The Government Updateis 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.  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:
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.
0 Comments
The Government Updateis 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.  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:
 Lummis-Gillibrand Responsible Innovation Act The long-anticipated text of the "Lummis-Gillibrand Responsible Innovation Act” sponsored by U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) was released on June 6th. In brief, the bill attempts to build a framework around the cryptocurrency ecosystem by, amongst other things, mandating requirements for stablecoins; formally defining terms; outlining a clear distinction between digital assets that are commodities or securities by examining the rights or powers conveyed to the consumer via disclosures; underscores that existing law requires the Federal Reserve banks to make available payment, clearing and settlement services to any depository institution chartered under State or Federal law; and by establishing an Advisory Committee on Financial Innovation with the goal of studying and reporting to regulators on the evolving digital asset market. The specific sections of the bill are outlined below:
House Energy and Commerce Committee Releases Bipartisan Privacy Bill the House Committee on Energy and Commerce regarding their bipartisan Discussion Draft of Comprehensive Data Privacy legislation. You can also find a section-by-section breakdown of the Discussion Draft here. At this time the Discussion Draft is expected to the focus of a hearing by the E&C Committee on June 14th. Lastly, attached above is a Senate version of the bill that was authored by U.S. Senator Maria Cantwell (D-WA). HFSC Advances Eight Bills The House Financial Services Committee held a legislative markup and passed the Payment Choice Act of 2022 by a bipartisan vote, which would require retail establishments to accept cash payments for goods and services in amounts less than $2,000. It also passed the Expanding Financial Access for Underserved Communities Act, which would expand the field of membership for all federal credit unions. A bill which would eliminate a regulatory exemption for industrial loan companies was withdrawn. McHenry, Luetkemeyer Send Letter to Chopra on Expanded UDAAP Policy House Financial Services Committee Ranking Member Patrick McHenry and Subcommittee on Consumer Protection and Financial Institutions Ranking Member Blaine Luetkemeyer sent a letter with 17 of their Republican colleagues to CFPB Director Rohit Chopra to express concern with the CFPB’s recently released unfair, deceptive, or abusive acts and practices (UDAAP) supervisory policy and recent changes to the rule governing CFPB administrative adjudications. The new UDAAP policy will allow the CFPB to target discrimination, whether intentional or unintentional, as an “unfair” practice in all consumer financial products and services. While the Congressmen acknowledged there is no place for discrimination in financial services, they criticized the move as an expansion of CFPB’s statutory authority done outside of the typical notice and comment process. The letter included several questions for response focused on the rulemaking and enforcement of the expanded policy. CFPB Clarifies State Enforcement Authority The CFPB issued an interpretive rule that clarified states’ roles in the enforcement of the Consumer Financial Protection Act of 2010. Specifically, the interpretive rule affirms that states can enforce the Consumer Financial Protection Act, including the provision making it unlawful for covered persons or service providers to violate any provision of the federal consumer financial protection law. It also says that nothing in the Consumer Financial Protection Act precludes complementary enforcement activities on the national and state level and it outlines the broad cross-section of companies and individuals against which a state can purse claims. CFPB Issues Blog Post on Nonbank Supervision As a follow up to their recent announcement that they will increase supervision of nonbank institutions, the CFPB has released a blog post with additional details that may be helpful to institutions when assessing whether or not they may be subject to additional CFPB supervision. The post answers several questions related to CFPB’s supervisory authority and examinations, and provides useful links. CFPB Issues Press Release on Black-Box Credit Models The CFPB issued a Consumer Financial Protection Circular that outlines a company’s responsibilities when denying a credit application or taking any other adverse actions using complex algorithms or black-box credit models. The Circular notes that use of artificial intelligence in credit decisions does not absolve a company from adverse action notice requirements under the Equal Credit Opportunity Act (ECOA), and that noncompliance with ECOA notification requirements cannot be justified on the mere fact that the technology used to make the credit decision is too complicated or opaque for the applicant to understand. HFSC Chair Waters Announces June Committee Schedule House Financial Services Committee Chair Maxine Waters has announced the Committee’s June hearing schedule. Notably, Federal Reserve Board Chair Jerome Powell will appear before the Committee on June 23rd for a hearing on monetary policy and the state of the economy. Bank of America Hit With Class-Action Lawsuit Related to Zelle Fraud Bank of America is facing a class action lawsuit related to the fraud on the Zelle platform. IPA is still reviewing the complaint, but paragraph five should be of particular interest to our members: “BofA prominently touts Zelle to its accountholders as a secure, free, and convenient was to make money transfers. However, it misrepresents and omits a key fact about the service that is unknown to accountholders: that there is virtually no recourse for consumers to recoup losses due to fraud. Indeed, unlike virtually every other payment method commonly used by American consumers—debit cards, credit cards, and checks—there is no protection for accountholders who are victims of fraud, and virtually no recourse for accountholders attempting to recoup losses due to fraud.” CA DFPI Issues Invitation for Comments on Crypto-Related Financial Products and Services As a follow-up to Governor Newsom’s recent Executive Order on blockchain development, the California Department of Financial Protection and Innovation has issued an invitation for comments from stakeholders and the public on the development of regulatory clarity in the offering of crypto asset-related financial products and services. More information, including a link to submit comments, can be found here. CA DFPI Releases Consumer Complaint Proposal The IPA has recently learned that the California’s Department of Financial Protection and Innovation (DFPI) has released a Notice of Proposed Rulemaking to implement, interpret, clarify, and make specific, certain sections of the California Consumer Financial Protection Law (CCFPL) that impose requirements on covered companies to respond to consumer complaints and report information about those complaints and responses to the DFPI. Specifically, the DFPI is proposing to make explicit what it means to provide a timely response to consumers and to the Department regarding complaints against or inquiries concerning a covered person. Covered persons are expected to have appropriate procedures to review, investigate, respond to, track, and report consumer complaints and inquiries. Notably, these proposed procedures apply to complaints received directly by a company — they are not limited to complaints submitted to the DFPI. For each complaint, covered persons must provide the complainant with a written acknowledgement of receipt. The deadline to submit comments to the CA DPFI is July 5th. FinCEN Issues ANPRM For No-Action Letters The Financial Crimes Enforcement Network (FinCEN) has issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on questions related to the implementation of a no-action letter process at FinCEN. A June 28, 2021 FinCEN report to Congress concluded that FinCEN should undertake a rulemaking to establish a no-action letter process to supplement the existing regulatory guidance and relief that parties may request from FinCEN. Several benefits of no-action letters were noted, including encouraging dialogue with the public, promoting a culture of compliance, and enhancing transparent enforcement of the Bank Secrecy Act.  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 31 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. The Government Updateis 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 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:
 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. The Government Updateis 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. Payments Forum 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. The Government Updateis 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. 2022 Innovative Payments Conference Last week IPA members traveled to Washington, D.C. from around the country to attend the 2022 Innovative Payments Conference. Attendees interacted with federal legislators and regulators, industry representatives, law enforcement, and policy experts on important and timely issues that affect our industry. We appreciated everyone who attended and participated in the event! HFSC GOP Letter to CFPB Dir. Chopra Rep. Blaine Luetkemeyer, Ranking Member of the HFSC Subcommittee on Consumer Protection and Financial Institutions joined Committee Ranking Member Patrick McHenry and nearly every Republican Committee Member in a letter to CFPB Director Rohit Chopra highlighting concerns with the CFPB’s “Financial Services” RFI. The letter included over a dozen questions for response, focusing on the potential for consumer harm if overdraft protection is removed as an option, the definition of “junk fee,” and the CFPB’s plans for rulemaking in this space. In addition, the IPA consulted with Luetkemeyer’s staff during the drafting of this letter, and we were pleased to see questions about existing prepaid account disclosure requirements, and fees collected by prepaid accounts. HFSC Hearing on Overdraft Fees The House Financial Services Committee Consumer Protection and Financial Institution Subcommittee held a hearing entitled “The End of Overdraft Fees? Examining the Movement to Eliminate the Fees Costing Consumers Billions.” The conversation on overdraft went as expected, with Democrats claiming overdraft fees more negatively affect lower-income Americans, and Republicans highlighting overdraft protection as a short-term liquidity tool that many Americans use to their advantage. Most notably for the IPA, Subcommittee Ranking Member Blaine Luetkemeyer spent much of his opening statement criticizing the CFPB’s “junk fee” RFI and highlighting the strict disclosure requirements of the prepaid industry. His full statement can be found here. Sen. Toomey Announces Stablecoin Regulatory Framework Bill Sen. Pat Toomey, Ranking Member of the Senate Banking Committee, released draft legislation entitled the Stablecoin Transparency of Reserves and Uniform Safe Transactions (Stablecoin TRUST) Act. The proposed 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. More information, including a press release and section-by-section summary, can be found here. FDIC Notification of Engaging in Crypto-Related Activities The FDIC has requested information from any FDIC-supervised institutions that currently engage, or intend to engage in, crypto-related activities. The specific information requested is outlined in a Financial Institution Letter. The FDIC will review the information and provide relevant supervisory feedback. Chairman Brown Falsely Claims Digital Banks Put Uses at Risk Senate Banking Committee Chairman Sherrod Brown (D-OH) was recently quoted in Business Insider as saying "Fintech companies that want to act like banks–but without the consumer protections and safeguards that actual banks must adhere to–put people's hard earned money at risk. Consumers shouldn't be getting locked out of their accounts.” In response to this statement, Forbes published an article this week entitled “US Senator Falsely Claims Chime And Digital Banks ‘Make Users Vulnerable To Losing Their Money’” in which the contributor pointed out the numerous facts and data points that Chairman Brown ignored when making the statement. New 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. 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 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. The Government Updateis 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 the American Banker The American Banker published an op-ed written by IPA President Brian Tate. The op-ed is entitled “Prepaid cards have real value. Don't be fooled by isolated incidents,” and is in response to the recent American Banker article which painted an inaccurate picture of the prepaid card community. American Banker article on Paypal v. CFPB feat. Brian Tate The American Banker published an article on the Paypal v. CFPB case in which IPA President Brian Tate was quoted. IPA Welcomes B4B as a New Member The IPA is pleased to welcome B4B Payments as a new member to the association. Learn more about the company in their new member profile on our blog. IPA Podcast: San Francisco Seeks New Financial Partner for Student Savings In the latest episode of the IPA Payments Pod, we talk with the San Francisco Office of Financial Empowerment about its search for anew financial services provider for its Kindergarten to College student savings program. We talk about what they are looking for in a partner and its planned RFP process. You can find the podcast here. President Biden's On-Demand Pay Tax Proposal The Department of the Treasury has published the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals as part of the President Biden’s budget proposal. Of particular interest to the IPA is a section that would clarify the tax treatment of on-demand pay arrangements. The section appears to indicate that the Administration is in full support of EWA and does not believe EWA products are loans. Further, it states that even if you receive your wages before payday, “on-demand” pay will be treated as paid on payday for tax purposes. CFPB Issues Report on Credit Card Late Fees The CFPB issued a report showing that credit card issuers charged $12 billion in late fees in 2020. The report also found that 18 of 20 issuers set late fees at or near the maximum allowable level, subprime and private label cardholders were particularly susceptible to late fees, late fee volume fell during time periods when households were receiving stimulus checks, and low-income areas were particularly hit with late fees. GAO Access to Banking Services Report The GAO released a report studying household use of banking services and the effect of regulatory action on financial products and services. The IPA was consulted for a substantial section on the use of prepaid card products. The report examines factors associated with households’ use of basic banking services; statutory and regulatory factors affecting service availability and cost; the use of prepaid cards and trends in the prepaid card market; and the efforts of selected federal financial regulators to address these issues. CFPB Targets Unfair Discrimination in Consumer Finance The CFPB has issued a press release announcing changes to its supervisory operations to protect against illegal discrimination. The Bureau will now rely not only on the Equal Credit Opportunity Act (ECOA), but also the Consumer Financial Protection Act (CFPA) when targeting discriminatory practices in consumer finance markets, including credit servicing, collections, consumer reporting, payments, remittances, and deposits. Washington Passes Payroll Card Unclaimed Property Bill The Washington State Legislature has passed WA SB5531, which would treat payroll cards as unclaimed property and subject to escheatment one year after issuance, and has been delivered to the Governor for his signature. The IPA sent a letter with suggested changes to the bill, specifically that payroll card accounts be treated like checking, savings, and other similar deposit accounts covered by Regulation E. It does not appear they made any of our recommended changes, but we have heard from multiple sources that the legislature is going to reconsider and make changes next session, including to the provisions related to payroll cards. House Passes FAIR Act The House passed the FAIR Act (H.R. 963) by a vote of 222-209. The bill bans pre-dispute arbitration clauses in employment, consumer, antitrust, or civil rights disputes. All Democratic Representatives and one Republican, Rep. Matt Gaetz (FL-1), voted in favor of the legislation. All other Republican Representatives voted against the legislation. The Fitzgerald Amendment, the only amendment that was made in order, was rejected by a vote of 184-246. The amendment would have removed the union carveout, and the AFL-CIO expressed their strong opposition to this amendment in their letter supporting the FAIR Act. In addition, the Biden Administration has issued a Statement of Administration Policy (SAP) in support of the FAIR Act and has said it would sign the bill into law if it were to be passed through the Senate. The IPA will be joining other financial industry trade associations in proactively advocating against the bill. CFPB Issues Policy On Contractual ‘Gag’ Clauses And Fake Review Fraud The CFPB issued policy guidance on “gag” clauses and fake review fraud. In the guidance, the CFPB affirms a customer’s right to post online reviews related to financial services and products and highlights that practices such as posting fake reviews or inserting clauses that forbid customers from posting honest reviews may violate the Consumer Financial Protection Act. A press release describing the guidance is available here. FDIC Request for Information on Bank Merger Act The FDIC released a request for information (RFI) soliciting comments regarding the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions involving one or more insured depository institutions, including the merger between an insured depository institution and a noninsured institution. The FDIC is interested in receiving comments regarding the effectiveness of the existing framework in meeting the requirements of section 18(c) of the Federal Deposit Insurance Act (known as the Bank Merger Act). The RFI has a 60-day comment period. 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 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 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 30 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. The Government Updateis 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. The Government Updateis 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.  The IPA is planning to hold two events later in March for our members. On March 15, at 2 p.m. eastern, with the Federal Bureau of Investigation's San Diego Elder Justice Task Force. They will discuss trends in financial crimes against seniors and talk about how the industry and law enforcement can work together to protect senior citizens. On March 22, at 3 p.m. eastern, IPA member DataSeers will present a webinar on how to adopt a data driven approach to compliance. The presentation will cover what data elements can help manage the compliance burden and how managing data can aid in adjusting to changes in the regulatory landscape.  California DFPI Issues Ruling on EWA Licensing The California Department of Financial Protection and Innovation has published a interpretive opinion in response to FlexWage’s request for an opinion relating to EWA licensing under the California Deferred Deposit Transaction Law (CDDTL) with respect to its EWA product. The CA DFPI found that FlexWage is not required to obtained a license under CDDTL. This conclusion was reached by determining that employers, not FlexWage, provide EWA funds that do not exceed what they already owe employee recipients, rather than FlexWage advancing funds and attempting to recoup those funds, plus a fee or charge, on a future date. HFSC Chairwoman Waters Releases March Hearing Schedule House Financial Services Committee Chairwoman Maxine Waters (D-CA) released the Committee’s March hearing schedule. The Committee will hold hearings on inflation, AI, overdraft fees, and stock market oversight, in additional to a monetary policy hearing with Federal Reserve Chairman Jerome Powell and a hearing on central bank digital currencies (CBDC). The witness list for the CBDC hearing has not been released, but we expect the hearing to follow up on the topics discussed at the recent hearing examining the President’s Working Group on Financial Markets’ Report on Stablecoins. Washington State Bill on Payroll Card Accounts Washington Senate Bill 5531 recently passed the Senate unanimously and has been introduced in the House Finance Committee. The bill would make revisions and updates to the Uniform Unclaimed Property Act and would treat payroll card accounts in the same manner as wages or checks under unclaimed property regulations and would subject them to escheatment one year after issuance. The IPA has drafted a comment letter to the Washington State Legislature with the suggestion that payroll card accounts be treated like checking, savings, and other similarly deposit accounts covered by Regulation E. More information on the bill can be found here. Russia Removed from SWIFT Financial System In response to Russia’s invasion of Ukraine, a joint statement was issued on Saturday by the United States, the European Union, the United Kingdom, and Canada that they would disconnect select Russian banks from SWIFT, the global system which allows financial institutions to send secure messages and payment orders. The move will essentially disconnect those banks from the international financial system. The full effect of the action, long considered the “nuclear” economic sanction option, remains to be seen. When Iran was removed from SWIFT in 2012 after being sanctioned by the European Union over the country’s nuclear program, they lost almost half its oil export revenue and 30% of foreign trade following the disconnection. North Korea is the only other nation to be disconnected from SWIFT. Federal Reserve Issues Request for Comment on Access to Accounts and Services This week the Federal Reserve issued a supplemental notice and request for comment on updates to its proposed guidelines on Account Access Guidelines. Last May, the Board requested comments on proposed guidelines to be used by Reserve Banks when evaluating requests for accounts and services. Those guidelines established a two-tier system under which requests by federally-insured institutions would be straightforward, while requests from non-federally insured institutions would require more extensive due diligence. Under the new proposed guidelines, a three-tiered system is created. Tie 1 consists of federally-insured institutions, and their requests would continue to be subject to a more streamlined review. Tier 2 consists of institutions that are not federally-insured but are subject to prudential supervision by a federal banking agency. These institutions would generally receive an intermediate level of review. Tier 3 consists of institutions that are neither federally-insured nor subject to prudential supervision. They would generally receive the strictest level of review. Republican Congressmen Raise Issues With Postal Banking Pilot Program Nine Republican members of the House Financial Services Committee sent a letter to Michael Kubayanda, Chairman of the Postal Regulatory Commission, to express concern with the recent US Postal Service pilot program allowing customers to exchange a paycheck or business check for a gift card in value up to $500 at USPS offices. The members expressed concern that check cashing is far outside the traditional jurisdiction of the USPS, which by statute includes the acceptance, collections, sorting, and transportation of mail. The members also criticized the USPS for enacting the pilot program without informing the Postal Regulatory Commission or publishing notice in the Federal Register as required by the Postal Accountability & Enhancement Act. The pilot program, which ran from September 12, 2021 to January 12, 2021, was used by only 6 customers and brought in only $35.70 in fees to the Postal Service. Top Republicans Demand Regulators Protect Access to Financial System from Government Overreach Top Republicans on the Financial Services Committee and the Subcommittee on Consumer Protection and Financial Institutions sent letters to the OCC, FDIC, Federal Reserve Board, and the Treasury Department seeking assurances that the federal cannot abuse its authority in their regulation of the financial system to block lawful business engaging in legal activities from accessing the financial system. The letter specifically mentioned “Operation Choke Point,” in which the FDIC and Department of Justice used supervisory and law enforcement authority to prevent legal businesses from accessing the financial system, and Biden Administration acts to pause publication of a November 2020 notice of proposed rulemaking which would prohibit national banks and federal savings associations from categorically declining financial services to businesses engaged in lawful business activities.  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- 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 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 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) 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 30 Democrat and 13 Republican House members have announced they will not be running for reelection in 2022. More information about Congressional retirements can be found here. The Government Updateis 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.  San Francisco Looking for Fintech or Banking Partner for College Savings Program The IPA has learned that the San Francisco Office of the Treasurer & Tax Collector and the Kindergarten to College (K2C) program is planning to hold a Webinar on Wednesday, Feb. 23, to discuss its forthcoming request for proposal for a financial services provider to offer college savings programs for every student in the San Francisco Unified School District. The accounts have seed funding and are eligible for incentive deposits from the city. It currently has $10.9 million in savings and continues to grow. This virtual pre-bid conference will introduce San Francisco’s K2C program, highlight the program goals, and share next steps in the process. They will answer questions about the program and what they are seeking. You can learn more and register at the link below. Virtual K2C Financial Institution Pre-Bid Conference Wednesday, February 23, 2022 9:00 – 10:00 AM PT Register at: Webinar Registration - Zoom  CFPB Publishes Blog Regarding Excessive Fees As a follow up to their recently-announced request for information (RFI) “Regarding Fees Imposed by Providers of Consumer Financial Products or Services,” the CFPB has published a blog post, entitled “The Hidden Cost of Junk Fees.” In addition to background information on how they define junk fees, the CFPB outlines common junk fees described in their request for information, including overdraft or non-sufficient fund fees, late fees, fees to pay your bill, closing costs and homebuying fees, and most important to the IPA, prepaid card fees. The IPA is reviewing the blog post and RFI on junk fees as it relates to prepaid (cards) accounts and is in the early stages of drafting a response to the CFPB. CFPB Begins Accepting Public Petitions for Rulemaking The CFPB has launched a new online system for members of the public to engage with the agency and request regulatory changes. Using the new system, the public will be able to request the agency pursue a new rule, amend an existing one, or repeal a rule. Petitions will be posted on public dockets for review and comment, and everyone, including former government employees and lobbyists, will be required to submit their petitions for public review through the online system going forward. Crypto/Stablecoin Bills Introduced in Financial Services Committee Rep. Tom Emmer (R-MN) introduced a H.R. 6415 to amend the Federal Reserve Act 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 to an individual. The bill has been referred to the Financial Services Committee but currently has no cosponsors and has not received a markup. In the coming weeks, Rep. Josh Gottheimer (D-NJ), also a member of the House Financial Services Committee, will be releasing a bill which would require stablecoin issuers to either become a bank, similar to recommendations from the President’s Working Group on Financial Markets’ Recommendations on Stablecoins, or to partner with a bank. Either option would subject the issuer 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. Rep. Gottheimer and Emmer’s bills are one of a number of recent legislative proposals on cryptocurrency, in addition to the Federal Reserve’s report on CBDCs and an upcoming White House Executive Order on cryptocurrency regulation, indicating 2022 will be Congress’ most active year for the regulation of digital assets. CFPB Release Results of Semiconductor Study The Department of Commerce released results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in September 2021. The study showed that median inventory held by chips consumer fell from 40 days in 2019 to 5 days in 2021, while semiconductor demand is 17 percent higher in 2021 than in 2019, indicating the potential for a major disruption if COVID, a natural disaster, or political instability affects a foreign semiconductor facility. PayPal v. CFPB Oral Arguments Oral arguments for PayPal v. CFPB took place last week. These arguments focused on Paypal’s attempting to strike down a proposal by the CFPB to hold digital wallets to certain disclosure and waiting-period rules that currently apply to physical prepaid payment cards. Lawyers for PayPal seemed to have a better grasp on the issues than lawyers for the CFPB, who appeared to be playing defense most of the time. While it’s impossible to predict how the court will decide the case, the judges seemed to understand the issue, and appeared more sympathetic to PayPal’s arguments. We expect a decision later this year or early next year. Senate Banking, House Financial Services Holds Hearing on PWG Stablecoin Report Undersecretary of the Treasury for Domestic Finance Nellie Liang appeared before the Senate Banking and House Financial Services Committees in separate hearings to discuss the recently-released Presidential Working Group Report on Stablecoins. Both hearing focused on stablecoin risks and benefits, existing state regulation, and the financial inclusion potential of stablecoins. Liang mostly repeated the findings and recommendations of the report, and did not reveal any new policy recommendations. When asked by Republicans about existing state regulation, Liang said that while there are existing state laws that apply to stablecoins, a less fragmented federal regulatory framework is preferred. Liang declined to advocate for specific legislative proposals, other than the recommendation from the report to require stablecoins be issued from insured depository institutions. This proposal tracks closely with Rep. Gottheimer’s (D-NJ) recent legislative proposal which has yet to be released. You can watch the senate hear at this link (the hearing starts at about 18:00: hearing | Hearings | United States Committee on Banking, Housing, and Urban Affairs (senate.gov) You can watch the house hearing here: Virtual Hearing - Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins | U.S. House Committee on Financial Services Feinstein Asks Treasury, IRS to Investigate Traffickers' Use of Cryptocurrency In a recent letter to the Treasury Department and IRS, Sen. Dianne Feinstein (D-CA) asked for information on how digital currencies are being used in human and drug trafficking. Feinstein specifically asked what steps Treasury and the IRS are taking in response to a recent GAO report which stated the agencies may not have all the data they need to determine the extent to which cryptocurrencies are being used to aid human and drug trafficking. She asked the agencies what steps they are taking to better capture the needed data, what other actions they are taking to improve the tracking, sharing, and use of information regarding the illicit use of cryptocurrencies, and whether they require additional legislative authorities to implement GAO’s recommendations.  New 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) Pending Federal Bills H.R. 6415 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 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 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)      The Government Updateis 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 Media Engagements The IPA is frequently cited in the media on issues important to our members. Below are the most recent examples:
 CFPB Issues Letter on EWA; Promises Greater Clarity CFPB Acting General Counsel Seth Frotman said in a letter to New Jersey consumer advocates that the CFPB’s November 2020 advisory opinion regarding EWA products has caused confusion among those trying to apply the opinion to a wider range of products than initially intended, and is being misinterpreted. The 2020 advisory opinion said that EWA products offered for free through an employer should not be regulated as consumer credit under the Truth in Lending Act. Consumer advocates, including the recipients of Frotman’s letter, have called for the opinion to be rescinded. Frotman noted that the 2020 advisory opinion was limited to a narrow set of facts and was not intended to apply to all EWA products. Frotman indicated that he is recommending to CFPB Director Rohit Chopra that the CFPB provide greater clarity on EWA products. Federal Reserve Releases CBDC Report The Federal Reserve released its long-awaited report on central bank digital currency (CBDC), entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation.” As expected, the Fed avoided taking a position on the creation and implementation of a CBDC, and instead laid out pros and cons, and posed questions that will shape the debate going forward. Notably, the Fed emphasized they would not move forward without congressional approval, stating “The Federal Reserve does not intend to proceed with issuance of a C.B.D.C. without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.” The Fed also dismissed the possibility that a CBDC could be implemented alongside consumer bank accounts at the Fed, stating “The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals, and such accounts would represent a significant expansion of the Federal Reserve’s role in the financial system and the economy,” The Federal Reserve’s initial analysis suggests that a potential U.S. CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable, and identity-verified. FinCEN Issues Proposed Rule for SAR Sharing Pilot Program The Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) that proposed and solicited public comment on the establishment of a pilot program for sharing suspicious activity reports (SARs). The pilot program would permit a financial institution with a SAR reporting obligation to share SARs and information related to SARs with the institution’s foreign branches, subsidiaries, and affiliates for the purpose of combating illicit finance risks. Currently institutions may only share SARs with foreign head offices (not branches) controlling companies (whether foreign or domestic), and domestic affiliates. Department of Commerce Releases Results from Semiconductor Supply Chain RFI The Department of Commerce has released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in September 2021. The RFI showed that median inventory held by chips consumer fell from 40 days in 2019 to 5 days in 2021, while semiconductor demand is 17 percent higher in 2021 than in 2019, indicating the potential for a major disruption if COVID, a natural disaster, or political instability affects a foreign semiconductor facility. As a reminder, the IPA joined a joint trade association letter in response to Department of Commerce RFI, and has joined a Semiconductor Shortage coalition with other financial trades to conduct proactive outreach on Capitol Hill. CFPB issues RFI Regarding Excessive Fees The CFPB issued a press release announcing a Request for Information (RFI) aimed at reducing fees charged by banks and other financial companies. Specifically, they are asking for consumers’ experiences with unexpected, unclear, duplicative, and excessive fees related to their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfer. Fienstein Asks Treasury, IRS to Investigate Traffickers' Use of Cryptocurrency Last week, in a letter to the Treasury Department and IRS, Sen. Dianne Feinstein (D-CA) asked for information on how digital currencies are being used in human and drug trafficking. Feinstein specifically asked what steps Treasury and the IRS are taking in response to a recent GAO report which stated the agencies may not have all the data they need to determine the extent to which cryptocurrencies are being used to aid human and drug trafficking. She asked the agencies what steps they are taking to better capture the needed data, what other actions they are taking to improve the tracking, sharing, and use of information regarding the illicit use of cryptocurrencies, and whether they require additional legislative authorities to implement GAO’s recommendations.  Notable State Issues NY Gift Card bill Passes Assembly NY State Bill A266 passed the Assembly and was referred to the Senate last week. The bill would require any businesses who display gift cards for sale to post notices alerting customers of gift card scams. One of our members who has a presence in New York has been communicating with the sponsor of the bill, and she is open to working with the industry, to make improvements and/or amendments. WA Payroll Card Bill in Senate Committee Last week, Washington Senate bill 5531 was introduced. It would amend the Uniform Unclaimed Property Act to consider payroll cards abandoned property one year after it was issued and made payable. IPA continues to follow the bill, but there has been no action on the bill since it was introduced.  New Federal Bills
None. Pending Federal Bills H.R. 6415 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 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 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) |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
March 2023
Categories |
RSS Feed