Congressional Testimony
On Friday, July 24, 2009, the House Committee on Financial Services held a hearing at 10:30 am entitled “Regulatory Perspectives on the Obama Administration’s Financial Regulatory Reform Proposals — Part 2″. An archived webcast can be viewed at the linked site. Two panels of witnesses were in attendance. Panel 1 featured Timothy Geithner in his capacity as Secretary of the Treasury. Panel 2 consisted of Ben Bernanke, Sheila Bair, John Dugan, John Bowman and Joseph Smith, Jr. Mr. Dugan is the Comptroller of the Office of the Comptroller of the Currency. Mr. Bowman is the acting director at the Office of Thrift Supervision. Mr. Smith is the Commissioner of Banks of the State of North Carolina and was present on behalf of the Conference of State Bank Supervisors.
Pending Legislation
On July 23, 2009, Congressmen John Tanner (D-TN) and Sam Johnson (R-TX) as Chairman of the Subcommittee on Social Security and Ranking Member of the Subcommittee respectively, introduced legislation meant to enhance the privacy of Social Security numbers in government and private sector recrds in order to protect Social Security programs from fraud and to combat identity theft. The bill is entitled “The Social Security Number Privacy and Identity Theft Prevention Act of 2009″ and is identical to legislation unanimously reported by the Committee on Ways and Means in the 110th Congress. Here is a summary of talking points contained in the bill.
On July 23, 2009, House Republicans, led by Financial Services Committee Ranking Member Spencer Bachus (R-AL), introduced comprehensive legislation to modernize and streamline the regulatory structure of the financial services industry.
H.R. 3310, otherwise known as “The Consumer Protection and Regulatory Enhancement Act” provides for the resolution of insolvent non-bank financial institutions – no matter how large or systemically important – through the bankruptcy system. It creates a Market Stability and Capital Adequacy Board that is charged with monitoring the interactions of various sectors of the financial system, and identifying risks that could endanger the stability and soundness of the system. It establishes an Office of Consumer Protection, with enhanced authority, within a consolidated regulatory agency to streamline in one place responsibility for rulemaking and enforcement of Federal consumer protection laws. The legislation also restores the Federal Reserve’s monetary policy mandate by relieving it of current regulatory and supervisory responsibilities. Taxpayer subsidies of Fannie Mae and Freddie Mac would end, as would Federal regulators’ reliance on use of credit rating agencies.
Data Security/Prepaid Cards
Scams involving prepaid and gift cards are on the rise in comparison to more widely known and reported schemes involving credit cards, according to this article on Dark Reading.
A recent speech by President Obama announced an impending move to place a “cyberczar” in the White House in order to coordinate the government’s efforts to shore up its information security, according to this article at Alibaba. The address illuminates the challenges the new position entails and what it might mean for the private sector. A related article at Forbes.com focuses on the general reluctance of various individuals in the computer industry to accept the position.
Nearly a year after ordering the phase-out of Wired Equivalent Privacy (WEP), a technology introduced in 1999 to protect data flowing over wireless networks, the PCI Security Standards Council this week released new guidelines meant to increase enhanced wireless security. The so-called Payment Card Industry data security standard wireless, written by the PCI Council’s Wireless Special Interest Group, outlines requirements that card-accepting merchants need to use to protect their networks from attacks via rogue or unknown wireless access points and clients. It also says that all organizations that transmit payment card information via wireless technology should implement the guidelines. This white paper can be accessed here.
Network Solutions, Inc., an Internet domain administrator and e-commerce vendor, was a recent victim of a data security breach. The discovery occurred in June and was the result of rogue code planted on servers normally used to host online businesses. The company had been certified PCI-compliant at the time of the breach. StorefrontBacktalk has an editorial here. The Washington Post has a related article here.
Meanwhile, the PCI Security Standards Council released the following statement. The Council is an open global forum for the ongoing development, enhancement, storage, dissemination and implementation of security standards for account data protection of all types.
The July 2009 edition of Selling Prepaid is now online. One article that may be of interest contains information on a series of white papers by CoreCard Software, a leading provider of prepaid and credit card processing licensed software. The first paper, entitled “Meeting the Challenges of Today’s Prepaid Market” can be viewed here and was released last month.
Technology Corner
CBS News.com has an opinion posted by Evan Schuman describing the state of contactless payments in the U.S. market. Mr. Schuman is a primary contributor to StorefrontBacktalk, a blog that routinely covers retailers’ perspectives on the nature of the payments industry.
U.S. Government Accountability Office Reports
On July 22, 2009, the GAO released a report entitled “Financial Crisis Highlights Need to Improve Oversight of Leverage at Financial Institutions and across System”. This 132 page report summarizes findings as a result of the Emergency Economic Stabilization Act’s directives instructing the GAO to study the role of leverage in the current financial crisis and federal oversight of such leverage. GAO’s objectives were to review (1) how leveraging and deleveraging by financial institutions may have contributed to the crisis, (2) regulations adopted by federal financial regulators to limit leverage and how regulators oversee compliance with the regulations, and (3) any limitations the current crisis has revealed in regulatory approaches used to restrict leverage and regulatory proposals to address them.
Consumer Financial Protection Agency
Here is a roundup of articles in connection with the proposed Consumer Financial Protection Agency that have appeared in the past few days:
Anne Flaherty reports on a spat between Secretary Geithner and Chairman Bernanke over who should hold the position of the nation’s top consumer advocate;
Los Angeles Times’ Tom Petruno blogs about a verbal smackdown between Congressional Oversight Panel chairperson Elizabeth Warren and Rep. Jeb Hensarling (R-Tex.). Ms. Warren has strongly embraced the creation of the agency as reported in this post at Baseline Scenario. Rep. Hensarling’s rebuttal can be viewed here;
An article on federal bank regulators’ resistance to the proposed CFPA appeared in The Miami Herald on July 24, 2009. The heads of the Federal Reserve, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency all testified for and against portions of the administration’s complex proposals to revamp the regulation of the financial sector with an eye toward protecting consumers;
A blog post at The American Prospect discusses Sheila Bair’s apparent support for the CFPA — within certain restrictions;
Over at The Hill, Silla Brush reports on Rep. Barney Frank‘s message to banking industry lobbyists, criticizing them for attempting to block passage of the proposed legislation; and finally,
The centrality of community banks’ role and their lobbying power cannot be overstated, according to this article in the Washington Post.
Electronic Funds Transfer/Anti-Money Laundering — European Union/United States
An agreement between the EU and the United States in connection with information-sharing on bank transfers for the purpose of fighting terrorism was reached on July 27, 2009. The international system for electronic funds transfers between banks and other financial institutions known as SWIFT is set to move most of its American-based servers to Europe in an effort to increase end-users’ privacy. Accordingly, Monday’s decision requires that the European Commission begin negotiations with its American counterpart on an interim data-sharing agreement until the servers have been moved and the Lisbon Treaty becomes effective.
Related Posts
- News Roundup — July 6, 2009 to July 10, 2009 - July 14, 2009
- News Roundup — October 12, 2009 to October 16, 2009 - October 16, 2009
- News Roundup — October 26, 2009 to October 30, 2009 - October 30, 2009
- News Roundup — June 22, 2009 to June 26, 2009 - July 2, 2009
- News Roundup — August 24, 2009 to September 8, 2009 - September 8, 2009
