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This Week in Congress
Tuesday, February 3, 2015 6:30 AM

This week, Congress continues its look at data security standards and breach notification requirements with a hearing in the Senate Commerce Committee. Also on the agenda, President Obama will release his budget proposal for fiscal year 2016, and the House Ways and Means Committee and Senate Finance Committee will both hold full committee hearings on it.

Specific to credit unions, Privacy Notification legislation has been reintroduced in the House, and the Senate Commerce, Science, and Transportation Committee Consumer Protection, Product Safety, and Insurance Subcommittee will hold a hearing on "Getting it Right on Data Breach and Notification Legislation in the 114th Congress."

Data Security Breach Legislation
The House Energy and Commerce Committee's Subcommittee on Commerce, Trade, and Manufacturing held a hearing last Tuesday entitled "What are the Elements of Sound Data Breach Legislation?" Preceding the hearing CUNA and six other financial services trade associations sent a letter for the record outlining principles which should be included in data security legislation.

CUNA has stated its support for data security legislation that includes the following principles:

  1. Strong national data protection and consumer notification standards with effective enforcement provisions must be part of any comprehensive data security regime, applicable to any party with access to important consumer financial information.
  2. Banks and credit unions are already subject to robust data protection and notification standards. These Gramm-Leach-Bliley Act requirements must be recognized.
  3. Inconsistent state laws and regulations should be preempted in favor of strong federal data protection and notification standards.
  4. In the event of a breach, the public should be informed where it occurred as soon as reasonably possible to allow consumers to protect themselves from fraud. Banks and credit unions, which often have the most direct relationship with affected consumers, should be able to inform their customers and members about the information regarding the breach, including the entity at which the breach occurred.
  5. Too often, banks and credit unions bear a disproportionate burden in covering the costs of breaches occurring beyond their premises. All parties must share in protecting consumers. Therefore, the costs of a data breach should ultimately be borne by the entity that incurs the breach.

The hearing witnesses were in nearly complete agreement that a federal standard should preempt the patchwork of state legislation and regulation for notification requirements. The Committee also asked questions about legislating a particular technology, to which the panel agreed that specific technology, such as chip and pin, should not be included as a requirement in legislation.

FHFA Hearing Explores FHLB Membership Eligibility Concerns

Last week in the House Financial Services Committee, Federal Housing Finance Agency Director Mel Watt provided an update on sustainable housing finance. CUNA wrote a letter to the committee in advance of the hearing, urging the FHFA to withdraw or "substantially revise" its proposal involving changes to the Federal Home Loan Bank program (FHLB) membership requirements.

Committee members had concerns similar to CUNA's. Rep. Frank Lucas (R-OK) expressed reservations about proposed changes in the FHLB membership requirements. He remarked that the system is working well and that the proposal could adversely affect community financial institutions.

Privacy Notification Legislation Reintroduced
Reps. Blaine Luetkemeyer (R-MO) and Brad Sherman (D-CA) introduced a bill which would change annual privacy notice requirements for credit unions and other financial institutions. CUNA sent a letter of support to the bill's cosponsors last week.

Patent Reform Coalition Sets Principles for Legislation
CUNA continues its work with coalition partners to end patent troll abuse. Last week, we joined several other groups in sending Congress a letter proposing a set of principles for members of Congress to consider as they develop patent reform legislation.