WASHINGTON–Both the House and Senate are in session this week and the legislation and hearings before both bodies in which credit unions have an interest will look familiar. Separately, the FDIC's chair says he will step down in wake of reports of 'toxic culture,' calls for resignation.
Credit unions are watching bills related to privacy, crypto and cannabis, issues that have been before prior congressional sessions in various forms.
On the privacy legislation, Carrie Hunt, chief advocacy officer with America’s Credit Unions, reminded the trade group continues to support a federal standard.
“We certainly think this bill is a step in the right direction and a bigger step forward than we've seen previously,” Hunt said. “We still have concerns with the private right of action and some potential confusion over preemption. We would love a full Graham Leach Bliley exemption all across the board. We also think there needs to be a strong data security standard for everyone, and this bill contains some exemptions.”
Nevertheless, Hunt said does not expect to see much in the way of the changes America’s Credit Unions is seeking as the bill goes through mark-up.
Hearing on Zelle Fraud
On the Senate side, a subcommittee hearing is being held this week on the money transfer service Zelle, which has been hit with many complaints related to fraud.
Hunt said ACU will be sending a comment letter to the committee in conjunction with the hearing in which it highlights not just the “dramatic” increase in fraud on Zelle, but the overall increase in fraud in general.
“We have concerns that regulation E could be expanded to include all types of fraud, in particular fraud that is in control of the consumer,” Hunt said. “While we certainly do not want any credit union members to be defrauded there is a limit as to how much liability credit unions can absorb purely from an economic standpoint. We need the entire ecosystem to help combat this.”
Senate Passes Bill that Seeks to Prevent Regulated FIs from Custodying Crypto
In addition, the Senate has passed H.J.Res. 109, which would overturn the SEC's Staff Accounting Bulletin (SAB) No. 121, which seeks to prevent regulated financial firms from custodying Bitcoin and other cryptocurrencies.
The legislation passed with a vote of 60 to 38.
“The resolution, which had already passed the House, aims to dismantle SAB 121. This bulletin imposes stringent restrictions on financial institutions, effectively barring them from acting as custodians for digital assets such as Bitcoin,” noted Nasdaq. “Under the Congressional Review Act, H.J.Res. 109 seeks to remove these roadblocks, thereby enabling highly regulated financial firms to offer custody services for Bitcoin and other cryptocurrencies,” Nasdaq said.
“The White House has made its stance clear regarding this legislation. A recent statement emphasized that if the bill reaches President Biden's desk, he will veto it,” Nasdaq continued. “The administration argues that overturning SAB 121 would ‘disrupt the SEC's work to protect investors in crypto-asset markets and to safeguard the broader financial system.’"
‘Crucial Protection’
Proponents of H.J.Res. 109, however, argue that overturning SAB 121 is crucial for protecting consumers in the United States, Nasdaq said in its report.
“Much of this stems from the batch of spot Bitcoin Exchange Traded Funds (ETFs) approved for trading by the SEC earlier this year. The majority of these bitcoins are being held on behalf of a few institutions, which poses centralization risks. H.J.Res. 109 seeks to remove barriers to allow more highly regulated institutions to take custody and hold bitcoin on behalf of customers, helping to ease any centralization concerns,” Nasdaq said.
FDIC Chair to Step Down
Separately, FDIC Chairman Martin Gruenberg has said he will step down as soon as a successor can be named.
Gruenberg has been under fire since a Wall Street Journal reported on the agency's "toxic" culture and "sexualized boys club," which has led numerous women to be subjected to harassment and to resign. More recently, an independent report confirmed the problems at the FDIC, which was front-and-center at a recent hearing at which Gruenberg came under heavy criticism from members of both parties, as well as calls for his resignation.
"It has been my honor to serve at the FDIC as chairman, vice chairman, and director since August of 2005," Gruenberg said in a statement. "Throughout that time I have faithfully carried out the critically important mission of the FDIC to maintain public confidence and stability in the banking system. In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed. Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture."
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