[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7440 Reported in House (RH)]
<DOC>
Union Calendar No. 654
118th CONGRESS
2d Session
H. R. 7440
[Report No. 118-792]
To promote innovation in financial services, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 23, 2024
Mr. McHenry introduced the following bill; which was referred to the
Committee on Financial Services
December 4, 2024
Additional sponsors: Mr. Donalds and Mr. Emmer
December 4, 2024
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on
February 23, 2024]
_______________________________________________________________________
A BILL
To promote innovation in financial services, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Financial Services
Innovation Act of 2024''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Agency identification of regulatory areas.
Sec. 4. Establishment or designation of FSIO at agencies.
Sec. 5. FSIO Liaison Committee and chair.
Sec. 6. Petition to agency.
Sec. 7. Agency determination of petition.
Sec. 8. Enforceable compliance agreement.
Sec. 9. Report to Congress.
SEC. 2. DEFINITIONS.
In this Act, the following definitions shall apply:
(1) Agency.--The term ``agency'' means each of the Board of
Governors of the Federal Reserve System, the Bureau of Consumer
Financial Protection, the Department of Housing and Urban
Development, the Department of the Treasury, the Federal
Deposit Insurance Corporation, the Federal Housing Finance
Agency, the National Credit Union Administration, the Office of
the Comptroller of the Currency, and the Securities and
Exchange Commission.
(2) Agency regulation.--The term ``agency regulation''
means--
(A) a rule (as defined in section 551 of title 5,
United States Code) issued by an agency;
(B) guidance issued by an agency; or
(C) a published, proposed, or interim rule, policy
statement, directive, adjudication, or interpretation
of an agency.
(3) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(4) Enforceable compliance agreement.--The term
``enforceable compliance agreement'' means an agreement
described under section 8.
(5) Financial innovation.--The term ``financial
innovation'' means a financial product or service (as defined
in section 1002 of the Consumer Financial Protection Act of
2010 (12 U.S.C. 5481))--
(A) the delivery of which is enabled by technology;
and
(B) that is or may be subject to an agency
regulation or Federal statute.
(6) FSIO.--The term ``FSIO'' means a Financial Services
Innovation Office established pursuant to section 4.
(7) Person.--The term ``person'' means an individual,
partnership, company, corporation, association, trust, estate,
cooperative organization, or other entity.
SEC. 3. AGENCY IDENTIFICATION OF REGULATORY AREAS.
Not later than 60 days after the date of the enactment of this Act,
and biannually thereafter, each agency shall publish in the Federal
Register a nonexclusive list that identifies 3 or more areas of
existing agency regulation--
(1) that apply or may apply to a financial innovation; and
(2) that the agency would consider modifying or waiving if
the agency were to receive a petition under section 6 relating
to that regulation.
SEC. 4. ESTABLISHMENT OR DESIGNATION OF FSIO AT AGENCIES.
(a) In General.--Each agency shall establish or designate an office
within the agency to be known as the ``Financial Services Innovation
Office''. Each such Financial Services Innovation Office shall promote
financial innovations and assist persons whose petitions are approved
under section 7.
(b) Administration.--Each agency shall designate an individual to
serve as the head of the agency's FSIO.
(c) Duties.--
(1) General duties.--The head of each agency's FSIO shall--
(A) support the development of financial
innovations;
(B) coordinate with FSIOs at other agencies to
share information and data about financial innovations;
(C) upon request, coordinate with relevant State
regulatory entities to provide information to the
public with respect to financial innovations and agency
regulations related to such financial innovations; and
(D) establish procedures to reduce the regulatory
burden of offering a financial innovation to the public
and enable greater access to financial innovations.
(2) Duties for petitions.--With respect to a person with an
approved petition under section 7, the head of each agency's
FSIO shall--
(A) work with the person to address issues of how
existing regulatory frameworks of the agency apply to
the financial innovation that is the subject of the
petition;
(B) assist the person in complying with any
requirements of the agency with respect to the
financial innovation; and
(C) assist the person in responding to any
challenges to a modification or a waiver granted under
subsection (d).
(d) Waiver Authority.--The head of each agency, acting through the
agency's FSIO, may modify or waive the application of an agency
regulation of the agency or a Federal statute under which the agency
has rulemaking authority if--
(1) a petition has been approved under section 7; and
(2) the agency determines that compliance with such agency
regulation or Federal statute would impede the ability of a
person to offer the financial innovation that is the subject of
the petition.
(e) Termination of Other Programs; Transfer of Authority.--
(1) In general.--Not later than 90 days after the
establishment or designation of a FSIO at an agency, the agency
shall modify any offices or programs at the agency that promote
financial innovations or assist persons in offering financial
innovations, and merge or transfer the operations of such
offices or programs into the FSIO.
(2) Transfer of authority.--On the date that is 90 days
after the establishment or designation of a FSIO at an agency,
the administration of any rule, policy, or prior agency
determinations relating to promoting financial innovations or
assisting persons in offering financial innovations, including
no-action letters and staff advisory opinions, shall be
transferred to the FSIO of that agency.
(f) Report.--Not later than 6 months after the date of the
enactment of this Act, and annually thereafter, each agency shall
present testimony to the Congress and submit a report to the Congress
and to the Financial Stability Oversight Council on the activities of
the FSIO of such agency, including a description of the petitions
considered, the rationale for acceptance or rejection of petitions, and
the efforts of the FSIO to encourage financial innovations.
SEC. 5. FSIO LIAISON COMMITTEE AND CHAIR.
(a) Establishment.--Not later than 60 days after the date of the
enactment of this Act, the agencies shall establish a committee to be
known as the ``FSIO Liaison Committee''.
(b) Members.--The FSIO Liaison Committee shall be composed of the
head of each FSIO described under section 4 and a State banking
supervisor selected by the Conference of State Bank Supervisors (or a
successor organization).
(c) Duties.--The FSIO Liaison Committee shall--
(1) consult on the administration, coordination, and
oversight with the FSIO of each agency;
(2) facilitate the cooperation of each FSIO to ensure that
agencies share information and data on petitions submitted
under section 6;
(3) monitor proposals for agency regulation and
developments related to financial innovations;
(4) encourage the application of uniform principles and
standards at each FSIO; and
(5) facilitate collaboration with relevant State regulatory
entities to provide information to the public with respect to
financial innovations and agency regulations related to such
financial innovations.
(d) Meetings.--The FSIO Liaison Committee shall meet at least twice
a year.
(e) Chair.--
(1) Establishment.--The first Chair of the FSIO Liaison
Committee shall be elected by the members. The Chair shall
serve for a term of 2 years and thereafter the chairmanship
shall rotate among the members of the committee.
(2) Powers of the chair.--The Chair is authorized to carry
out the internal administration of the FSIO Liaison Committee,
including the appointment and supervision of employees and the
distribution of tasks among members, employees, and
administrative units.
(f) Testimony.--Not later than 6 months after the date of the
enactment of this Act, and annually thereafter, the Chair of the FSIO
Liaison Committee shall present testimony to the Congress on the
activities of the FSIO Liaison Committee.
(g) Funding.--
(1) Compensation of members.--Each member of the FSIO
Liaison Committee shall serve without additional compensation
but shall be entitled to reasonable expenses incurred in
carrying out official duties as such a member.
(2) General expenses.--The costs and expenses of the FSIO
Liaison Committee, including the salaries of employees, shall
be split equally between, and paid by, each agency.
SEC. 6. PETITION TO AGENCY.
(a) In General.--A person may submit a petition to an agency,
through the agency's FSIO, in such form and in such manner as the
agency's FSIO may require, to request to enter into an enforceable
compliance agreement containing a modification or waiver of an agency
regulation of the agency or the Federal statute under which the agency
has rulemaking authority with respect to--
(1) the person; or
(2) a financial innovation the person offers or intends to
offer.
(b) Contents.--In a petition submitted under this section, the
person shall--
(1) identify any requirement under which the agency has
rulemaking authority or the agency regulation of the agency for
which the person is requesting a modification or waiver;
(2) explain why such modification or waiver is essential to
the operation of the person;
(3) submit an alternative compliance strategy that proposes
a method to comply with such requirement or agency regulation;
(4) demonstrate that under the alternative compliance
strategy, the financial innovation--
(A) would serve the public interest;
(B) improves consumer access to a financial product
or service;
(C) would not present a national security risk to
the United States;
(D) would meet the purposes of anti-money
laundering and countering the financing of terrorism
obligations under the Bank Secrecy Act;
(E) would not present systemic risk to the United
States financial system; and
(F) would promote consumer protection;
(5) provide a detailed business plan; and
(6) propose a date on which an enforceable compliance
agreement would terminate and explain why such termination date
would be appropriate.
(c) Multiparty Petitions.--One or more persons that offer or intend
to offer similar financial innovations may jointly submit a petition
under this section.
(d) Notice and Comment.--
(1) In general.--Not later than 30 days after receiving a
petition, the agency that receives the petition shall publish
the petition in the Federal Register and provide a 60-day
period for public notice and comment.
(2) Exception for notice and comment period.--The agency
that receives the petition may waive the notice and comment
period described in paragraph (1) if such agency determines
that the person submitting the petition is similarly situated
to another person that has been granted approval of a petition
pursuant to section 7.
(3) Confidentiality.--The agency shall maintain the
confidentiality of any nonpublicly available data or
information in any petition submitted under this section. The
agency shall give reasonable consideration to maintaining the
confidentiality of data or information identified by the person
in the petition submitted under this section.
SEC. 7. AGENCY DETERMINATION OF PETITION.
(a) In General.--Not later than 30 days after the end of the
comment period described under section 6 (or if the comment period was
waived, not later than 90 days after receipt of a petition under
section 6), the head of the agency receiving the petition shall
complete a review of the petition and notify the person who submitted
the petition, in writing, of the agency's determination of the
petition.
(b) Approval of Petition.--
(1) In general.--An agency shall approve a petition if the
agency has determined that--
(A) the alternative compliance strategy proposed by
the person in the petition satisfies the requirements
described in section 6(b)(4); and
(B) the person who submitted the petition has, with
respect to the financial innovation the person offers
or intends to offer, sufficiently identified--
(i) the regulations and Federal statutes of
which the person is seeking waiver or
modification; and
(ii) other applicable regulations and
Federal statutes with which the person intends
to comply.
(2) Notification to state regulatory agencies.--If an
agency approves a petition, the agency shall, with respect to
each State regulatory agency with jurisdiction over the person
who submitted the petition or the financial innovation about
which the person submitted the petition--
(A) notify such State regulatory agency that the
agency has approved the petition; and
(B) provide such State regulatory agency
information about the terms of the enforceable
compliance agreement entered into between the person
and the agency.
(c) Disapproval of Petition.--
(1) In general.--An agency may disapprove a petition if the
agency has determined that--
(A) the alternative compliance strategy proposed by
the person in the petition does not satisfy the
requirements described in section 6(b)(4); or
(B) the person who submitted the petition has not,
with respect to the financial innovation the person
offers or intends to offer, sufficiently identified--
(i) the regulations and Federal statutes of
which the person is seeking waiver or
modification; and
(ii) other applicable regulations and
Federal statutes with which the person intends
to comply.
(2) Written notice required.--If an agency disapproves a
petition the agency shall provide the person who submitted the
petition with a written notice explaining the reason for such
disapproval and such written notice shall include a description
of--
(A) any benefits of disapproving the petition,
including an identification of persons likely to
benefit from the disapproval of the petition;
(B) any costs, including potential costs, of
disapproving the petition, including an identification
of persons likely to bear the costs associated with the
disapproval of the petition; and
(C) the baseline used by the agency to determine
the likely economic consequences of disapproving the
petition.
(d) Resubmittal.--Receipt of a notice of disapproval of a petition
under this subsection shall not preclude a person from revising and
resubmitting such petition to the agency under section 6.
(e) Judicial Review.--A person may seek judicial review of an
agency's determination on a petition in accordance with subchapter II
of chapter 5 of title 5, United States Code, and chapter 7 of such
title (commonly known as the ``Administrative Procedure Act'').
SEC. 8. ENFORCEABLE COMPLIANCE AGREEMENT.
(a) In General.--If an agency approves a petition under section 7,
the person who submitted such petition shall enter into an enforceable
compliance agreement with such agency, which shall include--
(1) the terms under which the approved financial innovation
may be developed or offered to the public; and
(2) any requirements of the person and such agency with
respect to the financial innovation.
(b) Requirements.--Each agency, by rule, shall establish
requirements relating to enforceable compliance agreements that
include--
(1) procedures for modifying the terms of the agreement;
(2) consequences for failure to comply with the terms of
the agreement;
(3) a compliance examination process that--
(A) solicits feedback from other agencies on the
agreement; and
(B) occurs not less frequently than annually;
(4) a termination date for the agreement that is at least 1
year and not more than 3 years after the date on which the
agreement is entered into;
(5) procedures and standards for extending the termination
date, including procedures and standards for evaluating the
effectiveness of the agreement; and
(6) procedures for maintaining the confidentiality of any
information disclosed to the agency during the process of
drafting and entering into agreement.
(c) Joining of Agreement by Additional Agencies.--With respect to a
financial innovation that is the subject of an enforceable compliance
agreement entered into under this section, an agency that did not enter
into such enforceable compliance agreement may join as a party to the
enforceable compliance agreement entered into pursuant to this section.
(d) Enforcement Actions by Non-party Agencies.--An agency that is
not a party to an enforceable compliance agreement entered into under
this section--
(1) may not attempt to enforce, against the person who is
party to the enforceable compliance agreement, any regulation
or Federal statute modified or waived by the enforceable
compliance agreement; and
(2) may continue to enforce, against the person who is
party to the enforceable compliance agreement, any regulation
or Federal law over which the agency has enforcement authority
that has not been modified or waived by the enforceable
compliance agreement.
(e) Arbitration.--A person who is party to the enforceable
compliance agreement may elect to arbitrate any action initiated by
another person relating to a financial innovation that is the subject
of the enforceable compliance agreement.
(f) Rule of Construction.--Nothing in this Act shall be construed
to limit the ability of an agency to enforce the requirements of an
enforceable compliance agreement entered into under this Act.
SEC. 9. REPORT TO CONGRESS.
Not later than 1 year after the date of the enactment of this Act,
and annually thereafter, the Financial Stability Oversight Council
shall submit to the Congress a report on the aggregate impact of
enforceable compliance agreements entered into under this Act, which
shall include--
(1) the number and characteristics of the agreements;
(2) the most innovative and least burdensome tools that the
agencies' FSIOs have implemented to allow a financial
innovation that is the subject of an enforceable compliance
agreement to be offered;
(3) strategies implemented to coordinate and facilitate
cooperation among FSIOs;
(4) the existing Federal laws, regulations, or practices
that the Financial Stability Oversight Council identifies as
the most burdensome to innovation that adversely affect
competition in the financial services industry, or that
restrict improvements for consumers of financial products or
services; and
(5) an identification of the overlap or fragmentation of
agency regulations of financial products or services and
recommendations for reducing, consolidating, or eliminating
such overlap or fragmentation.
Union Calendar No. 654
118th CONGRESS
2d Session
H. R. 7440
[Report No. 118-792]
_______________________________________________________________________
A BILL
To promote innovation in financial services, and for other purposes.
_______________________________________________________________________
December 4, 2024
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed