Some news that may be of interest in the past week include the following stories:
Congressional Hearings and Committees
Two markup sessions with respect to proposed credit card-related legislation were held this week. First, the House Financial Services Committee had a markup of H.R. 627 aka “The Credit Cardholders’ Bill of Rights Act of 2009″ on April 22, 2009. Second, the Committee held a hearing entitled “HR 1728: Mortgage Reform and Anti-Predatory Lending Act” on April 23, 2009.
On April 21, the Joint Economic Committee held a hearing in relation to the recent spate of bank failures in the last few months. Entitled “Too Big to Fail or Too Big to Save? Examining the Systemic Threats of Large Financial Institutions,” economists including Joseph Stiglitz, Thomas Hoenig and Simon Johnson focused on new policy responses to failures at large financial institutions. The hearing examined what criteria policymakers and regulators should use to determine when institutions pose systemic risk — at what point financial firms become “too big to fail” and how regulators should deal with them when they are insolvent. You can view Rep. Maloney’s opening statement and statements from presenting witnesses, as well as watch a recorded feed of the hearing here.
Mr. Stiglitz is a widely published author, economist, Columbia professor and a prominent critic of the Obama administration’s handling of the banking system. Mr. Johnson is the Ronald Kurtz Professor of Entrepreneurship at the Massachusetts Institute of Technology’s School of Management as well as the co-founder of Baseline Scenario, a blog dedicated to explaining some of the key issues in the global economy and developing concrete policy proposals. Mr. Hoenig is the chief executive of the 10th District Federal Reserve Bank in Kansas City. He is also a voting member of the Federal Open Market Committee.
In related news, Treasury Secretary Timothy Geithner testified before the Congressional Oversight Panel on April 21, 2009. The Panel is empowered to hold hearings, review official data, and write reports on actions taken by the Department of Treasury and financial institutions and their effect on the economy of the United States. Through regular reports, the Panel must oversee Treasury’s actions, assess the impact of spending to stabilize the economy, evaluate market transparency, ensure effective foreclosure mitigation reports and guarantee that Treasury’s actions are in the best interest of the American people. Lastly, Congress has instructed COP to produce a special report on regulatory reform that will analyze “the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system and protecting consumers.”
View Secretary Geithner’s testimony here. Panelists are Rep. Jeb Hensarling (R-Tex.), Richard Neiman, Damon Silvers, former U.S. Senator John Sununu and Elizabeth Warren. Mr. Neiman is the Superintendent of Banks for the State of New York. Mr. Silvers is the associate general counsel of the AFL-CIO. Ms. Warren is the Leo Gottlieb Professor of Law at Harvard Law School and is a noted expert on bankruptcy and credit card issues.
Upcoming Supreme Court Cases
On April 17, 2009, the Court released the schedule of attorneys arguing in the session beginning on April 20. You can view the hearing list here. Of note is Cuomo v. Clearing House Association, L.L.C. et al. (No. 08-453), to be argued on April 28, 2009.
Cuomo is shaping up to be one of the more important bank regulation Supreme Court cases this term. On January 16, 2009, the Court granted certiorari in relation to this petition from the state of New York. Cuomo involves a Second Circuit Court ruling that bars state officials from investigating claims that banks holding national charters are engaging in racial or ethnic bias in the home mortgage market. The case technically turns on a part of the National Bank Act of 1864 that controls “visitorial powers” toward national banks. All of the other 49 states joined New York in urging the Court to hear that state’s petition, saying the U.S. Comptroller of the Currency has intruded deeply on state sovereignty by writing a regulation that scuttles traditional police powers of the states.
View the the opposing brief here, the brief for federal respondent in opposition here and petitioner’s reply here. More documents related to the case are available here. There are a number of amici curiae briefs that have been filed, ranging from the National Association of Realtors to the Conference of State Bank Supervisors.
Microfinance/Mobile Banking
This is an article courtesy of CGAP (Consultative Group to Assist the Poor) that describes how successful banking services can reach poor people in remote areas of the world. According to the article, WIZZIT, a division of the South African Bank of Athens Limited, will demonstrate how the reach of such services can be expanded with mobile technology and local banking representatives who are authorized to handle cash.
Payments
A recent article on Digital Transactions describes an agreement between USA Technologies Inc. and Visa Inc. in relation to the deployment of up to 4,000 card-accepting devices for vending machines across the United States. The agreement, potentially worth $800,000, is significant because it is the first between Visa and USA Technologies, a hardware and processing firm that has done similar seeding deals with MasterCard to promote acceptance of MasterCard’s PayPass contactless card.
The U.S. Department of Justice is seeking information from payment-card processor First Data Corp. on merchants who may be using offshore accounts to hide income and avoid paying U.S. income taxes. For reference, First Data Corp. is a global technology leader in information commerce. The company processes transaction data of all kinds, harnesses the power of that data, and delivers innovations in secure infrastructure, intelligence and insight for its customers.
Data Encryption
Over on Storefront Backtalk, Evan Schuman reveals details from a report released yesterday by Verizon on statistics that essentially verify what most retail IT executives already know — that most successful data breaches in the past year used remarkably little sophistication and PCI holes galore.
You may have heard of the Conficker worm earlier in April.
Conficker is an maliciously clever program that has infected anywhere from 9 to 15 million computers worldwide. The worm was first discovered in October 2008 but has since undergone numerous rewrites since then, such that now there are five known variants. The most recent variant was discovered roughly two weeks ago and continues to self-propagate over the Internet. The worm’s activities have created a vast botnet that has the potential to cause widespread chaos in addition to performing a function, the nature of which is mostly unknown as of this writing.
Why is would this be of interest you ask? This blog post on Dark Reading refers to the increasing likelihood that botnets will become more frequent on social networking sites such as Facebook, MySpace and Twitter. With a user base numbering in the millions, the opportunity for criminal mischief ranging from identity-theft to propagation of spam and malware is enormous. It can only get worse since many companies use these sites to market their products to the public. For example, a reloadable prepaid gift card issued by Metabank that was in beta mode as of July 2008 was promoted on Facebook as well as over 50 college campuses across the United States.
Social networking is here to stay and with it come numerous challenges in relation to security issues.
In related news:
A blog post on April 17, 2009 by Brian Krebs of the Washington Post describes significant problems that credit and debit card issuers face, particularly regarding payment card industry (PCI) compliance standards.
The post refers to recent testimony at a House Homeland Security panel regarding PCI compliance with respect to banks, credit card companies, retailers and e-commerce merchants. The hearing occurred on March 31, 2009. You can view a recorded feed of the hearing here. Witness testimonials include Dave Hogan, senior VP and chief information officer for the National Retail Federation; Rita Glavin, acting assistant attorney general of the U.S. DoJ; Michael Jones, chief information officer for Michaels Stores, Inc; and Robert Russo, general manager of the PCI Security Standards Council.
Truth in Lending Act
A six page report from the U.S. Government Accountability Office on a recent rule revision regarding the Truth in Lending Act of 1968 was released earlier this April. The GAO found that (1) the rule amends Regulation Z, which implements the TILA, and the staff commentary to the regulation, following a comprehensive review of TILA’s rules for open-end (revolving) credit that is not home-secured; and (2) the Federal Reserve System complied with applicable requirements in promulgating the rule.
Deferred Presentment/Payday Loans
Here is a news article on Senator Richard Durbin‘s (D-Ill.) stance against payday loans and deferred presentment. A more in-depth is article can be viewed here. The bill that Sen. Durbin talks about is US S 500 which amends the Truth in Lending Act to establish a national usury rate for consumer credit transactions.
Credit Cards and Prepaid Cards
An article in the Washington Post last week reports that executives of 14 of the nation’s largest credit card companies have been summoned to the White House for a meeting on April 23, 2009.
In a related followup, here is an interview by Lawrence Summers on Politico. Mr. Summers discusses the focus that President Obama will bring to bear with respect to credit card usage and a regulatory overhaul of the U.S. financial system.
The New York Times has an article that details how banks now seem to hold the upper hand in influencing pending credit card- and home mortgage-related legislation. As an aside, the American Bankers Association sent a letter to the House Committee on Financial Services on April 21, 2009 in advance of the following day’s markup session on H.R. 627 in the hopes of lobbying against the bill’s passage.
Senator Dodd (D-CT) released a statement on the Credit Card Accountability, Responsibility and Disclosure (CARD) Act this past Monday. View his statement here and a bill summary here.
Pending Legislation
The Senate is debating anti-fraud legislation that was considered by the Senate Judiciary Committee. S. 386 aka the Fraud Enforcement and Recovery Act of 2009 was introduced on February 5, 2009 by Sens. Leahy (D-VT), Grassley (R-IA) and Kaufman (D-DE). On February 11th, the Committee held a hearing to consider the legislation (webcast and guest list here). The Act was reported by the Committee on March 5th. The Act is also co-sponsored by Sens. Specter (R-PA), Schumer (D-NY), Whitehouse (D-RI and Klobuchar (D-MN). You can view a copy of the bill here. The bill impacts several areas of interest, from mortgage fraud, securities fraud, financial institution fraud, anti-money laundering compliance, and fraud related to federal assistance and relief programs.
Related Posts
- News Roundup — April 27 to May 1, 2009 - May 4, 2009
- News Roundup — May 18, 2009 to May 29, 2009 - May 29, 2009
- News Roundup — June 8, 2009 to June 12, 2009 - June 16, 2009
- News Roundup — May 11, 2009 to May 15, 2009 - May 19, 2009
- News Roundup — June 1, 2009 to June 5, 2009 - June 8, 2009
