NACHA Government Relations Update - June 23, 2016

Posted June, 20 2016

OCC Contemplates Offering Limited-Purpose Charters for Fintech Industry
Last week, U.S. Comptroller of the Currency Thomas J. Curry indicated during a Wall Street Journal conference, that the OCC is looking into what legal authority it has to offer Fintech firms a limited-purpose charter. The topic will be discussed at this week’s OCC-hosted forum on Fintech in Washington DC, which will be attended by the NACHA GR team. 
"The OCC traditionally charters full-service institutions — those that have deposit insurance," Curry said. "But we certainly have a tradition and legal authority to have limited-purpose banks." He added, "The best examples are limited-purpose trust companies that don't have deposit insurance, and credit card banks."

As the agency evaluates its statutory right to extend a similar type of modified charter to Fintech companies, Curry said it "probably" has the authority to offer such a charter to "something that is a not deposit-taking entity." However, he suggested the industry should conduct its own due diligence as well.

"Whether that works for the business model of a Fintech firm is something that sector needs to think through," said Curry. The OCC has already been urged to create a charter by companies in the Fintech industry, including Kabbage, OnDeck and CAN Capital.

During his remarks, Curry optimistically indicated that banks have the potential to be made stronger in the long run as a result of pressures created by the rise of Fintech companies. "Competition is good," he said. "Fintech has a lot of potential."

Curry would like the OCC to "encourage" bank-Fintech partnerships through the creation of a "clearing house for information" that could assist both entities in understanding their regulatory responsibilities.
CFPB Releases Small Dollar Lending Rule Proposal
On June 2, 2016, the Consumer Financial Protection Bureau (CFPB) released its long-awaited small dollar lending rule proposal, which is largely unchanged from the bureau’s March 2015 SBREFA outline. The proposed implementation timeline is 15 months – which suggests that the rule will not be effective until late 2018.
Some Highlights:
The ability to Repay Framework remains intact for both payday/single payment auto title loans and high cost installment loans. 

The proposal would require lenders to send written notice to borrowers three days in advance of an attempt to debit their account. Furthermore, following two unsuccessful attempts, the lender would be prohibited from attempting to debit the account again without first obtaining a "new and specific authorization from the borrower to again debit the account." This proposal is intended to limit fees to the borrower, which the CFPB contends could “exacerbate a consumer’s financial woes”.
To view the full text of the proposal, click here.

House GOP Task Force on Reducing Regulatory Burdens Releases Paper on The Economy
On June 14, 2016, Speaker Paul Ryan (R-WI), House Majority Leader Kevin McCarthy (R-CA) and other GOP leaders and committee chairs have officially released a paper on The Economy as a part of its “A Better Way” initiative to eliminate unnecessary regulation.

While focusing on other aspects of the economy, such as the energy sector, the Task Force’s paper includes extensive discussion on financial services issues. Specifically, the paper cautions that excessive regulation can result in numerous negative ramifications in the financial sector, including limiting retirement options, hindering Fintech innovation, and decreasing capital formation.

One of the central solutions that the paper proposes to address and prevent the issue of unneeded regulation is reforming the financial regulators’ rulemaking process by incorporating cost-benefit analysis and judicial review of proposed rules. Moreover, the paper emphasized the need to promote financial independence without regulators interfering with consumers’ decision-making.

Senators Form New Cybersecurity Caucus
On June 14, 2016, Senators Mark Warner (D-VA) and Cory Gardner (R-CO) officially launched a new Cybersecurity Caucus that will focus on addressing a holistic government approach to cyber issues. The new caucus will give senators a bipartisan and cross-jurisdictional forum for discussions on the topic.
Legislative Tool Kit
House 2016 Calendar (also in bottom right hand bar)
Senate 2016 Calendar (also in bottom right hand bar)​​
Access: Public