House Financial Services Committee
- On October 5, the House Financial Services Committee held a hearing on the oversight of the Securities and Exchange Commission, with SEC Chair Gary Gensler testifying. The hearing covered the SEC’s authorities and functions, capital market structure issues, digital assets, ESG disclosure requirements, and other issues impacting U.S. financial stability.
- On September 29, the House Financial Services Committee Subcommittee on Consumer Protection and Financial Institutions held a hearing entitled “The Future of Banking: How Consolidation, Nonbank Competition, and Technology are Reshaping the Banking System.” The hearing covered how banks’ increasing size, the slower rate of de novo depository institutions, and the growth of nonbank and fintech companies have impacted access to financial products and services, as well as the Committee’s policy options to ensure competition, promote innovation, and increase access.
- On September 21, the House Financial Services Committee Task Force on Financial Technology held a hearing entitled “Preserving the Right of Consumers to Access Personal Financial Data.” The hearing examined the increasing use of consumers’ financial data by fintech companies and financial institutions. It also covered policy questions about the use of consumer data following the Consumer Financial Protection Bureau’s November 2020 advanced notice of proposed rulemaking (ANPR) on Section 1033 of the Dodd-Frank Act and President Biden’s July 2021 Executive Order encouraging the CFPB to conduct rulemaking under Section 1033.
- Upcoming hearing: On October 13, the House Financial Services Task Force on Artificial Intelligence will hold a hearing entitled “Beyond I, Robot: Ethics, Artificial Intelligence, and the Digital Age.” More to come…
Senate Commerce Committee
- On September 29, the Senate Commerce Committee held a hearing entitled “Protecting Consumer Privacy” that focused on how to better safeguard consumer privacy rights, including by equipping the Federal Trade Commission with the resources it needs to protect consumer privacy through the creation of a privacy bureau; and the need for a comprehensive federal privacy law.
- This hearing is part of a series of hearings examining the growing urgency to protect consumer privacy and safeguard our data, as well as the need to ensure the Federal Trade Commission is equipped with the authorities and resources to fight digital harms and hold bad actors accountable for increasing privacy violations, data breaches, internet scams, ransomware assaults and other harmful data abuses.
- The next hearing in the series, entitled “Enhancing Data Security,” will be held on October 6 and will address major recent cybersecurity incidents, the impact of data breaches on consumers and businesses, and the current state of commercial data security practices.
Around the Agencies
Consumer Financial Protection Bureau (CFPB)
- Rohit Chopra was confirmed by the Senate as Director of the CFPB on September 30 by a vote of 50-48.
Federal Trade Commission (FTC)
FTC Chair Vision and Priorities memo
- FTC Chair Lina Khan sent a memo to FTC staff and Commissioners outlining her vision and priorities for the agency. Among the takeaways are that the FTC intends to:
- take an integrated approach to addressing antitrust and consumer protection violations, rather than a siloed approach within both the Bureau of Competition and Bureau of Consumer Protection
- target enforcement actions on root causes of harm such as structural incentives that enable unlawful conduct
- apply proactive attention to next-generation technologies and nascent industries
- strengthen merger enforcement, scrutinize dominant firms, and revise merger guidelines
- address dominant intermediaries such as gatekeepers and ways private equity and other investment vehicles influence incentives that may facilitate competition and consumer protection violations
- focus on contract terms such as non-competes, repair restrictions, and exclusionary clauses
Report to Congress on Privacy and Security
- The FTC submitted a report to Congress in response to the Consolidated Appropriations Act of 2021 that directed the FTC to “conduct a comprehensive internal assessment measuring the agency’s current efforts related to data privacy and security while separately identifying all resource-based needs of the FTC to improve in these areas.” The report provides an overview of the FTC’s authority related to privacy and security and recent efforts; discusses priorities for improving efforts to protect Americans’ privacy; identifies areas in which additional resources are necessary; and discusses the need for Congressional action on FTC authorities.
- Republican FTC Commissioners issued formal dissents to the report’s detailed plan to aggressively use regulations and civil penalties to address harms from the overlapping of data privacy and competition/antitrust concerns and the absence of federal legislation.
- With former-FTC Commissioner Rohit Chopra’s confirmation to lead the CFPB, the FTC is split between two Republican and two Democratic Commissioners until the Senate confirms nominee Alvaro Bedoya to fill Chopra’s seat.
U.S. – EU Trade and Technology Council
- The U.S. – EU Trade and Technology Council (TTC) met for the first time on September 29 in Pittsburgh. Following the meetings, the TTC released an Inaugural Joint Statement.
- The meetings were led by U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, U.S. Trade Representative Katherine Tai, EU trade chief Valdis Dombrovskis, and European Commissioner for Competition Margrethe Vestager.
- Vestager said the discussions on AI were among the meeting’s biggest takeaways. “Minds are meeting for artificial intelligence to be trustworthy, to be human centered, and to have a risk based approach,” Vestager told reporters after the meeting. (Reuters)
- The European Commission’s draft Artificial Intelligence Act, released in April 2021, is an example of Europe’s risk-based approach to AI regulation.
- The TTC tasked 10 working groups to focus on key issues before the next meeting, expected next year:
- Working Group 1 – Technology Standards: develop approaches for coordination and cooperation in critical and emerging technology standards including AI and other emerging technologies
- Working Group 2 – Climate and Clean Tech: identify opportunities, measures, and incentives to support technology development, transatlantic trade and investment in climate neutral technologies, products, and services
- Working Group 3 – Secure Supply Chains: Alongside a dedicated track on semiconductors, focus on advancing respective supply chain resilience and security of supply in key sectors for the green and digital transition and for securing the protection of citizens
- Working Group 4 – Information and Communication Technology and Services (ICTS) Security and Competitiveness: continue to work towards ensuring security, diversity, interoperability and resilience across the ICT supply chain, including sensitive and critical areas such as 5G, undersea cables, data centers, and cloud infrastructure
- Working Group 5 – Data Governance and Technology Platforms: exchange information on approaches to data governance and technology platform governance, seeking consistency and interoperability
- Working Group 6 – Misuse of Technology Threatening Security and Human Rights: combat arbitrary or unlawful surveillance, including on social media platforms; explore building an effective mechanism to respond to Internet shutdowns; work to protect human rights defenders online; and increase transatlantic cooperation to address foreign information manipulation; address social scoring systems and to collaborate on projects furthering the development of trustworthy AI
- Working Group 7 – Export Controls: engage in technical consultations on legislative and regulatory developments and exchange information on risk assessments and licensing good practices, as well as on compliance and enforcement approaches, promote convergent control approaches on sensitive dual-use technologies, and perform joint industry outreach on dual-use export controls
- Working Group 8 – Investment Screening: exchange information on investment trends impacting security, on risk analysis and mitigation best practices, and together with other groups, including Export Controls, develop a holistic view of the policy tools addressing risks related to specific sensitive technologies
- Working Group 9 – Promoting Small- and Medium-sized Enterprises (SME) Access to and Use of Digital Tools: use of digital tools is a key enabler for SMEs to innovate, grow and compete
- Working Group 10 – Global Trade Challenges: focus on challenges from non-market economic policies and practices, avoiding new and unnecessary technical barriers in products and services of emerging technology, promoting and protecting labor rights and decent work, and trade and environment issues
McHenry Letter to SEC
- Congressman Patrick McHenry (R-NC), ranking member of the House Financial Services Committee, sent a letter on October 5 to Securities and Exchange Commission (SEC) Chair Gary Gensler requesting clarification of Gensler’s recent remarks regarding the SEC’s authority to regulate the digital asset ecosystem.
The President’s Working Group on Financial Markets on Stablecoins
- The President’s Working Group on Financial Markets, led by the Treasury Department and including Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, and SEC Chairman Gary Gensler, is reportedly expected to release a report in late October recommending bank-like regulation on cryptocurrency companies that issue stablecoins (digital currencies pegged to national currencies like the U.S. dollar). The report is expected to also recommend that the Financial Stability Oversight Council (FSOC) consider designating stablecoins as systemically important, which could lead to the Federal Reserve issuing more stringent risk management standards. In addition, the report is expected to recommend Congress consider legislation to create a special-purpose charter for these firms and advance investor protections for cryptocurrencies. (WSJ)
Federal Reserve on U.S. Digital Currency
- The Federal Reserve is expected to soon release a review of the potential benefits and risks of issuing a U.S. digital currency. The Fed plans to release a paper analyzing the issue (without making a policy recommendation) and seeking public comment. The Boston Fed, along with the Massachusetts Institute of Technology, is then expected to release a technical paper outlining how a digital dollar might work. (WSJ)