Backlog
The Treasury and IRS have issued a press release announcing their plan to reduce the backlog of tax returns caused by both underfunding and operational challenges caused by the COVID-19 pandemic. The plan involves hiring thousands of additional employees, increasing taxpayer assistance, and updating out of date technology. The IRS noted that they usually have less than one million returns outstanding going into the tax season, but this year the backlog is 15x as large

North Dakota Retailer Litigation Challenging Reg. II Dismissed
The United States District Court for the District of North Dakota issued its order last week dismissing in its entirety the litigation brought by North Dakota retailers challenging the Federal Reserve’s Regulation II. The dismissal is based on statute of limitations grounds. 
 
In the case, a group of North Dakota retailers challenged the interchange fee generally, as well as fees related to ACS costs, including network connectivity, software, hardware, equipment, network processing fees, transaction monitoring costs, and fraud losses. 

New Federal Bills
 
None.
 
Pending Federal Bills
 
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 Judiciary Committee on November 3 and placed on the House floor schedule on March 11, 2022.
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 Democrat 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 Democrat and 16 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.