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Nacha Government Relations Summary - May 16, 2019

Administration Taking Fresh Look at Overdraft Fees

The Consumer Financial Protection Bureau (CFPB) is taking another look at the 10 year old overdraft fee regulations. The effort is part of a new CFPB initiative to assess how existing regulations affect small businesses. The notice can be found here.

Comments are due to the Bureau by July 1, 2019

States Encourage Lawmakers to Address Cannabis Banking

Attorney Generals from across the country called on Congress to take up cannabis banking legislation that would allow lenders to serve cannabis businesses that operate legally at the state level. The officials warned in a letter to House and Senate leadership that the conflict between federal and state law when it comes to marijuana has forced cannabis businesses to operate on a cash basis, that complicates taxation and makes the businesses targets for criminal activity.

CFPB Takes a Fresh Look at Remittance Rule

The Consumer Financial Protection Bureau has issued a Request for Information (RFI) regarding potential regulatory changes to the current remittance Rule. The RFI seeks information on two specific areas of the rule.

  • Temporary Exception Expiration Questions: First, the RFI seeks information and evidence that may inform possible changes to the rule that would not eliminate, but would mitigate the effects of the expiration of a statutory exception for certain financial institutions. The current temporary exception in the Remittance Rule runs to July 21, 2020 and does not authorize the Bureau to extend this term. 
  • Institution and Transaction Coverage Questions: In addition, the RFI seeks information and evidence related to the scope of coverage of the rule, including whether to change a safe harbor threshold in the rule that determines whether a person makes remittance transfers in the normal course of its business, and whether an exception for small financial institutions may be appropriate.

The public will have 60 days to comment on the request for information once it is published in the Federal Register. If you would like to review and/or comment on the RFI, it is available here.

FDIC’s McWilliams Wants Bank Regulators to Have a Common Standard for Small-Dollar Loans

Federal regulators need to create consistent guidance on the standards for bank small-dollar loan offerings. FDIC Chair, Jelena McWilliams stated that banks have been unwilling to get involved in the small-dollar loan market is because the three main federal banking regulators, the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency, all have different guidelines in place for such product offerings. 

McWilliams is advocating that banks need to get involved in small-dollar loans in order to take market share away from high-interest loans that payday lenders offer. 

The FDIC currently has a 2013 bulletin in place that effectively stopped banks it oversees from issuing deposit advance loans as a result to the outcry of payday loans leading consumers into debt traps.

Recently, the OCC canceled that 2013 bulletin after the CFPB issued its payday lending rule, and Comptroller of the Currency Joseph Otting has been encouraging banks to get involved in the market and introduced a bulletin to that effect last year.