It is safe to say that Las Vegas casinos will not soon be taking bets on the occurrence of future finance policy developments. It is an area where too many internal and external forces can influence progress and final outcomes. However, as we start a new year, I am compelled to dust off my crystal ball and see if I can provide some clarity (sans any wagering) on five regulatory issues of interest to the U.S. banking industry in the 2020.
The CFPB will issue its final debt collection rule in the fall of 2020
Forty-two years after the enactment of the Fair Debt Collections Practices Act, the CFPB proposed the first set of rules governing third-party debt collection activities. The Bureau received more than 12,000 comments in response to its proposal.
Industry is anxious for some clear rules of the road, including resolution on such issues as to how many attempted calls can be made weekly to a debtor and how collectors can leverage modern communications technology (e.g., email and texts). The big question is: when we will see the final product? Some are saying this spring but in Washington, D.C., deadlines always seem to slide. I predict we will see the final rule during the early portion of the 2020 NFL season.
The FCC will issue updated interpretations of the Telephone Consumer Protection Act in 2020
The Telephone Consumer Protection Act (TCPA) has long been a concern to many organizations that are frustrated by their inability to effectively use modern technology to communicate with their customers or members. In 2018, the DC Circuit Court of Appeals issued a ruling which struck down or vacated, in part, a previous 2015 Declaratory Ruling and Order made by the Federal Communications Commission (FCC). One of the most significant developments was the rejection of the FCC’s interpretation of “autodialer” under the TCPA. While current FCC leadership has tried to address some of the other issues implicated in the 2018 decision (e.g., plans to create a reassigned number database), the “autodialer” definition continues to remain in limbo. Call me an optimist, but I think the FCC finally issues a ruling in the first half of this year.
Congress takes the lead in promoting AML/CFT reform
The laws and rules governing anti-money laundering and combating the financing of terrorism compliance have not been substantively updated since the Bank Secrecy Act was adopted in 1970. Banks are uniformly supportive and have devoted significant resources to thwarting terrorist financing and detecting money laundering, however, there is uniform agreement that the mounting compliance burdens require some changes. Stakeholders point to the need for reforms to address currency transactions and suspicious activity reporting as well as a manageable approach to identifying beneficial owners of accounts.
While regulators have formed an inter-agency working group to develop viable reform measures, Congress has recently taken action to address the problem. The House has passed two reform bills, The COUNTER Act and The Corporate Transparency Act, and it appears that the Senate-introduced ILLICIT CASH Act may be the vehicle used to reach a compromise.
Political commentators are quick to note that currently there are few bipartisan issues left on Capitol Hill, but this is one of them. I say Congress gets a deal done in 2020.
The road to modernizing the Community Reinvestment Act will include some speed bumps
In December, the FDIC and OCC issued a proposed rule to modernize the Community Reinvestment Act (CRA). The CRA was adopted in 1977 and designed to ensure that depository institutions meet the credit needs of their local communities, including low-to-middle income neighborhoods. However, the current rules do not address changes in the industry like the advent of mobile banking.
The proposed rule generally drew praise from industry but raised concerns from consumer and civil rights advocates. The regulators set an aggressive deadline for public comments by requiring responses within 60 days of publication in the Federal Register. I believe this deadline will be extended. In addition, the Federal Reserve did not join the FDIC and OCC on the proposal. It is likely that the review period coupled with ongoing negotiations between the FDIC, OCC and the Federal Reserve will delay the issuance of a final rule. It is possible this could push the publishing of a final rule into 2021.
Identity proofing and authentication will be an emerging focus area in 2020
In November 2019, Congressmen Bill Foster (D-IL) and Barry Lowdermilk (R-GA), the two leaders of the House Financial Services Committee’s artificial intelligence task force, sent a letter to Treasury Secretary Steven Mnuchin calling for the establishment of a digital identity task force by March 2020. The panel would be charged with identifying gaps in digital identity solutions used in the market today and developing recommendations to address these shortcomings, as well as ways to promote the “robust, trustworthy and inclusive digital identity infrastructure.”
The policy leaders assert that Treasury action on this important topic would “help to advance the state of digital identity in financial services, as well as help to address threats to both consumers and the financial services sector caused by inadequate identity solutions.” As banking has moved online, identity proofing and user authentication become more of a necessity. The policy implications of using facial recognition and other biometrics to ensure secure and safe transactions will increasingly become an area of interest for policy leaders this year.
Well, my finance policy picks are in and I am on record. As you can tell, I do not believe the gridlock in Washington will prevent significant policy developments that impact the banking community during the next 12 months. However, like last year, much of the action will continue to occur at the federal agency level in the form of new regulations.