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This Week in Washington, DC
Tuesday, May 5, 2015 6:30 AM

Here's what you need to know about credit unions and legislatures this week:

  • A strong data security bill has been introduced in the House of Representatives by Reps. Randy Neugebauer (R-TX) and John Carney (D-DE).
  • The Senate Judiciary Committee will hold a hearing on patent reform.

Floor Schedule

This week, the House of Representatives will be out of session. The Senate has a rather ambitious agenda. The upper body is expected to continue its consideration of the Iran Nuclear Agreement Review Act. In addition, the Senate will resume consideration of the veto message to accompany S. J. Res. 8, the Congressional Review Act Resolution of Disapproval regarding the NLRB "ambush elections" rule. Additionally, the Senate is expected to vote on the fiscal year 2016 budget resolution conference report this week. Later in the week, if time permits, the Senate will begin consideration of the Hatch-Wyden trade promotion authority legislation.

Committee Meetings

There is just one hearing of note. On Thursday, the Senate Judiciary Committee will hold a full committee hearing on "Finding Effective Solutions to Address Abusive Patent Practices," focusing on S.1137, the "Patent Act."

Strong House Data Security Bill Introduced

Last week, Rep. Neugebauer (R-TX) and Rep. Carney (D-DE) introduced H.R. 2205, The Data Protection Act of 2015. CUNA joined other financial services trade groups in a letter expressing strong support for the bill. The bill would establish a process for companies of all sizes to follow in order to secure consumer data, and it would apply to companies that do not currently have a federal obligation to protect consumer information.

Under the bill, each covered entity must:

  • Develop and maintain an effective information security program tailored to the complexity and scope of its operations, and the sensitivity of its data;
  • Oversee service providers with access to customer information, including requiring service providers by contract to take appropriate steps to protect the security and confidentiality of this information;
  • Train staff to prepare and implement its information security program;
  • Test key controls, systems and procedures of its information security program; and
  • Adjust its information security program to reflect the results of its ongoing risk assessment.

CUNA strongly supports H.R. 2205 as the companion bill to S.961, introduced in April by Sen. Carper (D-DE) and Sen. Blunt (R-MO). A number of other data security bills have been introduced this Congress, but CUNA supports these two bills as the strongest steps towards addressing the issue of merchant data breaches and providing credit unions from some relief.

Examination Fairness Legislation Reintroduced

CUNA sent a letter of support for H.R. 1941, the "Financial Institution Examination Fairness and Reform Act" (FIEFRA) last week to the bill's sponsors, Rep. Westmoreland (R-GA) and Rep. Maloney (D-NY). This bill moves closer to ensuring the federal financial regulators conduct fair exams for those they supervise. Specifically, the legislation would make available to financial institutions the information used to make decisions in their examination; codify certain examination policy guidance; establish an Independent Examination Review Office at the Federal Financial Institution Examination Council (FFIEC) to which financial institutions could raise concerns with respect to their examination; and establish an appeals process before an independent administrative law judge.

TILA-RESPA Delay Bill Introduced

Prior to the recess, Reps. Steve Pearce (R-NM) and Brad Sherman (D-CA) introduced H.R. 2213, which would provide delay until the end of the year enforcement and private right of action related to the implementation of the Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosures (TRID) regulation, provided lenders are acting in good faith to comply with the regulations. CUNA supports this legislation and will be joining with other financial services trade associations in a letter encouraging its enactment.

The legislation addresses the concern that some credit unions and banks will not be able to test the processes to develop new disclosures in real-life transactions before the implementation date, creating a "hold-harmless" period (through January 1, 2016), during which time credit unions that demonstrate a good faith effort to comply with the regulation would not be subject to enforcement action or private right of action. This would allow credit unions to ascertain the hurdles they have in implementing the new disclosure requirements and work with the CFPB to address them before they could be subject to enforcement actions or lawsuits.

A copy of the joint letter to Congress will be posted on the Letters to Congress page after it has been transmitted.

Patent Reform Hearings Continue

The House Energy and Commerce Committee Subcommittee on Commerce, Manufacturing and Trade marked up the "Targeting Rogue and Opaque Letters Act of 2015" (TROL Act) last week.

CUNA joined a number of other trade associations on a letter to the subcommittee leadership Rep. Upton (R-MI) and Rep. Pallone (D-NJ) expressing concern with the bill. The bill does not address the key problems which are presented by patent assertion entities.

The bill would authorize the FTC to seek civil penalties where patent demand letters make certain misstatements or omissions in "bad faith"; preempt state laws specifically addressing patent demand letters; and preserve the authority of state attorneys general to enforce the bill's provisions. The "bad faith" provision as defined in the Act sets an impossibly high bar, and CUNA believes the definition should conform to similar laws enacted in 21 states, or that the provision should be eliminated in the bill.

CUNA believes that if the TROL Act passes as written, it would undo constructive state laws and replace them with a weaker federal standard.

Member Business Lending and Supplemental Capital

Last Thursday, the House Financial Services Committee Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on "Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens." CUNA sent a letter for the record of the hearing urging support for H.R. 989, the "Capital Access for Small Businesses and Jobs Act", H.R. 1188, "the Credit Union Small Business Jobs Creation Act"; and H.R. 1422, the "Credit Union Residential Loan Parity Act."