Posted June 1, 2014
NACHA’s Government Relations update provide insights to policy matters, at the federal and state level, that could impact the ACH Network.
On May 21, 2014, NACHA Government Relations met with Senior Senate Banking staff to discuss the Department of Justice’s (DOJ) “Operation Choke Point” initiative. The meeting was part of NACHA’s on-going commitment to educate and advocate for the ACH network. Questions centered on bank regulators use of “reputational risk” as a vehicle for attacking legal businesses. At this time Senate Banking does not plan to hold a hearing; however, House Financial Services and House Judiciary may further investigate the matter this year.
On May 28, 2014, NACHA Government Relations attended the AFCEA-DC Cybersecurity Summit in Washington. Federal government and private sector’s top cybersecurity professionals addressed cybersecurity threat challenges facing industry participants. In his keynote address, Army Cyber Command chief Lt. Gen. Edward Cardon discussed the broadening Army threats, highlighting strides in its development of a cyber fighting force, known as the Cyber Branch. Speakers also agreed that Congress needs to pass cybersecurity legislation; however, the likelihood of that happening this year remains uncertain.
On May 22, 2014, House Financial Services Chairman Jeb Hensarling wrote to Treasury Secretary Jack Lew, Federal Reserve Chair Janet Yellen, FDIC Chair Martin Gruenberg and NCUA Chair Debbie Matz inquiring about regulators use of "reputation risk" in supervisory activities. The letter expressed concern that regulatory agencies are issuing "subjective judgments" based on "reputation risk," which is not an official part of the CAMELS rating system.
On May 28, 2014, the U.S. Public Interest Research Group (USPIRG), joined by other consumer-advocacy organizations, last week celebrated the fifth anniversary of the Credit CARD Act by calling for similar action to address fees associated with debit and prepaid cards, something opponents to such action say requires careful consideration before being acting upon by Congress.
On May 22, 2014, Federal Reserve Board on repealed its Regulation DD (Truth in Savings) and Regulation P (Privacy of Consumer Financial Information) and issued final amendments to the Identity Theft Red Flags rule in Regulation V (Fair Credit Reporting). The final rule reflects legislation that amended the Fair Credit Reporting Act (FCRA) to clarify that these provisions apply only to creditors that regularly extend credit or obtain consumer reports in the ordinary course of their business. The amendments to the FCRA were intended to narrow the scope of the law so that it would not be applied to professionals, such as doctors or lawyers, who sometimes allow consumers to delay payment.
Consumer Financial Protection Bureau (CFPB)
On May 29, 2014, House Financial Services Committee marked up several bills to promote transparency at CFPB. H.R. 4262, the “Bureau Advisory Commission Transparency Act,” introduced by Rep. Sean Duffy, requiring CFPB to make advisory board and council meetings open to the public; H.R. 3770, the “CFPB-IG Act of 2013,” introduced by Rep. Steve Stivers, to create an independent inspector general for CFPB (CFPB now shares an IG with the Federal Reserve System); H.R. 4604, the “CFPB Data Collection Security Act,” introduced by Rep. Lynn Westmoreland, to require CFPB to create an opt-out list for consumers who do not want the bureau to collect personally identifiable information about them; H.R. 4262, the “Bureau Advisory Opinion Act,” introduced by Rep. Bill Posey, to establish an advisory opinion process that could be used to obtain legal opinions on proposed new services; H.R. 4684, the “Bureau Guidance Transparency Act,” introduced by Rep. Marlin Stutzman, on requiring a public notice and comment period before CFPB issues guidance in final form.
On May 27, 2014, Senator Tom Harkin and Representative George Miller introduced companion legislation aimed at increasing regulation on partnerships between banks and colleges, specifically the debit cards used to disburse financial aid. The announcement came weeks after the lawmakers, along with Senator Elizabeth Warren sent a letter to Education Secretary Arne Duncan urging him to curb the practice of colleges partnering with banks to offer students deals, such as debit cards, over the concern that students’ federal financial aid is going toward paying higher fees instead of schooling. In 2013, CFPB launched an inquiry about card-based financial products offered to college students on campus, including products offered by federally regulated financial institutions such as credit unions. With the Education Department reviewing its rules on cash management for student aid, the lawmakers urged a crackdown on “special arrangements” with colleges.