October 19, 2023

MBA Members Make Their Voices Heard in Washington

The Missouri banking community was well-represented in Washington, D.C., this week as 35 bankers from throughout the state attended MBA’s annual Washington Visit. During their time in Washington, MBA members met with Missouri’s congressional delegation and leaders of several regulatory agencies to share their concerns.

Bankers’ primary objective of the visit was to meet with Sen. Josh Hawley to discuss his proposal to cap credit card annual percentage rates at 18%. Every banker participated in this meeting, but Hawley did not attend the scheduled meeting. His staff met with MBA members, who expressed their staunch opposition to Hawley’s bill.

“We made certain that Sen. Hawley knew exactly how the banking community feels about his misguided legislation,” said MBA President and CEO Jackson Hataway. “We urge every banker to continue flooding his office with your opposition to this bill.”

Among visits with other lawmakers, many were broadly supportive of MBA’s legislative priorities. This includes the Access to Credit for our Rural Economy Act, known as the ACRE Act, which would give community banks the same tax-exempt status on certain earned interest that applies to farm credit institutions, allowing farm real estate borrowers and rural homeowners access to lower interest rates.

“Several in our delegation expressed their willingness to potentially co-sponsor ACRE, which would benefit all of the rural communities in Missouri,” Hataway said.

Lawmakers also expressed significant concern about regulatory overreach and the expansion of Section 1071 reporting requirements by the Consumer Financial Protection Bureau. On Wednesday, the Senate approved a resolution of disapproval seeking to overturn Section 1071.

“Coincidentally, MBA members met with CFPB Director Rohit Chopra the same day as the Senate vote,” Hataway said. “We were quite vocal with Director Chopra about the CFPB’s constant barrage of inflammatory press releases and guidance.”

Earlier in the week, bankers met with Federal Reserve Board Gov. Michelle Bowman, who expressed significant concern about expanded capital requirements. She reiterated her belief that the Federal Reserve should invite a third party to review the Federal Reserve’s own findings in the wake of the Silicon Valley Bank failure.

MBA members also met with Federal Deposit Insurance Corporation Director Jonathon McKernan.

Senate Approves Resolution to Overturn CFPB Small Business Data Collection Rule

The Senate voted 53-44 Wednesday to approve a resolution of disapproval seeking to overturn the Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act, which requires the collection and reporting of credit application data for small businesses, including women-owned and minority-owned small businesses. Sens. Josh Hawley and Eric Schmitt voted in favor of the resolution.

“We applaud the efforts of the Senate to address CFPB overreach and ease the unnecessary burden this rule would place on Missouri banks and their customers,” said MBA President and CEO Jackson Hataway.

S.J. Res. 32 would need to be approved by both houses of Congress and signed by the president to overturn the rule. An identical resolution has been introduced in the House and has passed out of committee. However, the lack of a House speaker presents a major obstacle for passage because the House is currently unable to move any legislation through regular order. The White House told reporters that President Biden would likely veto the legislation if it passed.

CFPB Proposes Data Privacy Rule

The Consumer Financial Protection Bureau announced a proposed rule today concerning financial data privacy. The proposed Personal Financial Data Rights rule implements Section 1033 of the Consumer Financial Protection Act of 2010. The proposed rule addresses the following.

• require depository and nondepository entities to make available to consumers and authorized third parties certain data concerning consumers’ transactions and accounts
• establish obligations for third parties accessing a consumer’s data, which includes privacy protections for that data
• provide basic standards for data access

MBA staff is reviewing the proposed rule. The CFPB is accepting comments on the proposal until Dec. 29.

CFPB, DOJ Warn Against Using Immigration Status to Determine Creditworthiness

Financial institutions risk violating federal protections against discrimination if they rely on immigration status to determine a consumer’s creditworthiness, according to the Consumer Financial Protection Bureau and Justice Department. In a joint statement, the two agencies said consumers have reported being rejected for credit cards, as well as for auto, student, personal and equipment loans, because of their immigration status, even when they have strong credit histories. Such rejections “may run afoul of the law,” the agencies said. 

The Equal Credit Opportunity Act allows creditors to consider immigration status, but “unnecessary or overbroad” reliance on that factor may constitute discrimination based on national origin, race or other protected status, the CFPB and Justice Department said. “Such overbroad policies may harm applicants with these protected characteristics without being necessary to ascertain the creditor’s rights and remedies for repayment or to meet other binding legal obligations. Any claims that such policies are necessary to preserve the creditor’s rights and remedies regarding repayment or to meet other binding legal obligations should be supported by evidence and cannot be a pretext for discrimination.”

The agencies added that the ECOA’s allowance for considering immigration status does not provide a “safe harbor” from other laws that explicitly ban discrimination based on that status. “ECOA and other laws protect consumers and help ensure fair lending and credit opportunities for qualified borrowers,” they said. “Creditors should be mindful of those obligations as they relate to noncitizen borrowers and ensure that credit decisions are based on non-discriminatory criteria.”