Nacha Government Relations Update – July 11, 2019

Sullivan Addresses the Fintech & Payments Caucus Congressional Staff
On July 9, 2019, Nacha’s Bill Sullivan, representing the ACH Network, was a panelist along with ICBA, The Clearing House and Financial Innovation Now (FIN) for a Congressional staff briefing on the Federal Reserve’s role in faster payments. Panel topics and questions included:

  • Does the Federal Reserve have standing to launch a RTGS service? Does it pass the three tests in the Monetary Control Act?
  • What would a Fed-operated system mean for market competition?
  • Could a Fed-operated service be interoperable with existing networks? What would it take to make that happen?
  • How would real-time payments impact underserved consumers? 
  • What are some of the most interesting use cases / value of real-time payments?

SCOTUS Rules to Uphold Precedent Regarding Federal Regulators’ Strength of Power
On June 26, 2019, the U.S. Supreme Court issued a decision on Kisor v. Wilkie, ruling to uphold the controversial legal precedent known as “Auer deference,” under which courts defer to federal regulators’ own (and reasonable) interpretations of the agencies’ rules when regulations are ambiguous. Auer deference, which came out of the 1997 Auer v. Robbins case, has been criticized in recent years as violating the Administrative Procedure Act and infringing upon the constitutional separation of powers. In Kisor v. Wilkie the Department of Veterans Affairs’ authority to interpret a rule regarding disability benefits was challenged by Vietnam War veteran, James Kisor and the case therefore sought to overturn Auer.

In a 5-4 vote, Chief Justice John Roberts provided the fifth and deciding vote out of respect for precedent, but did not join the entire court opinion written by Justice Elena Kagan. In the opinion, Justice Kagan wrote “Auer deference retains an important role in construing agency regulations.” She also stated “even as we uphold it, we reinforce its limits” and went on to emphasize the limitations of the power granted by Auer.

Following the high court’s ruling, Kisor’s case will now be sent back down to the lower courts for further review.

23 States Now Joined in Multi-state Licensing Agreement for Money Services Businesses
On Jun 24, 2019 the Conference of State Bank Supervisors announced that a current total of 23 states have now joined a multi-state licensing agreement standardizing processes for non-bank money services businesses (MSBs), including fintech companies, with California and North Carolina being among the most recent to join. This expands upon the original agreement established in February 2018, which had seven participants. The Agreement represents just one part of a set of initiatives laid out by CSBS and state regulators in their Vision 2020, an effort to create a 50-state integrated system for licensing and supervision of MSBs and fintechs.

"The collaboration among these 23 states has significantly streamlined the licensing process for participating companies," stated Charlie Clark, director of the Washington State Department of Financial Institutions. "This is a new era in the state system where we are not only coordinating but actively relying on our fellow regulators."

Legislative Calendars for 2019
House 2019 Calendar
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