Lawmakers urge OCC to rescind, replace cryptocurrency guidance

U.S. Sens. Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT) recently forwarded correspondence to the Office of the Comptroller of the Currency Acting Comptroller of the Currency Michael Hsu, advocating for the previously issued cryptocurrency guidance to be rescinded and replaced.© Shutterstock “We write to inquire about the Office of […]

The post Lawmakers urge OCC to rescind, replace cryptocurrency guidance appeared first on Financial Regulation News.

U.S. Sens. Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT) recently forwarded correspondence to the Office of the Comptroller of the Currency Acting Comptroller of the Currency Michael Hsu, advocating for the previously issued cryptocurrency guidance to be rescinded and replaced.

© Shutterstock

“We write to inquire about the Office of the Comptroller of the Currency’s (OCC) November 2021 interpretive letter authorizing banks to engage in certain cryptocurrency (crypto) activities and the activities that banks have been permitted to engage in under OCC’s guidance,” the legislators wrote. “Each of the prudential regulators, including the OCC, is responsible for safeguarding our financial system from undue risk and ensuring the safety and soundness of the banking system. In light of recent turmoil in the crypto market, however, we are concerned that the OCC’s actions on crypto may have exposed the banking system to unnecessary risk and ask that you withdraw existing interpretive letters that have permitted banks to engage in certain crypto-related activities.”

Under the previous acting comptroller, the OCC issued several interpretive letters related to cryptocurrency, which determined that banks were authorized to engage in certain crypto-related activities that included providing cryptocurrency custody services for customers, holding deposits that serve as reserves for certain stablecoins, and using independent node verification networks (INVNs) and stablecoins for payment activities.

“Given the risks posed by cryptocurrencies to banks and their customers, we request that you withdraw OCC Interpretive Letters 1170, 1172, 1174, and 1179 and coordinate with the Federal Reserve and the Federal Deposit Insurance Corporation to develop a comprehensive approach that adequately protects consumers and the safety and soundness of the banking system,” the legislators concluded.

The post Lawmakers urge OCC to rescind, replace cryptocurrency guidance appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/lawmakers-advocate-occ-rescind-replace-cryptocurrency-guidance/

Rep. Wild introduces bill to overhaul student loan repayment system

U.S. Rep. Susan Wild (D-PA) introduced legislation this week that would restructure the federal student loan repayment system.© Shutterstock Americans hold more than $1.5 trillion in student loan debt, and federal loans account for much of this debt. Many Americans are at risk of defaulting on their student loans because of high interest rates and […]

The post Rep. Wild introduces bill to overhaul student loan repayment system appeared first on Financial Regulation News.

U.S. Rep. Susan Wild (D-PA) introduced legislation this week that would restructure the federal student loan repayment system.

© Shutterstock

Americans hold more than $1.5 trillion in student loan debt, and federal loans account for much of this debt. Many Americans are at risk of defaulting on their student loans because of high interest rates and unaffordable monthly loan payments. Wildʻs bill, the Simplifying Student Loans Act, H.R. 8700, seeks to reduce the financial burden on current and future borrowers in several ways.

First, it would overhaul the loan repayment process. Specifically, it would replace the numerous existing federal student loan repayment plans with two repayment options: one fixed repayment plan and one income-based repayment plan. Research shows that borrowers enrolled in income-based repayment plans have better outcomes, lower monthly loan payments, and are less likely to default on their student loans.

Further, the bill limits the amount of a person’s monthly discretionary income that they must spend on student loan payments, which will help them afford their monthly payments.

Finally, it would establish a one percent interest rate on federal student loans. This is significantly lower than the current average student loan interest rate.

Taken together, said Wild, these updates would reduce the strain on students and families, help them achieve their long-term financial goals, and strengthen the economy.

“Whether it’s a four-year college, community college, or a technical school, we know higher education is a pathway to financial stability in America,” Wild said. “But with prohibitively expensive tuition, students often must take out multiple loans to pay for college — each with its own interest rate and repayment schedule. I’ve heard heartbreaking stories of people drowning in student loan debt and owing more in loans 10 years post-graduation than immediately after earning their diploma. By making student loans easier to understand and cheaper, simpler, and quicker to repay, the Simplifying Student Loans Act will help solve these problems.”

The post Rep. Wild introduces bill to overhaul student loan repayment system appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/rep-wild-introduces-bill-to-overhaul-student-loan-repayment-system/

Rep. Waters leads group of Democrats asking regulators to end redlining in CRA update

U.S. Rep. Maxine Waters (D-CA), as chairwoman of the U.S. House Financial Services Committee, is leading 76 Democrats in urging federal banking regulators to put an end to the practice of “modern day redlining” in their proposal to modernize the Community Reinvestment Act (CRA).© Shutterstock Redlining refers to a discriminatory practice that puts financial services, […]

The post Rep. Waters leads group of Democrats asking regulators to end redlining in CRA update appeared first on Financial Regulation News.

U.S. Rep. Maxine Waters (D-CA), as chairwoman of the U.S. House Financial Services Committee, is leading 76 Democrats in urging federal banking regulators to put an end to the practice of “modern day redlining” in their proposal to modernize the Community Reinvestment Act (CRA).

© Shutterstock

Redlining refers to a discriminatory practice that puts financial services, as well as other services, out of reach for residents of certain areas based on race or ethnicity. In a letter to the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), the Democrats said the regulators should carefully consider comments from civil rights and community groups in CRA modernization proposal.

“We are heartened by your agencies’ efforts to put forward a new proposal to modernize the CRA, which represents a once in a generation opportunity for federal bank regulators to end redlining and its present-day manifestations. The CRA became law in 1977 and the last time your agencies came together to reform CRA rules was in 1995, nearly three decades ago. Significant changes in the financial marketplace have taken place since that time…[m]any of those changes have contributed to less effective CRA rules,” wrote the lawmakers. “We appreciate your agencies’ joint efforts to work together to advance a much-needed update to CRA rules. As you work to finalize the rule, we urge you to consider our recommendations as well as those from civil rights groups, consumer advocates, and other affected stakeholders.”

Among their suggestions, they recommend that CRA exams take into account bank activities that impact communities of color as well as low-and-moderate income communities. They also say banks should only get CRA credit when they make meaningful investments in communities, and that CRA exams should become more rigorous.

The post Rep. Waters leads group of Democrats asking regulators to end redlining in CRA update appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/rep-waters-leads-group-of-democrats-asking-regulators-to-end-redlining-in-cra-update/

Senate passes bill that would impose tax on stock buybacks

A bill that would impose a 1 percent excise tax on the repurchase of stock by publicly traded companies passed the U.S. Senate this week.© Shutterstock The Stock Buyback Accountability Act, sponsored by U.S. Sen. Ron Wyden (D-OR), was passed as part of the Inflation Reduction Act. Wyden, the chair of the Senate Finance Committee, […]

The post Senate passes bill that would impose tax on stock buybacks appeared first on Financial Regulation News.

A bill that would impose a 1 percent excise tax on the repurchase of stock by publicly traded companies passed the U.S. Senate this week.

© Shutterstock

The Stock Buyback Accountability Act, sponsored by U.S. Sen. Ron Wyden (D-OR), was passed as part of the Inflation Reduction Act.

Wyden, the chair of the Senate Finance Committee, said the legislation seeks to incentivize big corporations to invest in their workers rather than investors and shareholders via stock buybacks.

“Rather than investing in their workers, mega-corporations used the windfall from Republicans’ 2017 tax cuts to juice their stock prices and reward their wealthiest investors and their executives through massive stock buybacks,” Wyden said. “Even as millions of families struggled through the pandemic, corporate stock buybacks once again hit all-time highs. Stock buybacks are currently heavily favored by the tax code, despite their skewed benefits for the very top and potential for insider game-playing. My proposal with Senator (Sherrod) Brown simply ends this preferential treatment and encourages mega-corporations to invest in their workers.”

Stock buybacks are just that, cases where public companies repurchase their own shares on the market, usually in down markets when prices are lower. Wyden said they are used by public companies to juice their stock prices and reward investors. Corporate stock buybacks set at an all-time high in 2018, then broke that record in 2021.

The post Senate passes bill that would impose tax on stock buybacks appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/senate-passes-bill-that-would-impose-tax-on-stock-buybacks/

Lawmakers seek diversity and inclusion practices of crypto, digital asset companies

Democratic lawmakers in Congress have asked major cryptocurrency and digital asset industry players to provide data on their diversity and inclusion practices.© Shutterstock Specifically, the lawmakers, including U.S. Rep. Maxine Waters (D-CA), chair of the U.S. House Financial Services Committee, sent the request to the nation’s 20 largest crypto, Web3, and digital assets companies, as […]

The post Lawmakers seek diversity and inclusion practices of crypto, digital asset companies appeared first on Financial Regulation News.

Democratic lawmakers in Congress have asked major cryptocurrency and digital asset industry players to provide data on their diversity and inclusion practices.

© Shutterstock

Specifically, the lawmakers, including U.S. Rep. Maxine Waters (D-CA), chair of the U.S. House Financial Services Committee, sent the request to the nation’s 20 largest crypto, Web3, and digital assets companies, as well as prominent venture capital firms with investments in crypto.

“The Committee on Financial Services in the United States House of Representatives has made diversity and inclusion a core pillar of its efforts to ensure that the U.S. financial services system works for everyone,” the lawmakers wrote in a letter to the 20 organizations. “There is a concerning lack of publicly available data to effectively evaluate the diversity among America’s largest digital assets companies, and the investment companies with significant investments in these companies. We believe transparency is a critical, first step to achieving racial and gender equity. That is why your participation in this snapshot is imperative in our efforts to understand how and whether the industry is working toward a more equitable environment for everyone.”

Along with Waters, the letter was signed by Reps. Joyce Beatty (D-OH), chair of the Subcommittee on Diversity and Inclusion; Al Green (D-TX), chair of the Subcommittee on Oversight and Investigations; Bill Foster (D-IL), chair of the Task Force on Artificial Intelligence; and Stephen Lynch (D-MA), chair of the Task Force on Financial Technology.

The letter was sent to the following companies: Aave, Andreessen Horowitz, Binance.US. Circle, Coinbase, Crypto.com, Digital Currency Group, FTX, Gemini, Haun Ventures, Kraken, OpenSea, PancakeSwap, Paradigm, Paxos, Ripple, Sequoia Capital, Stellar Development Foundation, Tether, and UniSwap.

The post Lawmakers seek diversity and inclusion practices of crypto, digital asset companies appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/lawmakers-seek-diversity-and-inclusion-practices-of-crypto-digital-asset-companies/

U.S. Senate bill looks to clarify digital asset reporting requirements in infrastructure law

A bipartisan bill was introduced in the U.S. Senate this week that seeks to clarify the digital asset reporting requirements in the Infrastructure Investment and Jobs Act (IIJA).© Shutterstock Specifically, the Senate approved an amendment to the infrastructure package last August that sought to clarify the definition of “broker” in relation to the person who […]

The post U.S. Senate bill looks to clarify digital asset reporting requirements in infrastructure law appeared first on Financial Regulation News.

A bipartisan bill was introduced in the U.S. Senate this week that seeks to clarify the digital asset reporting requirements in the Infrastructure Investment and Jobs Act (IIJA).

© Shutterstock

Specifically, the Senate approved an amendment to the infrastructure package last August that sought to clarify the definition of “broker” in relation to the person who must report to the government information about a digital asset transaction. However, the amendment excluded from reporting requirements services like mining and wallet providers who do not take custody of other individuals’ cryptocurrency, nor are able to comply with the reporting requirements of a broker.

The Senate never had the opportunity to vote on this amendment last August due to a procedural hurdle. This new bill provides that opportunity, as it contains the exact same text introduced as a bipartisan amendment nearly one year ago.

“There’s been a lot of confusion about the reporting requirements included in the bipartisan infrastructure law,” Sen. Mark Warner (D-VA), one of the bill’s sponsors, said. “As a former venture capitalist and someone who’s enthusiastic about innovation, I want to maintain America’s lead in financial innovation, including distributed ledger technologies. This bipartisan bill will underscore that the reporting requirements in the IIJA do not apply to crypto validators and other actors not providing broker-like functions while maintaining sensible guidelines to ensure that financial networks aren’t enabling illicit activity.”

Sens. Pat Toomey (R-PA), Cynthia Lummis (R-WY), Kyrsten Sinema (D-AZ), and Rob Portman (R-OH) joined bill sponsor Warner in introducing the legislation, S. 4751.

“While there’s no question that digital asset exchanges behaving as brokers should be required to comply with existing reporting requirements, the bill signed into law last year would impose these requirements on many people who don’t even have the information needed to comply with them,” Toomey said. “By clarifying the definition of a broker, our legislation will protect innovation by exempting miners, network validators, and other service providers from onerous and unworkable requirements. This amendment had strong bipartisan support last August, and there’s no reason it shouldn’t be signed into law.”

The bill has broad support in the digital asset community. Several organizations support the measure, including the Coin Center, Crypto Council for Innovation, Chamber of Digital Commerce, Association for Digital Asset Markets, Global Digital Asset and Cryptocurrency Association, the Proof of Stake Alliance, and the Wall Street Blockchain Alliance.

“The proposed revisions to Internal Revenue Code regarding Information Reporting for Brokers and Digital Assets marks a key legislative opportunity that we believe will begin to unlock the best benefits of digital assets and blockchain,” Ron Quaranta, chairman of the Wall Street Blockchain Alliance, said. “By clarifying what it means to be a broker in light of this important innovation, the bipartisan legislation paves the way for further innovations that can evolve markets and ultimately improve the overall financial lives of Americans.”

The post U.S. Senate bill looks to clarify digital asset reporting requirements in infrastructure law appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/u-s-senate-bill-looks-to-clarify-digital-asset-reporting-requirements-in-infrastructure-law/

Senate bill seeks to regulate digital commodities markets

A bipartisan group of U.S. senators introduced legislation that would supply the Commodity Futures Trading Commission with new tools and authorities to regulate digital commodities. This mandatory framework will safeguard customers and our markets.© Shutterstock The Digital Commodities Consumer Protection Act of 2022 seeks to safeguard markets in several ways. It closes regulatory gaps by […]

The post Senate bill seeks to regulate digital commodities markets appeared first on Financial Regulation News.

A bipartisan group of U.S. senators introduced legislation that would supply the Commodity Futures Trading Commission with new tools and authorities to regulate digital commodities. This mandatory framework will safeguard customers and our markets.

© Shutterstock

The Digital Commodities Consumer Protection Act of 2022 seeks to safeguard markets in several ways. It closes regulatory gaps by requiring all digital commodity platforms—including trading facilities, brokers, dealers, and custodians—to register with the CFTC. Further, digital commodity platforms must prohibit abusive trading practices, eliminate or disclose conflicts of interest, maintain sufficient financial resources, have strong cybersecurity programs, protect customer assets, and report suspicious transactions.

In addition, it mandates that digital commodity platforms adhere to advertising standards and disclose information about digital commodities and their risks, bringing greater transparency and accountability to the marketplace. Further, it authorizes the CFTC to impose user fees on digital commodity platforms to fully fund its oversight of the digital commodity market. It also directs the CFTC to examine racial, ethnic, and gender demographics of customers participating in digital commodity markets and use that information to inform its rulemaking and provide outreach to customers.

“One in five Americans have used or traded digital assets—but these markets lack the transparency and accountability that they expect from our financial system. Too often, this puts Americans’ hard-earned money at risk,” said U.S. Sen. Debbie Stabenow (D-MI), chair of the Senate Committee on Agriculture, Nutrition, and Forestry. “That’s why we are closing regulatory gaps and requiring that these markets operate under straightforward rules that protect customers and keep our financial system safe.”

Stabenow is one of the bill’s sponsors, along with John Boozman (R-AR), ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry.

“Digital assets and blockchain technology have already and will continue to change the way global markets function. Yet, this fast-growing industry is currently governed largely by a patchwork of regulations at the state level. That simply is not an effective way to protect consumers from fraud. Furthermore, relying solely on state regulation does not ensure that rules and regulations work for all stakeholders. Our bill will empower the CFTC with exclusive jurisdiction over the digital commodities spot market, which will lead to more safeguards for consumers, market integrity, and innovation in the digital commodities space,” Boozman said.

U.S. Sens. Cory Booker (D-NJ) and John Thune (R-SD) are also sponsors of the bill.

“As the number of Americans engaging with digital assets continues to grow, it is critical that we clarify and strengthen the regulation of our financial system,” Booker said. “This bipartisan legislation will enhance oversight over digital commodities, taking an important first step to ensure that the digital marketplace operates fairly with commonsense rules in place and protects consumers entering this market.”

The post Senate bill seeks to regulate digital commodities markets appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/senate-bill-seeks-to-regulate-digital-commodities-markets/

SEC charges 11 individuals with crypto Ponzi scheme

The Securities and Exchange Commission (SEC) charged 11 people for creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme.© Shutterstock The scheme raised more than $300 million from millions of retail investors worldwide, including in the United States. The SEC charged the four founders of Forsage, who were last known to be living […]

The post SEC charges 11 individuals with crypto Ponzi scheme appeared first on Financial Regulation News.

The Securities and Exchange Commission (SEC) charged 11 people for creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme.

© Shutterstock

The scheme raised more than $300 million from millions of retail investors worldwide, including in the United States. The SEC charged the four founders of Forsage, who were last known to be living in Russia, the Republic of Georgia, and Indonesia. It also charged three U.S.-based promoters who endorsed Forsage on its website and social media platforms, as well as members of the so-called Crypto Crusaders, a promotional group for the scheme that operated in the United States in at least five different states.

Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov launched Forsage.io in January 2020. This website allowed millions of retail investors to enter into transactions via smart contracts operated on the Ethereum, Tron, and Binance blockchains. According to the SEC’s complaint, Forsage allegedly operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme. Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure.

Cease-and-desist actions were taken against Forsage in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance. However, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and other means.

“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, said. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”

Along with the founders, the SEC charged Cheri Beth Bowen, of Pelahatchie, Miss.; Ronald R. Deering, of Coeur d’ Alene, Idaho; Samuel D. Ellis, of Louisville, Ky.; Mark F. Hamlin, of Henrico, Va.; Carlos L. Martinez, of Chicago, Ill.; Alisha R. Shepperd, of Dunedin, Fla.; and Sarah L. Theissen, of Hartford, Wis., with violating the registration and anti-fraud provisions of the federal securities laws.

The SEC is seeking injunctive relief, disgorgement, and civil penalties.

Without admitting or denying the allegations, two of the defendants, Ellis and Theissen, agreed to settle the charges and to be permanently enjoined from future violations of the charged provisions and certain other activity. Further, Ellis agreed to pay disgorgement and civil penalties, and Theissen will be required to pay disgorgement and civil penalties as determined by the court.

The post SEC charges 11 individuals with crypto Ponzi scheme appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/sec-charges-11-individuals-with-crypto-ponzi-scheme/

Bill to prohibit discrimination by banks introduced in Senate

U.S. Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) recently joined a group of senators that has proposed legislation that prohibits banks and other financial institutions from discriminating on the basis of race, color, religion, national origin, sex, gender identity, or sexual orientation.© Shutterstock The Fair Access to Financial Services Act seeks to ensure that […]

The post Bill to prohibit discrimination by banks introduced in Senate appeared first on Financial Regulation News.

U.S. Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) recently joined a group of senators that has proposed legislation that prohibits banks and other financial institutions from discriminating on the basis of race, color, religion, national origin, sex, gender identity, or sexual orientation.

© Shutterstock

The Fair Access to Financial Services Act seeks to ensure that all people receive equal treatment when trying to access financial institutions’ services. It would also hold institutions accountable for discriminatory practices.

“It’s appalling that in the 21st century, Americans still experience discrimination while opening a bank account, applying for a mortgage, or simply setting foot inside a bank,” Wyden said. “The Fair Access to Financial Services Act will hold financial institutions accountable for their discriminatory actions, and I am committed to getting this piece of legislation signed into law.”

Along with Wyden and Merkley, the bill is sponsored by U.S. Sens. Sherrod Brown (D-OH), Raphael Warnock (D-GA), Bob Menendez (D-NJ), Catherine Cortez-Masto (D-NV), Cory Booker (D-NJ), Tina Smith (D-MN), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Kirsten Gillibrand (D-NY), Alex Padilla (D-CA), Tammy Duckworth (D-IL), Ed Markey (D-MA), Tammy Baldwin (D-WI), Sheldon Whitehouse (D-RI), Dianne Feinstein (D-CA), and Ben Ray Luján (D-NM).

“It’s outrageous that in 2022 Americans are still facing discrimination in financial services,” Merkley said. “We know that financial institutions have engaged in racial profiling in everything from standing in a bank to mass denial of home refinancing applications only for Black applicants. The clear lack of equity for who can access full banking services is yet another contributor to wealth inequality in America. I will continue to work hard to get this legislation passed into law and protect all Americans from discrimination accessing banking services and in every area of their lives.”

The bill has been endorsed by the National Urban League, the Leadership Conference on Civil and Human Rights, the Center for Responsible Lending, the National Community Reinvestment Coalition, UnidosUS, the National Consumer Law Center, and the Lawyers’ Committee for Civil Rights Under Law.

The post Bill to prohibit discrimination by banks introduced in Senate appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/bill-to-prohibit-discrimination-by-banks-introduced-in-senate/

Sens. Durbin, Marshall introduce bill to enhance competition among credit card networks

U.S. Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) introduced legislation to enhance competition and choice in the credit card network market.© Shutterstock The Credit Card Competition Act of 2022 would direct the Federal Reserve to ensure that giant credit card-issuing banks offer a choice of at least two networks over which an electronic credit […]

The post Sens. Durbin, Marshall introduce bill to enhance competition among credit card networks appeared first on Financial Regulation News.

U.S. Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) introduced legislation to enhance competition and choice in the credit card network market.

© Shutterstock

The Credit Card Competition Act of 2022 would direct the Federal Reserve to ensure that giant credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed, with certain exceptions.

“Credit card swipe fees inflate the prices that consumers pay for groceries and gas. It’s time to inject real competition into the credit card network market, which is dominated by the Visa-Mastercard duopoly,” Durbin said. “This legislation, which builds upon pro-competition reforms Congress enacted in 2010, would give small businesses a meaningful choice when it comes to card networks, and it would enable innovators to gain a foothold in credit cards. Bringing real competition to credit card networks will help reduce swipe fees and hold down costs for Main Street merchants and their customers.”

There are currently four U.S. credit card networks — Visa, Mastercard, American Express, and Discover. Visa and Mastercard act as agents for thousands of card-issuing banks and mandate the fees and terms that the banks receive from merchants for each transaction. The lawmakers say the merchants have effectively no leverage to negotiate fees and terms because they cannot risk losing access to all the consumers served by Visa’s and Mastercard’s member banks.

If passed, this bill would require the Federal Reserve to issue regulations within one year, ensuring that banks with assets over $100 billion cannot restrict the number of networks on which an electronic credit transaction may be processed to less than two unaffiliated networks. Further, at least one of the networks must be outside of the top two largest networks – Visa and Mastercard. The lawmakers said this would inject competition into the credit card market, opening the door for new market entrants such as current debit-only networks. Also, they say it would encourage innovation, enhance security, and exert competitive constraints on Visa and Mastercard’s fee rates.

“When it comes to Main Street vs. Wall Street, I’ll choose Main Street every time,” Marshall said. “Convenience stores, gas stations, and other small businesses in Kansas are being taken advantage of by Visa and MasterCard on behalf of big banks in New York City at a time when they, and the communities they serve, are grappling with crippling inflation and staring down the barrel of a looming recession. It’s gone on long enough. Competition is the heartbeat of capitalism, and that is what our bill will create – competition.”

According to the Federal Reserve, Visa and Mastercard account for nearly 576 million cards or about 83 percent of general-purpose credit cards. Approximately $3.49 trillion was transacted on Visa and Mastercard credit cards in the United States last year, with a total of $77.48 billion charged in merchant credit card fees.

The National Federation of Independent Business (NFIB) supports the legislation. “NFIB members support increased competition for credit card processing networks,” Jeff Brabant, senior manager, Federal Government Relations, NFIB, said. “Competition will result in lower fees, which have increasingly cut into the razor-thin profit margins of small businesses.”

However, the Credit Union National Association (CUNA) opposes it, saying it poses a threat to consumers’ financial data by allowing retailers to bypass established secure payment networks.

“The so-called Credit Card Competition Act is nothing more than a massive financial windfall for big box retailers at the expense of consumers,” CUNA President and CEO Jim Nussle said. “This legislation would jeopardize access to safe, affordable credit. CUNA, Leagues, and credit unions will fight against any legislative changes to the current operation of credit and debit cards.”

The post Sens. Durbin, Marshall introduce bill to enhance competition among credit card networks appeared first on Financial Regulation News.

Read more / Original news source: https://financialregnews.com/sens-durbin-marshall-introduce-bill-to-enhance-competition-among-credit-card-networks/