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Lawmakers today introduced legislation that would require credit card issuers to add a second network to customers' cards. However, unlike rules for debit card transactions, the legislation would require banks to choose from options set by the Federal Reserve. The Credit Card Competition Act was introduced in both the House and the Senate.

In a letter to Congress, the NBA and other state banking associations said the legislation would result in "...fewer choices for consumers, increased threats to consumer data and privacy, weakened local banks and credit unions, and the disappearance of card rewards programs that families of all income levels use to stretch their budgets."

In a separate statement, eight financial trade groups said the new mandates would benefit large retailers like Walmart and Target at the expense of consumers. "Consumers will pay the price, while many small issuers will be forced to exit the credit card business altogether," the groups said.

Bankers are urged to contact their lawmakers and ask them to oppose the Credit Card Competition Act.

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Billboards Encourage Robbery Reward Tips

The NBA recently purchased space on digital billboards at 75th and Dodge and 108th and Maple in Omaha reminding the public that up to $20,000 is available for tips leading to the arrest of persons responsible for a bank robbery. The reward program is funded by the bank robbery reward fund established by the NBA and its member banks to help solve these dangerous crimes. Anonymous tips can be submitted to Omaha Crime Stoppers.

ABA Seeks Officer and Board Member Nominations

June is the nomination period for the American Bankers Association (ABA) Officers and Board of Directors candidates. The open positions include vice chair and six three-year term roles (two in each category).

If you are interested in serving on the ABA Board of Directors or as an ABA Officer, please contact NBA President and CEO Richard Baier at the NBA at [email protected] or 402-474-1555 before June 21.

Legislative, Policy & Regulatory Updates

Regulators Issue Guidelines for Third-Party Risk Management

Federal banking regulators issued joint guidance for financial institutions regarding the management of risks associated with third-party relationships, including technology providers.

The guidance establishes principles for all banking organizations to consider when developing and implementing risk management practices for third-party relationships. It provides direction and expectations for various stages of these relationships, including planning, due diligence, selection, negotiation and termination of contracts. Additionally, it offers guidance on conducting independent reviews and maintaining documentation. The agencies emphasized that they will assess a bank's risk management practices related to third-party relationships as part of their regular supervisory processes.

Federal Reserve Governor Michelle Bowman issued a statement expressing her opposition to the guidance. "Although this guidance suggests that a sound third-party risk management framework should be appropriately tailored to a bank's level of risk, complexity, and size, it does not provide the necessary clarity or supplemental tools to facilitate small bank implementation," she said.

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Proposal Released to Implement Standards for Automated Valuation Models

Several federal regulatory agencies released a proposed rule aimed at regulating the reliability of algorithmic models used in real estate valuations. The rule would mandate institutions involved in covered transactions to implement policies, practices, procedures, and control systems to ensure that automated valuation models (AVMs) meet quality control standards that safeguard the credibility and integrity of valuations. This proposal is part of the Biden administration's broader initiative to address concerns of bias in the appraisal process.

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CFPB Announces Section 1071 Enforcement Guidance

The Consumer Financial Protection Bureau (CFPB) released guidance on how it will enforce the final rule for Section 1071 of the Dodd-Frank Act. The rule mandates the collection and reporting of credit application data for small businesses, including those owned by women and minorities.

The CFPB will focus on the response rates of lenders to data requests from applicants and will compare response rates among lenders of similar size, type and other factors. Low response rates may indicate non-compliance with the rule or discouragement of applicants. The agency will also consider anomalies in responses, such as a high number of applicants choosing not to provide information. This could suggest steering, improper interference, or potential obstruction of applicants' preferred responses.

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CSBS Survey of Community Banks

Banks are encouraged to complete the 2023 National Survey of Community Banks conducted by the Conference of State Bank Supervisors (CSBS). The survey has been conducted for ten years, making it one of the longest and largest longitudinal surveys of the community bank industry. Results have enabled community banks to inform policymakers and researchers about the opportunities and challenges facing the community banking industry. Responses should be submitted by June 30.

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SBA Offers On-Demand Training for Lenders

The Small Business Administration (SBA) announced a new website with training videos for lenders. Among the offerings is training on compliance with SOP 50 10 7 which takes effect on Aug. 1, 2023.

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