NACHA Government Relations Update - May 4, 2017

Posted April, 28 2017

Keith Noreika Named Acting Comptroller of the Currency
On May 3, 2017, the Treasury Department announced that attorney Keith Noreika will temporarily replace Thomas Curry to lead the OCC, effective May 5. Furthermore, the Trump administration is rumored to be considering Joseph Otting to fill the role on a permanent basis. Mr. Otting’s resume includes stints at U.S. Bancorp, CIT, and then as CEO of OneWest following the merger.
This shift at the OCC marks the administration’s first imprint on major bank regulatory agencies. Administrative relief through the regulatory agencies is likely to be the primary avenue for changes to the regulatory regime in the near term. Secretary Mnuchin’s June 2017 Dodd-Frank report will likely serve as the roadmap for these efforts.
White House Issues Executive Order Re: American Technology Council
On May 1, 2017, the White House issued an executive order creating the American Technology Council. The Council will be led by the President himself and also includes members from the highest levels of the federal government such as the vice president; the secretaries of Defense, Commerce and Homeland Security; the director of national intelligence; and senior presidential adviser Jared Kushner.
The Council's aim is to "coordinate the vision strategy, and direction for the federal government's use of information technology (IT) and the delivery of services through information technology," according to the order.

Comptroller Curry Speaks Re: Fintech – Says Banking Must Continue to Evolve
On April 28, 2017, Comptroller of the Currency Tom Curry gave a speech which called out the banking industry’s need to keep current with technology and innovation, and aimed to defend the OCC’s efforts to encourage such growth.

The agency’s limited purpose bank charter for fintech firms has faced opposition within the banking industry, with argument that the startups are not banks. Curry, (who will remain acting Comptroller until the Senate confirms a replacement), addressed this in his speech stating “At the heart of the issue is the fundamental nature of the business of banking – the business of banking is dynamic and I would urge caution to anyone who wants to define banking as a static state. Such a view risks choking off growth and innovation.”

Curry also praised the fintech sector for maturing, noting that their “conferences now include topics such as 'meeting community needs,' ‘financial inclusion,’ ‘collaboration’ and ‘compliance,’”.
CFS Hearing – “A Legislative Proposal to Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs”
On April, 26, 2017, The Committee on Financial Services held a hearing entitled “A Legislative Proposal to Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs.”
  • Mr. John Allison: Former President and Chief Executive Officer, Cato Institute
  • Dr. Norbert J. Michel: Senior Research Fellow, Financial Regulations and Monetary Policy Institute for Economic Freedom and Opportunity, The Heritage Foundation
  • Ms. Hester Peirce: Director of Financial Markets Working Group and Senior Research Fellow, Mercatus Center
  • Mr. Alex J. Pollock: Distinguished Senior Fellow, The R Street Institute
  • Mr. Peter J. Wallison: Senior Fellow and Arthur F. Burn, Fellow in Financial Policy Studies, American Enterprise Institute
  • The Honorable Michael S. Barr: Professor of Law, University of Michigan Law School
  • Dr. Lisa D. Cook: Associate Professor, Economics and International Relations, Michigan State University
This hearing examined a discussion draft of the “Financial CHOICE Act of 2017,” which the Committee publicly released on April 19, 2017. A summary of the bill can be found here.

Key Takeaways
  • Chairman Hensarling maintains that the Dodd Frank Act reduced access to banking services for the underbanked, increased the number of unbanked by three million, reduced credit to consumers and businesses and largely eliminated free checking accounts.
  • Democrats on the Committee contend that the provisions in the bill are not meant to benefit small financial institutions and instead are meant to benefit large financial institutions – many of whom are responsible for creating the financial crisis. 
  • There was vigorous debate about the impact of the Volker Rule and its impact on the strength of banks, the merits of the Feds SIFI designation authority and what if any impact Dodd Frank has had on small financial institutions.
  • Much debate was dedicated to the impact of the CFPB on consumers – the agency would be made subject to the annual appropriations process and the Director an at-will position under Choice 2.0. 
  • There was very little discussion of the Durbin Amendment. It is still unclear if there will be an amendment in Committee to strike the Durbin repeal language and who might offer that amendment. 
  • One important note – a tie vote on a Committee Amendment means that it fails and the repeal language would stay in the bill. 
  • Ranking Member Waters has formally requested another hearing on the Choice 2.0 legislation. Under the rules, the Minority Day is a continuation of today’s hearing. The mark-up of the bill is scheduled for May 2, and there is no indication that the mark up date will change. Therefore, any date that is offered for a Minority hearing may not be appealing to RM Waters.
GAO Report – Financial Technology: Information on Subsectors and Regulatory Oversight
On April 19, 2017, the Government Accountability Office (GAO) released the first in a planned series of reports on the growing and wide-ranging fintech industry. This comes in response to requests from several congressional offices as fintech continues to gain attention from consumer advocates as well as the traditional financial industry. The report called out the following four fintech subsectors and regulatory oversight for each as well as potential benefits and risks.
  • Marketplace lenders
  • Mobile payments
  • Digital wealth management platforms
  • Distributed ledger technology
Read More »

Legislative Tool Kit
House 2017 Calendar
Senate 2017 Calendar
Access: Public