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@example.com.
May 16-18 Payments Forum will take place May 16-18th in Phoenix, AZ. IPA President and CEO Brian Tate will be speaking, and IPA members can receive 30% off tickets using the promo code “IPA.”
HFSC FinTech Task Force Holds Hearing on Digital Wallets
The House Financial Services Committee held a hearing last week entitled “What’s in Your Digital Wallet? A Review of Recent Trends in Mobile Banking and Payments.” Although the hearing was shortened by votes on the House floor, a number of topics of interest to the IPA were discussed. The IPA is specifically reviewing exchanges between Task Force members and witnesses on the subjects of pass-through insurance and Regulation E, and preparing a letter to Task Force members offering clarifications.
CFPB Director Rohit Chopra Testifies in the House and Senate
CFPB Director Rohit Chopra delivered testimony before the House Financial Services and Senate Banking Committees last week, his first appearance since a number of RFIs, press release, and statements relating to the payments industry. Based on his statements in both committees, Director Chopra has a wide view of his authority and intends to use it.
Republicans on both committees criticized him for the Fee RFI, attempting regulation by press release, and the recent announcement that the CFPB would be using dormant authority to oversee non-bank institutions. Democrats were generally pleased with the expanding authority of the CFPB and Director Chopra’s recent announcement that the CFPB would reduce enforcement for smaller institutions in favor of going after repeat offenders. As expected, Zelle fraud was mentioned by members in both committees, but Chopra declined to comment on the specific case, only saying that fraud is something they continuously monitor.
CFPB Invokes Dormant Authority to Examine Nonbank Companies Posing Risks to Consumers
The Consumer Financial Protection Bureau announced its intention to use a previously-unused authority to examine nonbank financial companies that, in its view, pose a risk to consumers. The authority will cover any nonbank institution regardless of which consumer financial products or services are provided. According to the CFPB, doing so will level the playing field between bank and nonbank institutions. This move has the potential to considerably expand the scope and type of companies the CFPB supervises to companies offering consumer financial products that are not explicitly part of its mandate.
Top HFSC Republicans Send Letter to USPS on Postal Banking Pilot
Top Republicans on the House Financial Services Committee, Patrick McHenry, top Republican on the Oversight and Reform Committee, James Comer, and the top Republican on the Consumer Protection and Financial Institutions Subcommittee, Blaine Luetkemeyer sent a letter to Postmaster General Louis DeJoy criticizing the USPS for overstepping its statutory authority by extending the failed postal banking pilot program.
The original pilot program, which ran from September 12, 2021 to January 12, 2022, was used by only 6 customers and brought in only $35.70 in fees to the Postal Service. In spite of the program’s failure, it was extended on or around April 1, 2022. The letter states the program extension violates language in the Consolidated Appropriations Act, 2022, signed into law on April 6, 2022, which specifically prohibits taxpayer funds for pilot programs related to non-banking financial services, and requests the Postmaster General provide any related material that the USPS has submitted to the PRC related to the pilot program.
Sens. Warren and Menendez Question Zelle Over Fraud
Democratic Senators Elizabeth Warren and Bob Menendez sent a letter to Early Warning, operator of Zelle, and criticized Zelle’s handling of recent consumer scams. Warren and Menendez said reports of rising fraud were disturbing and asked Early Warning what steps it had taken to protect consumers from the proliferation of sophisticated scams. The letter also asks Early Warning for details on the number of fraud complaints it has received and how the banks that use Zelle choose which customers will receive refunds.
Financial Health Network FinHealth Spend Report 2022
The Financial Health Network has released their FinHealth Spend Report 2022, which examines how American households managed their finances and used credit during 2021. The report analyzed year-over-year trends for more than two dozen financial products and services. Among these product and services are BNPL, credit cards, and prepaid cards. The report also analyzed recent trends in overdraft fees.
McHenry and Emmer Send CFPB Document Retention Letters
After failing to receive satisfactory responses to recent letters sent to CFPB Director Rohit Chopra on automobile repossessions and the Fee RFI, HFSC Ranking Member Patrick McHenry and Ranking Member of the Subcommittee on Oversight and Investigations Tom Emmer have sent letters to the Director Chopra requesting the CFPB retain all documents and communications and communications related to the actions in questions.
The letters state it may be necessary for the HFSC to seek answers to their original questions using these documents and communications, and they request a written response from the Director as to how he will ensure all relevant records will be preserved.
The letter related to the automobile repossession can be found here, and the letter related to the RFI can be found here.
New Federal Bills
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
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 30 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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