Capital Corner: Mid-Year Musings

Provided by John McKechnie

Where do things stand in Washington in June of an election year? Good question. Capitol Hill is treading legislative water in preparation for fall campaigning, which means neither party wants to pass bills that could help the other party.

But regulators still have their pens out and are working to finish old business and start a new to-do list.

DCUC is on patrol, and flags several issues:
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CFPB became a flashpoint (as usual) during the markup of a House spending bill in early June, giving the GOP a talking point in their ongoing battle against the consumer regulator. Following a recent Supreme Court ruling upholding the CFPB’s funding structure, language that subjects the CFPB to the congressional appropriations process and creates a 5-member CFPB board was approved in Committee and is waiting for action in the full House. It will not pass the Senate.

​My two cents: This episode shows just how much of a partisan flashpoint CFPB is, and probably always will be. It is amusing to see members of Congress who always insist on transparency and accountability in every corner of the federal government suddenly become advocates for a bureaucratic black box when it comes to CFPB.

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On the horizon:

Artificial intelligence (AI), and the ever-expanding role that it will play for credit unions and other financial service providers, is the subject of an aggressive new Treasury campaign to find out how the technology can and will be used.

Treasury is seeking input from credit unions, consumers, investors, financial firms and regulators, in two main areas:

1. use of AI by financial firms in offering products to customers
2. managing risk

Separately, a class-action lawsuit filed in California against a credit union may provide a glimpse of the potential dangers to credit unions in deploying AI to serve members. The suit alleges that the credit union has allowed an AI vendor to analyze and record his call without permission. The vendor then uses information from those calls to train the AI functions of the company.

The request carries a 60-day comment period.

Lesson(s) for all credit unions: be extra transparent, and expect increasing scrutiny of your AI activities by regulators and the courts.

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​The merchant lobby may have failed to pass their controversial credit card price control bill (CCCA), but they sure keep trying. Even to the point of embracing a CFPB report that government should control prices…on everyone except the retail industry.

Their latest email blast to the Hill celebrated CFPB’s report recommending cheap, unreliable and non-secure payment networks. This was met with a stinging response from a senior House staffer: “until now I’ve never met a business owner who supports the CFPB.” DCUC was told by another lawmaker that the “spectacle of free market worshiping small businesses suddenly calling for the government to dictate how products are delivered is a sad commentary.”

In making the rounds on the Hill, it’s pretty clear that

• most Republicans continue to be opposed
  
• Democrats seem split
  
• the retailers aren’t letting up

Merchant groups ranging from National Retail Federation and the National Grocers Association to the Bowling Alley Operators of America, are hitting the Hill hard. And will continue to through the end of this Congress—DCUC is pushing back, and extolling the virtues of fast, safe and efficient payment services.