NACHA Government Relations Update - Feb. 18, 2016

Posted February, 16 2016

NACHA Visits Members of House of Representatives
As part of NACHA’s ongoing engagement with policymakers, last week NACHA visited the offices of several members of the House Financial Services Committee including Rep. Randy Neugebauer (R-TX), Rep. Lynn Westmoreland (R-GA), Rep. Bruce Poliquin (R-ME), Rep. Kyrsten Sinema (D-AZ) and professional staff of the House Financial Services Committee. Topics of discussion included Same Day ACH, faster and real-time payments initiatives, data security and protection of consumer information, the newly established Task Force on Terrorism Financing and the activities and plans of the Congressional Payments Technology Caucus.
H.R. 766 – Financial Institution Customer Protection Act, Passes House of Representatives
On Feb. 4, 2016, a bill sponsored by Rep. Blaine Luetkemeyer (R-MO) – H.R. 766, The Financial Institution Customer Protection Act, passed in the House of Representatives by a bipartisan vote of 250-169. As Representative Luetkemeyer outlined to NACHA’s Board of Directors in November, the bill prohibits a federal banking agency from formally or informally discouraging a financial institution from providing services to a legitimate business that is not engaged in fraudulent or illegal activity. Often, certain types of “high risk businesses” are targeted regardless of their legal standing – which has received attention as the Department of Justice’s “Operation Choke Point.” 
Bill Highlights:
  • Forbids regulators from using their subpoena powers to coerce banks into closing their customers’ accounts.
  • When the Department of Justice (DOJ) or Federal Deposit Insurance Corporation (FDIC) orders a financial institution to terminate a relationship with a customer, they must communicate any request via a written document to the financial institution, wherein they cite a well-supported legal rationale for such action.
  • The bill prohibits the DOJ/FDIC from using reputational risk as the sole criterion for action. 
During consideration of the bill, NACHA sent a letter of support to Members of the House of Representatives.

FDIC Issues Winter 2015 Supervisory Insights, Focusing on Cybersecurity and Lending
On Feb. 1, 2016, the FDIC issued its Winter 2015 edition of Supervisory Insights, leading with an article that discusses the ever-evolving cyber-threat risks within the financial services sector and how financial institutions can enhance their security systems accordingly. Following articles include reports on marketplace lending, results from the “FDIC’s Credit and Consumer Products/Services Survey” and an overview of recently issued regulations and guidance.
Federal Reserve Board Director to Retire this Year
On Feb. 3, 2016, The Federal Reserve issued a press release announcing the retirement of Louise L. Roseman, later this year. Ms. Roseman currently serves as director of the Division of Reserve Bank Operations and Payment Systems, a position she has held for 17 of her 30 years with the Federal Reserve Board.
As she thanked Ms. Roseman for her “dedicated service”, Fed. Chair Janet L. Yellen stated "Louise's vision and energy during a time of rapid technological innovation have contributed enormously to the Federal Reserve's important mission of fostering a safe and efficient payment system."
House Financial Services Subcommittee on Financial Institutions and Consumer Credit Conducts Hearing on PayDay Loans
On Feb. 11, 2016, The House Financial Services Committee held a hearing entitled, “Short-term, Small Dollar Lending: The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty.” The hearing focused on the impending CFPB proposed rules on short term, small dollar loans, the use of these loans by consumers in certain situations and the effectiveness of current state and tribal oversight of the industry.
Many Members took offense to the idea that the CFPB needs to regulate in an area that is subject to state and local regulatory enforcement. Acting Deputy Director of the CFPB, David Silberman, defended the proposal stating that the CFPB could sue people for Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) under Dodd-Frank, and that often these small dollar loans are made without assessing consumers' ability to repay. As such, the CFPB feels there is need for federal regulation that establishes that this is an unfair practice.
The second panel of witnesses touted the benefits of short-term, small dollar lending and that there is quite a bit of diversity in the types of products that are available to consumers. There is the worry that many of these types of loan products will no longer be available to consumers in the aftermath of any rulemaking by the CFPB.

U.S. Treasury Asks FIs to Promote Use of Direct Deposit for 2016 Tax Refunds
Treasury’s Bureau of the Fiscal Service and the Internal Revenue Service (IRS) have collaborated to issue “key social media messages” to financial institutions for use in communications encouraging their customers request to receive their tax refunds via Direct Deposit:
  • Eight out of 10 taxpayers get their refunds by direct deposit.
  • Direct deposit is simple, safe and secure.
  • 98 percent of all federal benefits are disbursed by direct deposit.
  • Direct deposit also saves money. It costs taxpayers $1 for every paper refund check issued, but only about a dime for each direct deposit made.  
Legislative Tool Kit
House 2016 Calendar (also in bottom right hand bar)
Senate 2016 Calendar (also in bottom right hand bar)​​
Access: Public