NACHA Government Relations Update

Posted June 30, 2014

Consumer Financial Protect Bureau (CFPB)
On June 26, 2014, the U.S. Supreme Court invalidated President Obama’s authority in nominating members to the National Labor Relations Board (NLRB), sparking questions about possible “after-effects” in connection with CFPB Director Richard Cordray's ratification of actions prior to his Senate confirmation. The court held that President Obama was barred from making appointments during the three-day pro-forma period, concluding that such short recesses do not require House consent, thus not invoking the President’s recess-appointment power. Cordray, though never a party to the U.S. Supreme Court case, was appointed director on the same day as the NLRB appointments were made. The case is particularly meaningful in the wake of Senate mid-term elections, because a simple blueprint emerged to shut down controversial nominations by remaining “in session” to circumvent the President’s recess power. Democrats currently enjoy a slim 53-member majority in the Senate. A total of 21 of the 36 chamber seats are at stake in November, while the remaining 15 are currently held by Republicans. Read more at: Nat'l Labor Relations Bd. v. Canning, 2014 BL 177533, U.S., No. 12-cv-01281, ruling 6/26/14.

On June 19, 2014, the CFPB released updated information to curb elder abuse. The guidance aims to empower long-term care providers “to prevent, detect and respond to financial exploitation.” The CFPB previously recognized the important role banks, credit unions, money transmitters, and other financial services play in spotting financial abuse targeted at older adults. Earlier guidance clarified for banks and financial services providers that reporting suspected elder financial exploitation to appropriate authorities does not generally violate the privacy provisions of the Gramm-Leach-Bliley Act. See more at: www.cfpb.gov.
 
On June 12, 2014, the CFPB issued a request for information on the use of mobile financial services, particularly by "economically vulnerable" consumers. Wide-ranging questions were asked, including those on general use, barriers to use by underserved populations, consumer protection, expansion of access to financial services, specific types of technology and specific products and services, opportunities for population subgroups, and past experiences of underserved populations. See more at: 79 Fed. Reg. 33731. The comment deadline is September 10.
 
Congressional Activity
On June 26, 2014, Congressman Blaine Luetkemeyer (R-MO) introduced H.R. 4986, “To amend certain banking statutes in response to Operation Choke Point.” The legislation is designed to challenge the Department of Justice probe targeting high-risk originators. The text focuses on restoring balance between financial institutions and regulators. The bill was referred to the House Financial Services Committee, of which Luetkemeyer is a member and is chaired by Congressman Jeb Hensarling (R-TX). According to the Congressman's official press release, H.R. 4986 demonstrates the increasing frustration that small bankers and many House Republicans have with law enforcement programs, which are designed to choke off fraudsters’ access to the payments system. Banks have complained that regulators are effectively forcing them to deny financial services to many legitimate businesses in an effort to target bad actors. Chairman Hensarling sent a letter to bank regulators last month raising questions about the probe, and the Oversight and Government Reform Committee issued a highly critical report, warning that officials have overstepped their legal authority. The House also approved an amendment to the appropriations bill for the Department of Justice, mandating that none of the funds made available for the agency be used to carry out Operation Choke Point. See more at: http://luetkemeyer.house.gov.
 
Midterm Election Results & Analysis
A total of 471 seats in the U.S. Congress (36 Senate seats, including three special elections, and all 435 House seats) are up for election on November 4, 2014. Republicans currently occupy a 17-seat lead in the House of Representatives. Democrats outnumber Republicans, 53-45, in the U.S. Senate (with two Independents). Heading into the election, Democrats control the U.S. Senate while Republicans are the majority in the U.S. House. For Republicans to take the majority in the Senate, they need to take six currently-held Democrat seats, as well as retain control of the 14 seats held by Republicans. For Democrats to take majority control of the U.S. House, 17 seats are needed. As of June 2014, six incumbent senators and 42 representatives have announced they are not seeking re-election. Additionally, three senators and six representatives left office early.

Advocacy Activity
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