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.
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. 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) 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. Podcast: Expect the Unexpected in 2022 In the latest episode of the IPA Payments Pod, Brian Tate, the IPA’s CEO, discusses the impact of some of the biggest stories from the past year and what they might mean for 2022. We cover the PayPal lawsuit, which could change the way the prepaid products can offer credit, and the types of disclosures they need to provide. We talk about earned wage access and buy-now-pay-later products. These products have drawn interest from Congress and Brian testified in front of the House Financial Services Committee on earned wage access products. We discuss how the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation are at odds over a request for public comment on the Bank Merger Act. We also cover the nomination of Saule Omarova to be comptroller of the currency, routing requirements, and even what might happen with Crypto. You can listen to the podcast on your favorite podcast app or at our site: Podcast - Innovative Payments Association (ipa.org). Make sure to subscribe and leave us a review. IPA Joins a Coalition to Comment on the FTC Provision of the Build Back Better Bill The U.S. Chamber of Commerce has invited the IPA to sign a joint trade letter opposing the FTC penalty provisions in the reconciliation bill. In brief, Sections 35501 and 35502 of the bill would give the FTC authority to obtain first-time civil penalties against companies that engage in unfair or deceptive trade practices. Please note the bill is being supported by the National Consumer Law Center and other consumer groups. Chris Stromberg Joins IPA as Director of Government Relations Chris Stromberg has joined the Innovative Payments Association as Director of Government Relations. Most recently, Chris served in the office of U.S. Representative French Hill (R-AR) as Financial Services Fellow assisting the Congressman with his financial services portfolio. Prior to his time on Capitol Hill, Chris held government relations positions as JPMorgan Chase & Co., and the bipartisan federal lobbying firm Capitol Counsel. Chris is excited to begin working on behalf of the IPA and its members and is looking forward to meeting people in person at the April conference. Chris lives in the Washington, DC metro area with his wife and three kids, and enjoys spending time with his family in the great outdoors. Don’t hesitate to reach out to Chris at CStromberg@IPA.org with any questions, concerns, or just to chat! Jelena McWilliams Steps Down as FDIC Chair On December 31st, FDIC Chairman Jelena McWilliams announced her intention to step down from her role effective February 4th. McWilliams’s term was set to expire in 2023, and FDIC board member Martin Gruenberg, a Democrat, is set to become acting chair. McWilliams’s announcement comes after her unusual confrontation with Gruenberg and CFPB Director Rohit Chopra. Gruenberg and Chopra announced that the two agencies planned to launch a review of bank mergers and sought public comment on the issue. McWillaims followed with her own statement on behalf of the FDIC, saying the FDIC hadn’t approved the review. The dust-up spurred speculation that the Biden administration might try to push McWilliams out. Her departure paves the way for Democrats to gain control of the agency’s agenda in the coming weeks, potentially leading to more stringent requirements around bank mergers, climate change, and more. Powell and Brainard Face Confirmation Hearings; Raskin, Cook, and Jefferson Nominated to Fed Board Chairman Jerome Powell testified before the Senate Banking Committee on January 11th in his reconfirmation hearing. While his confirmation by the Senate is expected, he faced tough questions from both sides of the aisle on inflation and his track record on enforcement. Sen. Elizabeth Warren, for example, said she opposes Powell for his “failures on regulation, climate and ethics.” Meanwhile, Federal Reserve Governor Lael Brainard faced the Senate Banking Committee on the 13th for her confirmation hearing to be the Fed’s new Vice Chair. In her confirmation hearing, she was pressed on a range of issues, including inflation, climate change, and the independence of the Federal Reserve. Like Powell, her confirmation is likely. On the 14th, Biden nominated former Fed Governor and onetime deputy Treasury Secretary Sarah Bloom Raskin as Vice Chair of Supervision, as well as Lisa Cook and Philip Jefferson to the Federal Reserve Board of Governors. If confirmed, Cook will be the first Black woman to serve as a Fed Governor, and Jefferson would be the fourth black man to serve in the Fed’s history CFPB Seeks Public Comment on Buy Now Pay Later Last week the CFPB issued request for public comment on BNPL. Specifically, they have asked anyone interested in the market, including families, small businesses, and international regulators, to submit answers to the following questions:
Notable State Issues New Jersey Passes Gift Card Fraud Bill Like many state legislatures, New Jersey concluded its 2021 session last week, but not before considering a number of important bills. Notably, both the Senate and Assembly passed a bill which would require every retail establishment that displays gift cards for sale to train employees on how to identify and respond to gift card fraud. The bill was signed by Governor Phil Murphy on January 18th and will take effect four months after enactment. New Jersey Senate Passes EWA Bill The New Jersey Senate also passed a bill that would require earned wage access (EWA) providers to register with state regulators, have contracts directly with employers, verify earned income before making an advance, and to secures employee’s consent before obtaining information about the employee from the employer. The bill passed the Senate with amendments on January 10th, but was not considered by the Assembly before the session concluded. New York Introduces Gift Card Bill The New York State Assembly has introduced a bill that would require sellers of gift cards to provide the public with certain notices regarding scams. The bill requires the notice to be posted in a conspicuous manner in the location where the sale occurs, or on the screen of an electronic payment system. A companion bill has been filed in the Senate and is currently pending before the Senate Consumer Protection Committee. New Federal Bills
Rep. Tom Emmer (R-MN) has proposed a bill which would amend the Federal Reserve Ace 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 (CBDC). Although the bill has not been formally introduced, bill text is available here. Pending Federal Bills 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. Podcast: Digital Driver’s Licenses May Come Next Year Nearly everything in a physical wallet can be put into a digital wallet. For a long time, the one exception was your driver’s license, but that may soon change. Apple has struck deals with a number of states to put licenses into iPhones. In this episode, Jason Mikula, the publisher of Fintech Business Weekly, talks about what he found when he reviewed the deals and how they look nearly identical from state to state and give Apple much of the control over the programs. The company has said on its iOS 15 Web site that it will launch a driver’s license or ID feature in 2022. We discuss the pros and cons of digital driver’s licenses and of private companies getting into what was once purely a government domain. You can listen to the podcast on your favorite podcast app or at our site: Podcast - Innovative Payments Association (ipa.org). Make sure to subscribe and leave us a review. IPA Joins a Coalition to Comment on the FTC Provision of the Build Back Better Bill The U.S. Chamber of Commerce has invited the IPA to sign a joint trade letter opposing the FTC penalty provisions in the reconciliation bill. In brief, Sections 35501 and 35502 of the bill would give the FTC authority to obtain first-time civil penalties against companies that engage in unfair or deceptive trade practices. Please note the bill is being supported by the National Consumer Law Center and other consumer groups. IPA Members Can Get a Discount for the ACI Prepaid Accounts Compliance ConferenceIPA members can receive a discount on registration for ACI’s 22nd Annual National Forum on Prepaid Accounts Compliance, taking place February 23-24 in Washington, DC. Use registration code S10-857-857I22.S by December 17, for a 10% discount off of the early main conference fee. To learn more, visit: https://www.americanconference.com/prepaidaccounts/ Saule Omarova Withdraws from Comptroller Nomination Process Prof. Saule Omarova withdrew from the Comptroller of Currency nomination process, the White House announced on Dec. 7. In a letter, she described her nomination as “no longer tenable.” In an interview with National Public Radio, she attributed opposition to a “caricature” of her written work. CFPB Director Chopra Tries to Run the FDIC Along With the CFPB The Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation are at odds over a request for public comment on the Bank Merger Act. The CFPB published the request on its own site on Dec. 9, saying that the FDIC board had approved the request. The FDIC’s Board is currently composed of the Chairman of the FDIC, Director Martin Gruenberg (internal), the Director of the CFPB Rohit Chopra, and the Acting Comptroller of the Currency, Michael Hsu. The same day, the FDIC published a release on its own site that said no request for information had been voted on by the board and that it looked for to a collegial relationship with other regulators in the future. On Dec. 14, CFPB Rohit Chopra published a statement on the CFPB Web site saying that he, Gruenberg, and Hsu voted for the request over e-mail, so it should be published in the Federal Register. Chopra described the refusal of FDIC Chairwoman Jelena McWilliams to publish the request as “an attack on the rule of law.” Senators and industry observers described the dispute over the request for information as an attempt to oust the Republican-appointed McWilliams by Democrats at the other agencies, the New York Times reported. The spat prompted U.S. Representative Blaine Luetkemeyer (R-MO) has introduced a bill entitled, “the FDIC Board Accountability Act,” to revise the membership requirements for the Board of Directors of the FDIC. If enacted, the FBAA would make the Director of the CFPB a non-voting member of the Board and replace the Director with a new presidential appointee (subject to Senate confirmation) who possesses community bank experience. In addition, the bill would limit Board membership to two-terms. The IPA has a copy of the language of the bill if you are interested. Notable State Issues New York Gift Card Law Adds Fee and Expiration Limitations A new law in New York State place limitations on the fees that can be charged on gift cards and extends their expiration date. The law, signed on Dec. 10, includes the following provisions:
You can find the complete text of the bill here: NY State Senate Bill S3467B (nysenate.gov) New Jersey Gift Card Bill Seeks to Provide Fraud Protections A gift card bill in New Jersey seeks provide additional protections to gift card holders in the event of a fraud. In short, the bill would require issuers to:
An earlier provision that would require issuers to hold any balance over $100 for 48 hours was removed by a senate committee. The bill is still in the Assembly Consumer Affairs Committee. The two-year legislative session will end at the end of the year, and all unfinished business expires, so this bill may end here. New Federal Laws
None. Pending Federal Bills 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 CEO Testifies on Earned Wage Access Before Congress Brian Tate, the IPA’s CEO, testified in front of the House Financial Services Committee’s Task Force on Financial Technology in a hearing on November 2 entitled “Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL and Other Emerging Fintech Cash Flow Products.” The following witnesses testified:
He covered the uses of earned wage access by individuals and companies and responded to questions from the panel. You can find a replay of the hearing and additional information at: Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL and Other Emerging Fintech Cash Flow Products | Financial Services Committee (house.gov) Podcast: New Agency Heads Will Change the Regulatory Environment In this episode Brian Tate talks about testifying at the hearing described above and what he thinks the questions and testimony of the other panelists might tell us about the future of payments regulation. You can listen to the podcast on your favorite podcast app or on our site. Make sure to subscribe and leave us a review. IPA Joins a Coalition to Comment on the Chip Shortage The IPA has joined a coalition of financial services and trade associations to responding to the U.S. Department of Commerce’s Request for Comment regarding disruptions to the supply chain, specifically for microchips. The U.S. Department of Congress published a request for public comment on the semiconductor chip shortage affecting a number of industries across the United States on Sept. 24. The shortage has been caused by the COVID 19 pandemic. The request seeks input on:
For more information on how the chip shortage could affect the payments industry, see IPA COO Ben Jackson’s column in Digital Transactions: Payments 3.0: The Chips are Down. So Are the Cards – Digital Transactions You can find the Commerce Department’s request for comment here: Federal Register :: Notice of Request for Public Comments on Risks in the Semiconductor Supply Chain IPA Signs Joint Trade Letter to White House on IRS Reporting The IPA has signed a letter from a coalition of financial services trades including American Bankers Association, the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, and other companies addressed to the White House opposing the proposed new tax information reporting regime from the Biden Administration. This proposal would have required providers of financial services to track and submit to the IRS information on the inflows and outflows of every account above a de minimis threshold of $600 during the year. The proposal seems to have been removed from any enabling legislation for the time being. Office of the Comptroller of the Currency & Federal Deposit Insurance Corp. Stablecoin Report Released by President Task Force, Regulators A report on stablecoins, which are digital assets pegged to a currency and designed to maintain their value, was released by President’s Working Group on Financial Markets (PWG), the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency at the beginning of November. The report calls for several measures to protect users and the payments system including:
You can find a copy of the full report here: Report on Stablecoins (treasury.gov) Capital Clues
New Federal Laws
None. Pending Federal Bills 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 Podcast: New Agency Heads Will Change the Regulatory Environment The Consumer Financial Protection Bureau has a new director, and the Biden Administration has nominated a new Comptroller of the Currency. These two agencies regulate large swaths of financial services. With the appointments, the industry likely will see a change in both the kinds of regulations that will be promulgated and the tone of interactions with the regulators. In this episode, we talk with Brian Tate, the CEO of the Innovative Payments Association, about what these changes might mean and how the industry can prepare. You can listen to the podcast on your favorite podcast app or at our site: Podcast - Innovative Payments Association (ipa.org) Make sure to subscribe and leave us a review. IPA Joins a Coalition to Oppose Tax Reporting Proposal The IPA has joined a coalition of financial services trades (including ABA, ICBA, CUNA, etc.) and companies opposing the proposed new tax information reporting regime from the Biden Administration as part of the proposed Reconciliation package pending in Congress. In brief, the proposal would require providers of financial services to track and submit to the IRS information regarding every account above a de minimis threshold of $600 during the year. In total over 100 trade associations have signed the letter. The letter will be sent to Members of the House and Senate. CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) Rohit Chopra confirmed as CFPB Director, Will Testify Before Congress On September 30, the U.S. Senate confirmed Rohit Chopra’s to be the next Director of the Consumer Financial Protection Bureau. He was sworn in on October 12. He previously served at the CFPB from 2010 to 2015 and led the Bureau’s efforts on student lending issues. He will testify in front of the House Financial Services Committee on Oct. 27 and is expected to reveal some of his priorities as director. The hearing will be livestreamed at: https://financialservices.house.gov/live/. OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC) Saule Omarova Nominated to be next Comptroller, Draws Scrutiny On September 23, President Biden announced that he was nominating Saule T. Omarova, the Beth and Marc Goldberg Professor of Law at Cornell University, to be the next comptroller of the currency. Saule’s nomination has drawn scrutiny because of her writings on the banking system. In an article for the Vanderbilt Law Review, she calls for “the complete migration of demand deposit accounts to the Fed’s balance sheet…” Support for her nomination seems to be split along party lines, with Sen. Sherrod Brown (D-OH) releasing a statement in support, and Senator Pat Toomey (R-PA) saying he has “serious reservations” about her nomination. The Postal Service Begins Testing Financial Services The Washington Post reported that the United States Postal Service has begun a test where it is offering check cashing services at several east coast locations. It plans to expand the pilot to include other financial services such as bill payments, the Post said. You can read the article here: USPS moves toward banking services with paycheck-cashing test - The Washington Post Postal Banking has existed in the past. Post Offices offered deposit accounts from 1910 through 1966. The accounts were aimed moistly at immigrants and people in rural areas who did not have access to banks. You can read more about the history of postal banking here: Banking on the Postal Service? | USPS Office of Inspector General (uspsoig.gov) The idea of postal banking has come up many times since 1966. In 2020, Senator Kirsten Gillibrand (D-NY) and Bernie Sanders (I-VT) introduced the Postal Banking Act to allow the Postal to offer low-cost checking and savings accounts, ATMs, mobile banking, and low-interest loans. You can read more here: Senators Gillibrand And Sanders Reintroduce Postal Banking Act To Fund United States Postal Service And Provide Basic Financial Services To Underbanked Americans | Kirsten Gillibrand | U.S. Senator for New York (senate.gov) Department of Commerce Requests Input on Impending Chip Shortage The U.S. Department of Congress published a request for public comment on the semiconductor chip shortage affecting a number of industries across the United States on Sept. 24. The shortage has been caused by the COVID 19 pandemic. The request seeks input on:
It is seeking input from a variety of companies. The deadline to respond is November 8. You can find the notice here: Federal Register :: Notice of Request for Public Comments on Risks in the Semiconductor Supply Chain The chip shortage could affect the payments industry by making it difficult to find chips for new EMV and contactless cards and by causing manufacturing problems for chip reading terminals. The IPA is working with its members and other organizations to look for possible solutions to the shortage. California Governor Signs Bill for Requirements on Accepting Deposits California Governor Gavin Newsome signed a bill into law on Oct. 5 that puts requirements on accounts that want to accept direct deposit of state funds for unemployment, welfare, and child support payments. Any account that wants to be able to accept these funds must be held at an insured depository institution and offer deposit insurance, provide consumer protections under the Electronic Funds Transfer Act, and not offer overdraft or credit features that charge a fee. You can find the full text of the law here: Bill Text - SB-497 Qualifying accounts for direct deposit of publicly administered funds. (ca.gov) NCLC Writes to the CFPB to Ask it to Treat EWA as Credit The National Consumer Law Center submitted a letter to the Consumer Financial Protection Bureau dated October 12, that requested that it treat all earned wage access products as extensions of credit and that it rescind an earlier compliance sandbox order that found earned wage access products are not credit. You can find NCLC’s letter here: CFPB-EWA-letter-coalition-FINAL2.pdf (nclc.org) Research shows that earned wage access products are cheaper alternatives for liquidity than alternatives such as payday loans and pawn loans. (See Final Copy EWA & D2C Advance Usage Trends) Research by the Aite Group found that 81% of EWA users stopped using payday loans after EWA became available. (Aite Report - DailyPay) New Federal Laws
None. Pending Federal Bills 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: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021. 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; Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. IPA Podcast: Comdata Puts New Twists on Payroll Cards The way companies pay workers has fallen out of step with their financial needs, and Comdata is looking to fix that with its Fintwist Payroll product. In the latest episode of the IPA Payments Pod, we talk with Brian Radin, the president of Comdata’s prepaid business about how the company has adapted its payroll business to meet the changes brought on by long-term trends and the acute problems that some companies are facing in the wake of the COVID19 Pandemic. Recognizing the companies are having a hard time recruiting and retaining, Comdata wanted to provide them with a product that would appeal to employees having a tough time managing their finances. By offering earned wage access and financial information in conjunction with a no fee account, they hope to make payroll a way for the companies to stand out in recruitment. You can listen to the podcast on your favorite podcast app or at our site: Podcast - Innovative Payments Association (ipa.org) Make sure to subscribe and leave us a review. To learn more about Fintwist, visit its Web site at Fintwist - Superior Workforce Payment Solutions (fintwistsolutions.com) BOARD OF GOVENORS OF THE FEDERAL RESERVE SYSTEM The Fed Releases a Guide for Community Banks Wanting to Partner with Fintechs The Board of Governors of the Federal Reserve has released a paper to help community banks who want to partner with fintech companies to create new products. The paper is not new guidance on third-party risk. Instead, it draws lessons from research on existing partnerships between banks and Fintechs to discuss the kinds of partnerships available and key considerations on the benefits and risks of them. You can find the full paper here: Community Bank Access to Innovation Through Partnerships (federalreserve.gov) The Future of Cash is Examined in a Philadelphia Fed Research Paper The Federal Reserve bank of Philadelphia released a paper entitled “The Future of Cash” that examines the role of cash payments in context of the rise in electronic payments. Despite the decline in cash payments over the past few years, and the pressures on cash use caused by the pandemic, that amount of cash in circulation has increased, which may be a sign that individuals are holding cash as a store of value. You can find the complete paper here: The Future of Cash (philadelphiafed.org) Overdrafts Were Up in 2020, according to a Fed Survey A report by the Federal Reserve Bank of Philadelphia found that 29 percent of respondents to its survey reported being charged an overdraft fee during the crisis. This was up from 24.3 percent of respondents reporting paying a fee in 2019. It also found that customers with higher incomes were more likely to ask for help from their banks and have fees refunded. You can find the full report here: Overdraft Use During the Pandemic: Insights from the CFI COVID-19 Survey of Consumers (philadelphiafed.org) CONSUMER FIANCIAL PROTECTION BUREAU (CFPB) Rohit Chopra’s Nomination to Lead the CFPB Moves Forward On September 21, the U.S. Senate passed a motion, 49-48, to discharge Rohit Chopra’s nomination to be the next Director of the Consumer Financial Protection Bureau from the Senate Banking Committee. His nomination now moves from the Committee to the Senate floor. Two additional Senate votes (Cloture and final passage) are still needed before Chopra’s nomination is confirmed by the U.S. Senate. FEDERAL DEPOSIT INSURANCE CORP. (FDIC) & OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC) The FDIC. Federal Reserve, and OCC Currency Extend Comment Period on Risk Management The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency has extended the guideline for public comment on its proposed guidance on third-party relationship risks. The guidance would offer a framework for banks to use when developing risk management programs for third-party relationships, taking into consideration the size of the institution. It would replace each agency’s existing guidance. The new deadline to submit comments is October 18, 2021. You can read more here: 12 CFR Chapter II (fdic.gov) Toomey Requests Feedback on Clarifying Laws Around Cryptocurrency and Blockchain Technologies In a press release in late August, U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) announced he was seeking ideas and legislative proposals to make sure that federal law will help support the development of cryptocurrencies and blockchains. He plans to introduce legislation towards this end. Anyone looking to submit ideas has until September 27. You can find the full release here: Toomey Requests Feedback on Clarifying Laws Around Cryptocurrency and Blockchain Technologies | United States Committee on Banking, Housing, and Urban Affairs (senate.gov) New Report on Machine Learning in Credit Underwriting FinRegLab, an independent, nonprofit research organization that conducts research to evaluate new technologies and data, announced it has released a report on the use of machine learning in underwriting. The report “describes the current use of machine learning underwriting models and the choices firms are making in developing, implementing, and monitoring those models” You can find the report here: The Use of Machine Learning for Credit Underwriting: Market & Data Science Context - FinRegLab California DFPI Office of Financial Technology Innovation Announces Virtual Office Hours The California Department of Financial Protection and Innovation’s Office of Financial Technology Innovation has announced that it will hold virtual office hours for any financial company that wants to meet to discuss financial innovation or a product in development. Deputy Commissioner Christina Tetreault will meet with companies every Tuesday via Zoom from 9 to 10 a.m. Pacific Time. The meetings are scheduled for 20 minutes and can be booked on a first-come, first-serve basis at this link: Meeting Registration - Zoom After registering, you will receive a confirmation email containing information about joining the meeting. If you can’t make these times, then you can schedule a meeting with Deputy Commissioner Tetreault by emailing OFTI@DFPI.CA.Gov. She is interested in discussing potential products, business models, and other topics of concern for financial innovators. CSBS Release Model Money Transmission Act In a bid to help standardize the laws around money transmission from state to state, the Conference of State Bank Supervisors released a Model Money Transmission Modernization Act, also known as the Money Transmitter Model Law in August. The goal is to make sure that the rules across states are as uniform as possible, but this may require legislation, regulation, or guidance changes in the states. You can find more details here: CSBS Model Money Transmission Modernization Act | CSBS Capital Clues Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
New Federal Laws
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution) Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. Status: Signed by the President on 6/30/20. Sponsor: Sen. Chris Van Hollen (D-MD) Pending Federal Bills 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: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021. 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; Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org. IPA Podcast: Teaching Banks and Fintechs to Work Together In the brave new world of financial services, there are opportunities for both innovative companies and traditional banks, but they need to understand one another if they want to thrive, says Joyce Mehlman, the founder of iLex Consulting Group. In the latest episode of the IPA Payments Pod, we talk about why Fintechs need to understand the difference and relative value of Banking as a Service versus a direct issuer model of working with banks. We also discuss how traditional banks need to understand where Fintechs offer more in terms opportunities than competition. In addition, she explained how the latest group of Fintechs and their founders are different in that they are more focused on building a business long-term than they are in building up a company that can be sold. Listen here! BOARD OF GOVENORS OF THE FEDERAL RESERVE SYSTEM IPA Files Comment in Response to Fed Debit Routing Proposed Rule On July 22, the IPA submitted its comment letter to the Board of Governors of the Federal Reserve System (the Board) in response to their Notice of Proposed Rulemaking concerning Debit Card Interchange Fees and Routing. In brief, the IPA’s comment asks that the Board further consider the Proposed Rule's potential impacts on competition in the marketplace, the compliance burdens it may place on differently situated providers, and on the potential for the Proposed Rule's requirements to increase the presence of fraud in ecommerce transactions. The letter also asks the Board to make adjustments to the proposal accordingly to minimize such impacts and burdens. The letter further requests that the Board provide sufficient time for industry participants to implement whatever changes the Board ultimately makes as part of any final rule. A copy of the letter can be accessed here. Thank you to all who provided feedback throughout the process of the drafting this comment letter. CONSUMER FIANCIAL PROTECTION BUREAU (CFPB) Filing Deadlines Extended in PayPal Case Appeal In July, the CFPB filed an unopposed motion to extend the time they have to file their initial brief in their appeal in the PayPal case. Accordingly, a modified scheduling order from the United States Court of Appeals for the District of Columbia Circuit has been issued. The modified order requires that the CFPB files its initial brief by August 16, 2021 and that PayPal files its initial brief by October 13, 2021. Additional documents will be due in early-mid November, with final briefs being due on December 8, 2021. PayPal Faces SEC & CFPB Probes In its recent quarterly earnings report, PayPal disclosed that it is facing probes by both the U.S. Securities and Exchange Commission and the Consumer Financial Protection Bureau. The SEC is investigating whether the swipe fees paid to the banks that issue PayPal’s debit cards are consistent with Federal Reserve guidelines. The agency is also investigating how PayPal reports marketing fees earned from its branded-card program. PayPal has responded to subpoenas and requests for information it received from the SEC’s enforcement division and is cooperating with the investigation, according to the filing. Separately, PayPal said it received a civil investigative demand from the CFPB in connection to the marketing and use of PayPal Credit in connection with merchants that provide educational services. The regulator asked PayPal to produce documents, written reports and answers to written questions. The company said it is cooperating. OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC) Acting Comptroller of the Currency Tells Congress OCC is Reviewing Bank Overdraft Policies In testimony before the Senate Banking Committee on August 3, Acting Comptroller of the Currency Michael Hsu said the bank regulator is conducting a review of bank overdraft policies. Acting Comptroller Hsu told senators his agency is "looking very closely at overdrafts." "Excessive fees on overdrafts, predatory lending, high-cost debt traps — these things shouldn't have a place in the federal banking system," Hsu said, responding to Sen. Chris Van Hollen, D-MD, who brought up several small banks that derive a large portion of their revenue from overdraft fees. "We have a review going on, these particular institutions have been identified, as well as other practices. We're going to use the full range, within our supervisory toolkit, to address it." He then asked Hsu whether or not he believed a bank that operates in such a way should be considered a "safe and sound institution." "It certainly raises a lot of flags, and we follow up on those flags to ensure the firms are safe and sound," Hsu responded. White House Reported to Be Vetting Cornell Professor for OCC Head On August 5, the New York Times reported that the White House is vetting Saule Omarova, a Cornell professor, to head the Office of the Comptroller of the Currency (OCC). That report can be accessed here. Additionally, Ms. Omarova published a paper in February 2021 entitled, “The People’s Ledger: How to Democratize Money and Finance the Economy”, which a attempts to describe an approach to addressing, “…the challenge of “beating” the currently dysfunctional U.S. financial system by reimagining its fundamental structure and redesigning its operation.” From the paper’s conclusion - “This Article offers a blueprint for radically reshaping the basic architecture and dynamics of modern finance. Using the creation of digital dollar FedAccounts as its starting point, the Article constructs a coherent set of structural reforms aiming to make the financial system more inclusive, efficient, and stable. It advocates a comprehensive update of the Federal Reserve’s balance sheet—the nation’s core economic ledger—to maximize its structural capacity to support productive economic enterprise, in the long-term interests of the American people. In effect, it re-imagines the role of a central bank as the ultimate public platform for generating, modulating, and allocating financial resources in a modern economy—the People’s Ledger:” New Reports on Digital Money A few reports on digital money were released be various organization in recent weeks that are worth highlighting. The first, a report from The Clearing House (TCH), examines the challenges and opportunities associated with central bank digital currencies (CBDC). Specifically, it highlights significant implications of certain design and implementation choices that might be made with respect to a U.S. CBDC and makes specific recommendations about CBDC, assuming the U.S. government may proceed with some form of CBDC implementation. The second report is from the Diem Association (formerly known as Libra) on the payments system. Titled “Why is the United States Lagging Behind in Payments?”, the paper offers criticism of payment fees, account fees, bank consolidations, interchange, and more. In addition, it outlines three ways to “remove frictions” and improve payments, which include a CBDC, greater adoption and use of real-time gross settlement (RTGS) systems, and facilitating the growth of interoperable stablecoin payment rails “by creating the right regulatory framework for these new types of networks.” Finally, the International Monetary Fund (IMF) has released a new paper entitled, “The Rise of Digital Money”. In brief, the paper reviews the forces of change driving the adoption of digital forms of money; considers the policy implications and new policy questions that arise; clarifies the IMF’s role in tackling these questions; outlines a strategy to do so; and provides initial estimates of the resources necessary to deliver this vision. Capital Clues Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
California DFPI Enters in MOU with EWA Company The IPA has learned that, in July, the California Department of Financial Protection and Innovation (DFPI) entered into a Memorandum of Understanding (MOU) with an earned wage access (EWA) company called Immediate Solutions. In brief, the MOU requires, among other things, that Immediate comply with a quarterly reporting requirement, periodic onsite examinations, a set of best practices, and that they include new specified language in their consumer disclosure. Immediate also agreed to refrain from representing to its customers that it is supervised, approved, or endorsed by DFPI in any way. A copy of the MOU can be accessed here. IPA Draft Letter to the California Financial Regulator on EWA The IPA has drafted a letter to the California Department of Financial Protection and Innovation (DFPI) on earned wage access (EWA). In brief, the letter provides an overview of the industry, discusses principles for regulation going forward that the IPA believes would appropriately balance consumer protection and innovation, and expresses the IPA’s desire to being an ongoing dialogue with DFPI on EWA. The IPA has released a revised draft of the letter and is currently working to incorporate additional feedback received from members. New Federal Laws
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution) Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. Status: Signed by the President on 6/30/20. Sponsor: Sen. Chris Van Hollen (D-MD) Pending Federal Bills 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: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021. 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; Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: gr@ipa.org.
IPA Podcast: IPA’s Government Update for July 2021 Capitol Hill has been taking an active interest in the payments industry. Overdraft, buy now pay later products, and even a possible computer chip shortage have all drawn lawmakers’ attention. On top of all that, the Durbin Amendment has resurfaced as a topic of conversation, and there are rumors that it may be extended to other types of payments. We cover all of this and more in our latest podcast episode with the IPA’s CEO, Brian Tate, and our Government Relations Director, Grant Hannah. To learn more about the forces shaping the payments industry, we encourage our listeners to join the IPA for its Summer of Learning Webinar series, where we talk with regulators, industry leaders, and analysts about what they see coming in the world of payments innovation. Listen here! IPA Summer of Learning Please join the IPA on July 27th when we will be joined by the Honorable Warren Davidson, U.S. Representative (R-OH). U.S. Representative Davidson, the Ranking Member of the House Financial Services Committee’s Task Force on Financial Technology, will discuss cryptocurrencies, blockchains, and the future of payments. This conversation is only for members of the IPA. Speaker: Honorable Warren Davidson, U.S. Representative When: July 27th, 2pm Eastern Register Now FEDERAL RESERVE (THE FED) Federal Banking Agencies Request Comment on Proposed Risk Management Guidance for Third-Party Relationships On July 13, three federal bank regulatory agencies (FDIC, Federal Reserve, and OCC) requested public comment on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance is intended to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance. A copy of the proposed guidance can be found here. Comments are due by September 17, 2021. CONSUMER FIANCIAL PROTECTION BUREAU (CFPB) CFPB Releases Blog on Buy Now Pay Later Products On July 8, the CFPB released a blog on Buy Now Pay Later (BNPL) products. This represents some of the first public statements we’ve heard from the CFPB on BNPL. The blog post discusses how BNPL works generally, how late fees work, consumer protection and credit reporting issues, and more. When it comes to consumer protection, the blog highlights that buy now pay later BNPL loans currently lack the consumer protections that apply to other forms of payment. It also discusses issues consumer could face when returning merchandise bought with a BNPL loan. It is expected that the CFPB as well as other regulators and Congress will increasingly take closer looks at BNPL products. The full blog post can be accessed here. President Biden Issues Executive Order on Competition On July 9, President Biden signed an Executive Order (EO) aimed at promoting competition in the American Economy. The EO includes 72 initiatives that will direct more than a dozen federal agencies to address issues of competition across the economy. The White House says that President Biden is taking this action to, “…reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses.” Included in the EO is a “banking and consumer finance” section which discusses branch closures and consolidation in the banking industry and difficulties faced by consumers who want to move banks due to issues with the portability of financial transaction history data. The EO seeks to address these issues by:
In addition to the provisions around bank mergers and the portability of financial transaction history data, there is an additional requirement that the Secretary of the Treasury submit a report to the Chair of the White House Competition Council, not later than 270 days after the date of the order, assessing the effects on competition of large technology firms’ and other non‑bank companies’ entry into consumer finance markets. Given the 270-day timeframe, the report would come out no later than early April of next year. A fact sheet with a full overview of the EO can be found here. Senate Banking Republicans Send Letter to CFPB Nominee On July 13, all Republican members of the Senate Banking Committee sent a letter to CFPB Director Nominee Rohit Chopra expressing their concern, “…with [his] refusal to respond to a congressional request seeking information about potential violations of law at the Consumer Financial Protection Bureau (CFPB).” Senate Banking Republicans had previously sent Mr. Chopra and CFPB Acting Director Dave Uejio a letter asking them to respond to reports last month that senior career civil servants at the CFPB were being pressured to quit to make room for political allies to be installed at those positions. A copy of the letter can be accessed here. House Republicans Request Information from CFPB Acting Director On July 15, Republican Members of the House Financial Services sent a letter to CFPB Acting Director David Uejio requesting additional information on actions he’s taken related to issuing new rules, guidance, and policy statements; delaying the implementation date of multiple major rulemakings; reversing and rescinding policy statements and guidance; and undertaking nine enforcement actions against financial services companies. The members additionally express concerns that, “…the CFPB is conducting business as usual without a Senate-confirmed Director and without proper oversight.” In a separate letter, Ranking Member Patrick McHenry (R-NC) sent a letter to Chairwoman Waters requesting that the Committee hold an oversight hearing with Acting Director Uejio. Fed Chair Jerome Powell Testifies Before Congress Fed Chair Jerome Powell provided his semiannual testimony before the House Financial Services Committee and Senate Banking Committee on July 14th and July 15th respectively. Inflation, stablecoins, and central bank digital currencies (CBDC) were common subjects of Members’ questions. Chair Powell indicated that the Fed believes that the recent rise in inflation is temporary and that continued economic recovery and growth would bring it down. In addition, Powell mentioned that the Fed’s report on CBDCs will likely be released sometime in September. Finally, he was asked about stablecoins a number of times and, in his responses, discussed their similarities with deposit accounts and money market accounts and called for a similar regulatory framework to be applied. Capital Clues Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
IPA Draft Letter to the California Financial Regulator on EWA The IPA has drafted a letter to the California Department of Financial Protection and Innovation (DFPI) on earned wage access (EWA). In brief, the letter provides an overview of the industry, discusses principles for regulation going forward that the IPA believes would appropriately balance consumer protection and innovation, and expresses the IPA’s desire to being an ongoing dialogue with DFPI on EWA. The IPA held a call to review and discuss our initial draft of the letter and is currently working to incorporate feedback received from members. New Federal Laws
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution) Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. Status: Signed by the President on 6/30/20. Sponsor: Sen. Chris Van Hollen (D-MD) Pending Federal Bills 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: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021. 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 2024
Categories |
© COPYRIGHT 2024 ALL RIGHTS RESERVED. | Privacy Policy
|