Major changes in Washington, D.C., often mean major changes to banking and financial services policy. With the Biden administration planning large regulatory changes that could impact the states, what does the banking landscape look like?
Leadership of the House Financial Services Committee remains unchanged, with U.S. Representative Maxine Waters (D-Calif.) retaining her gavel as chairwoman and Representative Patrick McHenry (R-N.C.) continuing to serve as the ranking member. Waters has focused most of the committee’s early hearings on additional COVID-19 relief, additional support for small and minority-owned businesses, the effects of climate change on investor decisions, and the recent attention paid to “meme stocks” like GameStop. The agenda is largely an extension of the committee’s priorities from the previous Congress and is likely to continue through the summer.
NCSL is also tracking potential legislation that would impact state interest rate caps on payday loans, which the committee explored in a 2020 hearing. The Veterans and Consumers Fair Credit Act from 2020 would impose a 36% annual percentage rate cap on almost all consumer loans, although the proposal as constructed last year would not preempt stricter state laws that set caps below that rate. Similar legislation could be introduced in the coming months.
The Senate Banking, Housing and Urban Affairs Committee saw a change in leadership, with Senator Sherrod Brown (D-Ohio) recently taking over as chairman and Senator Pat Toomey (R-PA) as ranking member. Brown intends for the committee to focus on boosting economic relief from the pandemic, strengthening financial regulations, expanding affordable housing, and protecting consumers. Brown stated that, while the banking component of the committee’s work is important, not enough attention has been paid to housing access and affordability. Issues of racial and gender diversity in corporate positions may also appear before the committee in bills like the Improving Corporate Governance Through Diversity Act of 2020, written by Senator Bob Menendez (D-N.J.). The bill would seek to promote greater diversity in corporate positions and require public companies to report demographic information.
The Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) are two critical agencies that affect state authority and regulation. The “fintech bank charter” is of particular importance at the OCC. Offering national bank charters to fintech companies would preempt the banking authority that states currently exercise during the licensing and regulating of such companies and eliminate the consumer protections states have put in place. Read more about this change and NCSL’s response here.
At the CFPB, a large focus will be on debt-collection oversight, racial equity, COVID-19 relief and fair lending enforcement. NCSL has worked closely with the CFPB on these issues as well as state interest rate caps on payday lending, financial literacy efforts, and others.
As priorities develop in the 117th Congress, NCSL will continue to ensure the voices of state legislators are heard.
Tres York is a policy specialist in NCSL’s State-Federal Relations Division.