September 22, 2021

​​The Government Update 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  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: [email protected].

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)
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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 [email protected]. 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:
 

• We are hearing that Sen. Durbin has draft language seeking to possibly expand the Durbin Amendment like limitations to credit.  The draft language is not publicly available, but it is possible a bill could be introduced in the coming months.

 

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)