STATE GOVERNMENT RELATIONS
Indiana General Assembly Gavels in for Start of Legislative Session
The Indiana General Assembly started their work for the 2024 legislative session this past Monday. Lawmakers got to work quickly, holding committee hearings on a number of different topics throughout the week. Committees must finish their work by the first part of February. The IBA is tracking several bills, including:
Senate Bill 188 – Actions on deposit accounts
House Bill 1084 – Privacy of firearms financial transactions
House Bill 1284 – Deposit account agreements
Senate Bill 28 – Discriminatory financial services practices
FEDERAL GOVERNMENT RELATIONS
CFPB Issues Guidance on Background Checks, Credit File Disclosure
The Consumer Financial Protection Bureau Thursday issued two advisory opinions for consumer reporting companies to address what it said were inaccurate background check reports and “sloppy” credit file sharing practices.
The first advisory opinion on background checks states that the reports must be complete, accurate and free of information that is duplicative, outdated, expunged, sealed or otherwise legally restricted from public access, according to the agency. For example, a criminal charge that does not result in a conviction generally cannot be reported by a consumer reporting company beyond the seven-year period that starts at the time of the charge.
The second advisory opinion on file disclosure states that people are entitled to receive all information contained in their consumer file at the time they request it, along with the source or sources of the information contained within, including both the original and any intermediary or vendor source. Among other things, the opinion states that consumers only need to make a request for their report and provide proper identification – they do not need to use specific language or industry jargon to be provided their complete file.
Read the advisory opinion on background checks
Read the advisory opinion on file disclosure
House Working Group to Study AI in Financial Services
House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., and Ranking Member Rep. Maxine Waters, D-Calif., Thursday announced the formation of a bipartisan working group to explore how artificial intelligence is affecting the financial services and housing industries. The working group will be led by Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill, R-Ark., and Ranking Member Stephen Lynch, D-Mass.
The new group will examine the use of AI in the development of new products and services, fraud prevention, compliance efficiency, and the enhancement of supervisory and regulatory tools, as well as how AI may affect the financial services workforce, according to a committee statement. It will also examine how existing regulation addresses the use of AI and how lawmakers can ensure that new regulations consider both the potential benefits and risks associated with the technology.
Banking Agencies Release Video on CRA Rule
The Federal Deposit Insurance Corp., Federal Reserve and Office of the Comptroller of the Currency Wednesday jointly released a prerecorded, one-hour webinar on the final rule to modernize regulations implementing the Community Reinvestment Act. The video provides an overview of the rule and its objectives. Additional topics in the recording include assessment areas, community development, evaluation framework, performance tests, ratings, data collection, and reporting and applicability dates.
Senate Fails to Override Veto on 1071 Resolution
The Senate Wednesday failed to override President Biden’s veto of a joint resolution to overturn the Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act. S.J. Res. 32 by Sen. John Kennedy, R-La., cleared both houses of Congress last year by bipartisan votes, but Biden vetoed the resolution in December. Congress can override a veto if two-thirds of lawmakers in the House and Senate vote to overturn the president’s action, but the motion failed on a 54-45 vote.
Proposed Legislation Would Curtail Trigger Leads
Sens. Jack Reed, D-R.I., and Bill Hagerty, R-Tenn., recently introduced the Homebuyers’ Privacy Protection Act (S.B. 3502), which would amend the Fair Credit Reporting Act to prohibit credit reporting agencies from selling trigger leads in certain circumstances. Trigger leads are a marketing product sold by credit bureaus containing contact information for consumers who have had a credit report pulled while in the process of shopping for a mortgage loan.
Under the bill, a consumer reporting agency would not be able to furnish a trigger lead to a third party unless: the third party certifies to the consumer reporting agency that the consumer has authorized the solicitations; or the third party certifies it has originated the consumer’s current residential mortgage loan, is the servicer of the consumer’s current residential mortgage loan, or is an insured depository institution or insured credit union and holds a deposit account for the consumer to whom the consumer report relates.
Similar legislation was introduced in the house in June by Reps. John Rose, R-Tenn., and Ritchie Torres, D-N.Y.
Barr: Fed Considering Adjustments to Proposed Capital Standards
Federal Reserve Vice Chairman for Supervision Michael Barr said Tuesday that the Fed is considering adjustments to key provisions in its proposed rulemaking to implement the Basel III “endgame” capital requirements, as reported by the news agency Reuters. Barr, speaking at a private event in Washington, D.C., cited operational risk calculations and potential offsets for mortgage servicing as two areas where revisions could be made.
Barr also said that the Fed plans to publish the results of a survey on the effect of the pending rulemaking, Reuters reported. He added that the public comments received so far had been “super helpful” in developing the proposal's approach to matters like operational risk and fee-based income.
Bowman Urges Return to Regulatory Tailoring
Federal Reserve Governor Michelle Bowman said Monday that she worried that “an overbroad application” of bank requirements could become a characteristic of future regulatory reforms, pointing to the proposed capital requirements as one example of the trend. During a speech to the South Carolina Bankers Association, Bowman called for a renewed commitment to the Fed’s congressionally mandated obligation to tailor regulation to institution size, saying that such a focus “helps us avoid the impulse to simply crank regulatory dials to their highest level for all firms.”
As an example, Bowman pointed to an interagency proposal to implement the Basel III "endgame." The governor said that bankers have voiced concerns that the proposed capital requirements would be significantly higher than stakeholders anticipated, and that it would largely "flatten" the regulatory requirements for all banks over $100 billion, creating a severe cliff effect for firms approaching or crossing that threshold.
“While the capital proposal does not directly apply to regional and community banks, all banks are affected when policymakers shift away from or deemphasize tailoring,” Bowman said. “When we fail to recognize fundamental differences among firms, there is a strong temptation to continually push down requirements designed and calibrated for larger and more complex banks, to smaller and less complex banks that cannot reasonably be expected to comply with these standards. As we look to the future and the anticipated regulatory agenda for 2024, the critical role of tailoring must be incorporated as a foundational element of these regulatory reforms.”