NACHA Government Relations Update

Posted July 31, 2014

Capitol Hill Activity
On July 31, 2014, Sen. Kirsten Gillibrand (D-NY) introduced “The Cyber Information Sharing Tax Credit Act,” which would encourage companies to participate in cybersecurity threat information-sharing through a tax credit. The bill is distinct from CISA, S. 2588 “Cyber Intelligence Sharing Act," which passed committee this month, because it would not offer liability protections or formalize DHS authority. NACHA joined industry trade groups by signing a joint trade letter advocating that CISA be brought to the Senate floor for a vote. The Gillibrand bill could be incorporated into CISA as the bill advances.

On July 28, 2014, the U.S. House of Representatives passed H.R. 3696, H.R. 2952, and H.R. 3107. Respectively, the bipartisan bills aim to combat cyber-attacks through the distribution of threat information, the development and procurement of new technologies, and increase support for DHS’s cybersecurity workforce. NACHA joined industry trade groups by signing a joint trade letter recognizing the necessary partnership between the private and public sectors. 

On July 25, 2014, Rep. Cedric Richmond (D-LA)​ introduced, H.R. 5179, “The Providing Opportunities for Savings, Transactions and Lending Act,” or “POSTAL Act,” which would require the Postal Service to offer a "postal card,'' that would act as a debit card allowing customers to conduct in-store, mobile and online transactions. Banking as a fix to the Postal Service’s financial crisis was first announced in the Postal Service Inspector General’s report recommending that the agency expand its financial services to meet the needs of underserved communities. 

Department of Treasury 
On July 24, 2014, Treasury's Bureau of Fiscal Service published a final rule, 79 FR 42974, to amend regulation governing the use of the Automated Clearing House (ACH) Network by Federal agencies ("Federal Government Participation in the Automated Clearing House," 31 CFR Part 210). The changes include amendments set forth in the 2010, 2011, 2012, and 2013 NACHA Operating Rules. The changes will become effective August 25, 2014.

On July 17, 2014, Treasury Secretary Lew urged the financial sector to redouble efforts to thwart cyber-attacks. Lew said the Department will foster information-sharing through the Financial Services Information Sharing and Analysis Center (FS-ISAC). Lew’s statement called for Congress to pass legislation that enhances information-sharing by providing targeted liability protections while protecting privacy considerations.

Federal Reserve
On July 24, 2014, the Financial Services Policy Committee released additional information on the December 2013 Payments Study. New findings include updated results on the intensity of card use by consumers and businesses; further discussion of previously released information on third-party payments fraud; new estimates of over-the-counter cash withdrawals and deposits at bank branches and wire transfers made by businesses and consumers; and discussion of emerging and alternative payments likely to replace traditional payments such as cash and checks. The study is the fifth in a series of triennial survey efforts, collecting data for 2012 and including, for the first time, analysis of previously reported trends. 

On July 15, 2014, the Federal Reserve Financial Services group discontinued research efforts on electronically created items (ECI). NACHA released detailed information upon the announcement. Get updates on the Federal Reserve Financial Services strategic direction online.

Federal Deposit Insurance Corporation (FDIC)
On July 28, 2014, the FDIC issued FIL-41-2014 to clarify its supervisory approach to institutions establishing account relationships with third-party payment processors (TPPPs). Previously issued FDIC guidance contained lists of examples of merchant categories that had been associated with higher-risk activity. The lists led to misunderstandings regarding FDIC's supervisory approach to TPPPs, creating the misperception that the listed examples of merchant categories were prohibited or discouraged. The clarification came days after Congressional hearings concerning the Justice Department’s “Operation Choke Point.” Richard Osterman, the FDIC's acting general counsel, said in a July 15 hearing that “the list was meant to instruct banks on where to focus their due diligence.” He also added that banks and third-party payment processors obeying the law “have nothing to be concerned about.” Banking industry advocates expressed hope that getting rid of FDIC’s list will at least direct more of the attention to third-party payment processors and away from banks. Industry groups also made clear that efforts to dismantle “Operation Choke Point” will continue.

Consumer Financial Protection Bureau (Bureau)
On July 21, 2014, the Bureau announced that it is now accepting complaints from consumers encountering problems with prepaid cards, such as gift cards, benefit cards and general purpose reloadable cards. In addition, consumers can also submit complaints about added nonbank products, including debt settlement services, credit repair services, and pawn and title loans. 

On July 21, 2014, the Bureau announced the publication of its second annual financial literacy report to Congress. The report outlines its strategy and past year efforts to enhance financial literacy. The report highlights tools and information aimed to help navigate financial choices and explains various collaboration efforts among organizations that reach consumers.

On July 14, 2014, the Bureau released for comment a proposed policy statement, which would expand its existing consumer complaint database to include unstructured consumer complaint narrative information (“narratives”), rather than the more limited information about complaints it now publishes. Only those narratives for which opt-in consumer consent had been obtained and personal information was removed would be disclosed. The proposal would supplement the Bureau's existing Policy Statements establishing and expanding the Consumer Complaint Database. Comments are due by August 22, 2014. On July 23, 2014, five financial services groups asked the CFPB to extend the 30-day comment period to 90 days. 

Federal Trade Commission (FTC) 
On July 31, 2014, the Federal Trade Commission announced it is seeking public comment on the Telemarketing Sales Rule (TSR). As detailed in the Federal Register notice, the FTC seeks information-specific changes in the marketplace and legal landscape since the TSR was last amended. Comments are due by October 14, 2014. 

Government Accountability Office (GAO)
On July 31, 2014, the GAO published GAO-14-621 “Expectations of Government Support for Large Bank Holding Companies” report, which investigated the funding advantage of large financial institutions during times of financial crisis. In general, the report found that Dodd-Frank reforms deter the likelihood of a government bailout while not completely eliminating it. The report also distinguished that the largest banks receive more of a market advantage during financial turmoil than in times of economic booms. The study comes after two years of congressional and industry debate over whether large banks continue to get what has come to be known as a too-big-to-fail subsidy despite regulatory changes. Senators Sherrod Brown (D-OH) and David Vitter (R-LA) requested the report in January 2013 and held a Senate Banking subcommittee hearing coinciding with the publication. Community bankers responded that the report proves that small institutions are disadvantaged; however, the largest financial institutions highlight the decreased level of an advantage. It is unclear how much the debate over large banks’ advantages will recede with the August recess and November elections. Senator Brown is among those in line to be Banking Committee chairman if Democrats retain the Senate.​

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