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CBA's Public Policy Issues

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CFPB Resource Center

On July 21, 2011, the Consumer Financial Protection Bureau (CFPB), an agency with unprecedented power and authority to regulate the market for consumer financial products, opened its doors for business.

Because of our focus and expertise on retail banking products and services, CBA is well positioned to be your industry resource on the CFPB and will regularly update this page as the rulemaking process unfolds. In addition, our insights and analysis on CFPB-related issues, along with the latest news and information, will provide you with the necessary tools to navigate this new regulatory environment, so please visit often.

CBA’s 2014 Legislative & Regulatory Priorities

CFPB Report
December 12, 2014

CFPB Moves to Tacle Medical Debt Issues
This week the CFPB took several steps to address the challenge of consumer medical debt, releasing a report and data points, as well as new requirements on Wednesday, December 10, 2014, followed by a field hearing in Oklahoma City on Thursday, December 11, 2014.
The Bureau's report addressed the impact of medical debt on consumer credit scores and pointed to the following findings:
  • Half of all overdue debt on credit reports is from medical debt;
  • One in five credit reports contains overdue medical debt, totaling 43 million Americans with unpaid medical debt affecting their credit scores;
  • 15 million consumers have only medical debt on their credit reports; and
  • Average reported medical debt is $579 and average unpaid, non-medical debt is $1,000.
The CFPB expressed its concerns about the complicated process of collecting medical bills, including:
  • Confusing process of incurring medical debt: Multiple bills from multiple providers create confusion on how much the consumers are responsible for paying;
  • Haphazard system for reporting overdue medical debt: There is no standard practice for when overdue medical debt is sent to a collector or reported; and
  • Opaque practice of collecting debt by "parking" it on credit reports: Debt collectors may not notify the consumer the debt is due until it is on their credit report.
The Bureau also announced that major consumer reporting agencies must file regular accuracy reports with the CFPB detailing how consumer disputes are being handled. Using information provided in the reports, the Bureau will analyze the furnishers with the most disputes, industries with most disputes, and furnishers with particularly high disputes relative to their industry peers.
The Bureau also published a Data Point offering tips for consumers on how to deal with medical debt.
The new reports, requirements and consumer tips were announced at the CFPB's field hearing in Oklahoma City, and featured remarks from Bureau Director Richard Cordray. The hearing featured a panel including representatives from the CFPB, Center for Responsible Lending, Consumer Union, FICO, Healthcare Financial Management Association, a credit reporting agency and an attorney, and was moderated by CFPB Deputy Director Steve Antonakes.
The panelists addressed the impact of medical debt on consumer credit scores, highlighting the different nature of the debt, the confusion surrounding healthcare costs, and the need for separating medical debt for purposes of credit scores. The importance of consumer education and how credit scoring models can alter their process to better predict risk also was discussed.
CFPB Takes Action Against Student Loan Debt Relief Companies
On Thursday, December 11, 2014, the CFPB took action against two companies offering student debt relief. The Bureau acted to shut down College Education Services and filed a lawsuit against Student Loan Processing.US. The Bureau also issued a consumer advisory warning student loan borrowers to be wary of paying high fees for free federal loan benefits.
"Student loans are already a significant debt for many Americans. College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly," said Director Cordray. "When scam artists prey on student loan borrowers, we will take action to halt their illegal activity."
CBA Comments on CFPB Larger Participant Proposal for Auto Financing
On Monday, December 8, 2014, CBA filed a comment letter in response to the CFPB's larger participant proposal for the automobile financing market. The Bureau is seeking to extend its supervisory jurisdiction over nonbank auto lenders pursuant to its larger participant authority under section 1024 of the Dodd-Frank Act. In its letter, CBA supported the agency's efforts to promote fair competition between bank and nonbank auto lenders and to enhance consumer protection. CBA also asked the CFPB to set the supervisory threshold for larger nonbank lenders at 10,000 aggregate annual originations, and to expressly exclude securitization-related transactions from the definition of annual originations.

Senate Hears from Regulators on Cybersecurity Threats
On Wednesday, December 10, 2014, the U.S. Senate Banking, Housing & Urban Affairs Committee held a hearing entitled: "Cybersecurity: Enhancing Coordination to Protect the Financial Sector," which included testimony from the U.S. Department of the Treasury, U.S. Department of Homeland Security, the OCC, the U.S. Secret Service, and the Federal Bureau of Investigation. The hearing focused on the evolving cybersecurity threats facing financial institutions, and how the private sector and federal government can share information to combat criminal actors, including foreign governments and other international groups.
"Responsible management of cyber risks by financial institutions is important for consumer protection, financial stability, privacy, and national security. Not only are financial institutions frequent targets of cyber crime, they are uniquely interconnected with major sectors of the economy. Cyberattacks may cause damage to the financial system without directly attacking a bank, including through third party providers," said Committee Chairman Tim Johnson (D-SD) in his opening statement. "The largest banks are under constant attack every day and spend hundreds of millions of dollars per year on cyber defense. What many may not realize is that the cost of defending against cyber attacks is remarkably disproportionate compared to the cost of attacking," said Ranking Member Mike Crapo (R-ID).
The hearing focused on how federal agencies are working with financial institutions, and other critical infrastructure, to combat cyber threats. Cyber security as part of the larger payment environment from the point-of-sale to where sensitive financial data may be held by the private sector was also covered. Sen. Elizabeth Warren (D-MA) stated, "this cannot just be about the banks." Members of the Committee expressed payments are only as secure as their weakest links, including merchants and third party service providers.
Cybersecurity from a safety and soundness perspective was also addressed. Sen. Warren asked what the repercussions to the financial system would be if financial institutions active in the tri-party repo markets suffered a major breach. The OCC witness emphasized hiring examiners with strong technology backgrounds. Sen. Warren requested an unambiguous answer about how cybersecurity risk is treated as part of determining risk to the over-all financial system.
All witnesses informed Sen. Charles Schumer (D-NY) further legislation from Congress is necessary, in response to his questioning.

House Extends Terrorism Risk Insurance Act, Negotiations Continue
On Wednesday, December 10, 2014, the Terrorism Risk Insurance Act (TRIA) was passed in the House, receiving support from 417 Members who voted to extend the measure. The bill (S. 2244), passed the Senate in July, but differs from the House version which was amended to roll back the swaps push out provision in the Dodd-Frank Act. Extending TRIA was considered a "must do" by most Members of Congress and made it a vehicle for other contentious legislative objectives.
"By playing games and refusing to pass a clean extension of terrorism insurance, the House Republicans have put terrorism insurance at risk," Sen. Charles Schumer (D-NY) said in a statement.
The bill, which extends TRIA by six years, raises the amount needed in total losses from $100 million to $200 million before TRIA is triggered.
The bill also amends the Federal Reserve Act to "require the President, in selecting members of the Board of Governors of the Federal Reserve System, to appoint at least one member with demonstrated primary experience working in or supervising community banks having less than $10 billion in total assets."
The maneuver puts pressure back on the Senate to pass the amended version of the bill, before Congress goes into recess. The threat of a government shutdown still looms over negotiations as Congress operates under short-term Continuing Resolution that keeps the government funded through Saturday.

House Oversight Releases FDIC, Operation Choke Point Report
On Tuesday, December 9, 2014, the House Committee on Oversight and Government Reform released a report on its investigation into the FDIC's involvement in Operation Choke Point, accusing the agency of violating "the most fundamental principles of the rule of law and accountable, transparent government."
The authors of the report say the FDIC targeted legal industries as part of the operation via "circular agreement" policymaking, as there was no articulated justification or rationale for the agency's list of high-risk merchants – the basis for the targeted industries. Additionally, the FDIC was found to have used the list of high risk merchants to make sure banks "got the message" that offering services to a certain group of businesses would carry enormous regulatory risk and the possibility of full-blown investigations.

FSSCC Responds to Cybersecurity Inquiry
On Tuesday, December 9, 2014, the Financial Services Sector Coordinating Council (FSSCC) responded to a November, 18, 2014 letter from Sen. Elizabeth Warren (D-MA) and Rep. Elijah Cummings (D-MD) inquiring about cybersecurity protections at financial institutions. To combat cyber threats, the FSSCC has established a project to standardize and automate the flow of cyber threat information, and participated in the Merchant and Financial Cybersecurity Partnership. The letter outlined the strong laws already protecting the financial services industry from breaches, including Title V of the Gramm-Leach-Bliley Act; the supervisory guidance from the Federal Financial Institutions Examination Council; the myriad of state laws mandating breach notification and data security standards; and mandates from prudential regulators regarding "risk-based" response programs. Additionally, the FSSCC urged Congress to pass cross-sector information sharing legislation.

Fed Issues Proposal to Strength SIFI
On Tuesday, December 8, 2014, the Federal Reserve Board proposed a rule to further strengthen the capital positions of the largest, most systemically important U.S. bank holding companies.
The proposal establishes a methodology to identify whether a U.S. bank holding company is a global, systemically important banking organization (GSIB). A firm identified as a GSIB would be subject to a risk-based capital surcharge calibrated based on its systemic risk profile.
The proposal is intended to build on a GSIB capital surcharge framework agreed to by the Basel Committee on Banking Supervision (BCBS), augmented to address risks to U.S. financial stability. A firm identified as a GSIB would calculate its GSIB surcharge under two methods and use the higher of the two surcharges.
The first method would consider the GSIB's size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with a methodology developed by the Basel Committee. The second would use similar inputs, but would replace substitutability with use of short-term wholesale funding and would generally result in significantly higher surcharges than the BCBS framework.

NACHA Proposes Same-Day Settlement
On Tuesday, December 8, 2014, the National Automated Clearing House Association (NACHA) asked for comments on a proposal to introduce a same-day settlement mechanism for the automated clearing house network. Comment on the proposal will be accepted through February 6, 2015.
According to NACHA, if the proposal is approved, the network will process almost 1.4 billion same-day payments annually within 10 years of the system's full rollout. The proposal also contains an "interbank fee," projected to be 8.2 cents per transaction, payable by originating banks to receiving banks. The new fee is intended to compensate receiving institutions for costs involved in accommodating same-day settlement. Receiving banks will be required to handle same-day settlements. The proposal calls for same-day capability to be established through three phases during an 18-month period, beginning in September 2016 and ending in March 2018.

CBA Supports ABA Petition
On Monday, December 8, 2014, CBA filed a comment letter with the Federal Communications Commission (FCC) supporting an American Bankers Association (ABA) petition to create an exception for fraud and identity theft alerts, data breach notifications, remediation messages, and money transfer notifications on a free-to-end-user basis. CBA believes the ABA petition proposes exemptions that would promote beneficial communications without compromising consumer privacy, and ultimately reduce the risk of fraud and identity theft associated with payment card transactions. CBA continues to urge the Commission to clarify that "called party" refers to the "intended recipient" for the purposes of the Telephone Consumer Protection Act prior express consent requirement, as outlined in CBA's Petition for Declaratory Ruling.

Cybersecurity Bills get Green Flag from Congress
This week, Congress acted to pass three pieces of cybersecurity legislation. The National Cybersecurity Protection Act of 2014 (S. 2519), sponsored by Sens. Tom Carper (D-DE) and Tom Coburn (R-OK) codifies the existing cybersecurity and communications operations center at the U.S. Department of Homeland Security (DHS), known as the National Cybersecurity and Communications Integration Center, and will be sent to the President for his signature. "Cybersecurity is one of the biggest national security challenges our country faces. Our laws should reflect that reality," said Sen. Carper, who chairs the Senate Committee on Homeland Security and Governmental Affairs.
The second bill, the Cybersecurity Act of 2013 (S. 1353), sponsored by Sens. Jay Rockefeller (D-WV) and John Thune (R-SD), incorporated the National Institute of Standards and Technology (NIST) process, authorizing it to continue facilitating the development of voluntary standards and best practices to protect critical infrastructure. The bill is expected to be signed by the President. "Sen. Thune shares with me a commitment to giving businesses the flexibility and assurances they need as they work toward this goal, and those the government must meet in a changing world of cyber threats with potentially devastating impacts for our economy and national security. NIST is a jewel of the federal government and it's the right organization to guide this very important work."
The Cybersecurity Workforce Assessment Act (HR 2952), sponsored by Rep. Patrick Meehan (R-PA), requires the Secretary of DHS to assess the Department and develop strategies to further enhance the readiness, training, recruitment, and retention of the cybersecurity workforce. "We've seen remarkable changes in the cyber world and the threats have developed and changed dramatically in the last decade," said Rep. Meehan.

Past Reports

December 12, 2014
December 5, 2014
November 21, 2014
November 14, 2014
November 7, 2014
October 31, 2014
October 24, 2014
October 17, 2014
October 10, 2014
October 3, 2014
September 26, 2014
September 19, 2014
September 12, 2014
September 5, 2014
August 29, 2014
August 22, 2014
August 15, 2014
August 8, 2014
August 1, 2014
July 18, 2014
July 11, 2014
June 27, 2014
June 20, 2014
June 13, 2014
June 6, 2014
May 30, 2014
May 23, 2014
May 16, 2014
May 9, 2014
May 2, 2014
April 25, 2014
April 18, 2014
April 11, 2014
March 28, 2014
March 21, 2014
March 14, 2014
March 7, 2014
February 28, 2014
February 21, 2014
February 14, 2014
February 7, 2014
January 31, 2014
January 24, 2014
January 17, 2014
January 10, 2014

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