May 18, 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].

IPA Payments Pod: Talking Taxes, Fees, and Fintech Regulation with Brian and Brian
In the latest episode of the IPA Payments Pod we take a deep dive into some of the most recent regulatory activity with Brian Tate, the IPA’s CEO, and Brian Axell, of Axell Law, who has worked on compliance with Fintechs, issuing banks, and a variety of companies across the value chain. 
 
We look at the Consumer Financial Protection Bureau’s recent Request for Information on Fees, and their assertion of power to regulate Fintechs. We get into the Biden Administrations proposal on tax reporting for Earn Wage Access, and we even dip our toes back into the Interchange waters.
 
You can find the podcast at the link below or wherever you get your podcasts. Please subscribe and leave us a review to help others find the show.

Podcast - Innovative Payments Association (ipa.org

FDIC Issues Final Rule Regarding Misrepresentations About Insured Status
The FDIC approved a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. 
 
The final rule implements section 18(a)(4) of the Federal Deposit Insurance Act, which prohibits any person from misusing the name or logo of the FDIC or from engaging in false advertising or making knowing misrepresentations about deposit insurance. Although the FDIC has broad authority in this area, they have never actually issued specific regulations regarding false representations or misuse of the FDIC name or logo. 
 
The final rule clarifies procedures for identifying, investigating, and taking formal and informal action to address potential violations. The regulation also establishes a point-of-contact for receiving complaints and inquiries regarding potential misrepresentations. The rule notes that although they are not required to enact regulations to implement section 18(a)(4), the FDIC believes that doing so will increase transparency and promote stability and confidence in FDIC insurance. 
 
Acting Chairman Gruenberg noted in his statement that they have seen circumstances where certain non-banks were making unsubstantiated claims about deposits insurance. The final rule requires non-banks to support this claims and identify the bank or banks with which they have existing business relationships and into which consumers’ deposits may be places. This will enable the consumers, and the FDIC, to evaluate the accuracy of claims about deposit insurance.
 
Warren, Maloney, and Booker Send Letters to Banks on Overdraft
Senators Elizabeth Warren and Cory Booker, and Rep. Carolyn Maloney sent letters calling on the Presidents of JPMorgan Chase, Bank of America, and Wells Fargo to eliminate overdraft and non-sufficient fund fees. The letters noted that in recent months large banks such as Capital One and Citigroup have eliminated these fees, and referred to overdraft fees as one of the “most common exploitative mechanisms big banks use to target the poor.”
 
The letter asked the recipients to respond to questions on recent revenue from overdraft fees, disclosures about overdraft policies, waiting periods, and overdraft fees on debit transactions and ATM withdrawals.  

 
OCC to Host Virtual Innovation Office Hours
The Office of the Comptroller of the Currency has announced Virtual Innovation Office Hours on June 14-15th. According to the press release, participants may discuss fintech, new products or services, partnering with a bank or fintech company, or other matters related to the responsible innovation in the financial services. Interested parties must request a session by May 20th.
 
HFSC Chair Waters Releases May Hearing Schedule
House Financial Services Committee Chair Maxine Waters has released the Committee’s May hearing schedule. Of particular note to IPA members will be a May 26th hearing on the benefits and risks of a Central Bank Digital Currency. Remaining hearings on the schedule include:

• Tuesday, May 24 at 12:00 PM ET: The Subcommittee on Diversity and Inclusion will convene for a virtual hearing entitled, “Diversity Includes Disability: Exploring Inequities in Financial Services for Persons with Disabilities, Including Those Newly Disabled Due to Long-Term COVID.”
  
  
• Wednesday, May 25 at 12:00 PM ET: The Subcommittee on Housing, Community Development and Insurance will convene for a virtual hearing entitled, “Reauthorization and Reform of the National Flood Insurance Program.”
  
  
• Thursday, May 26 at 12:00 PM ET: The full Committee will convene for a virtual hearing entitled, “Digital Assets and the Future of Finance: Examining the Benefits and Risks of a U.S. Central Bank Digital Currency.”

​New Federal Bills
None.
 
Pending Federal Bills
 
The Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act 
 
Summary: The bill would provide that payment stablecoin issuers must choose from one of three regulatory regimes: a traditional bank charter; a new federal license designed specifically for stablecoin issuers; or a state-based money transmitter or similar license under state law. The bill would also subject all payment stablecoin issuers to standardized disclosure, redemption, and audit requirements; and would clarify that stablecoins that do not offer interest are not securities.
 
Status: Proposed, but not yet introduced.
 
The Stablecoin Innovation and Protection Act
 
Summary: This bill would require stablecoin issuers to either become a bank or to partner with a bank, and be subject to bank-like regulation. The bill also requires nonbank stablecoin issuers to maintain collateral in an amount equal to 100 percent of the value of outstanding stablecoin.
 
Status: Proposed, but not yet introduced.
 
Sponsor: Rep. Josh Gottheimer (D-NJ)
 
H.R. 6415- To amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, and for other purposes.
 
Summary: This bill amends the Federal Reserve Act to prohibit the Federal Reserve banks from offering banking products and services, including CBDC, directly to consumers.
 
Status: Introduced in the House and referred to the Financial Services Committee on January 18, 2022
 
Sponsor: Rep. Tom Emmer (R-MN)
 
H.R. 4773 – Consumer Financial Protection Commission Act
 
Summary: This bill removes the CFPB from the Federal Reserve System, converts the Bureau into an independent commission, and modifies its leadership structure. Specifically, the bill eliminates the position of director and deputy director and establishes a five-person commission appointed by the President and confirmed by the Senate.
 
Status: Introduced in the House and referred to the Financial Services Committee on July 28, 2021
 
Sponsor:  Rep. Blaine Luetkemeyer (R-MO)
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
 
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
 
Status: The bill passed the House on 3/17/2022 by a vote of 222-209 and was received in the Senate on 3/21/22.
 
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
 
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
 
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
 
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
 
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
 
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
 
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
 
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
 
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
 
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
 
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
 
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
 
Sponsor: Rep. Carolyn Maloney (D-NY)
 
IV. U.S. Congress Members Not Seeking Re-Election in 2022
The current structure of the U.S. Senate is 48 Democrats, 50 Republicans, and 2 Independents. Currently 1 Democratic and 5 Republican Senators have announced they will not be running for reelection in 2022. The current structure of the U.S. House is 222 Democrats and 211 Republicans. Currently 32 Democratic and 17 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here.