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From Banking and Finance Law Daily, December 8, 2015

Financial Services set to mark up data security, ‘consolidated asset threshold’ bills

By Colleen M. Svelnis, J.D.

At a scheduled mark-up hearing, the House Financial Services Committee was set to consider two banking-related bills that would establish a national data security and breach notification standard for all businesses, and significantly increase the “consolidated assets threshold” from $1 billion to $5 billion for small bank holding companies and savings and loan holding companies.

H.R. 2205, the Data Security Act of 2015, is a bipartisan bill introduced by Reps. Randy Neugebauer (R-Texas), Chairman of the Financial Institutions and Consumer Credit Subcommittee, and John Carney (D-Del), a member of the Financial Services Committee. The Data Security Act would establish a national data security and breach notification standard for all businesses and would apply to any individual, partnership, corporation, trust, estate, cooperative, association, or entity that accesses, maintains, communicates, or handles sensitive account information or sensitive personal information.

Industry support for H.R. 2205. A letter signed by a coalition of financial services trade associations expressed support for the Substitute Amendment to the Data Security Act of 2015. Calling it “especially timely in light of the data security breaches at major retailers that have put millions of consumers at risk,” the letter stated that, “The Data Security Act ensures all entities that handle consumers’ sensitive financial data have in place a robust process to protect data, which can help prevent breaches from happening in the first place.”

The letter noted that banks and credit unions are already required under law and regulation to protect consumer data and provide notice in the event a breach is likely to cause harm, and stated that “extending similar requirements to other industries that handle sensitive information will result in better consumer protection against data theft and fraud.”

The American Bankers Association, American Land Title Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America, National Association of Federal Credit Unions, and The Clearing House signed the letter. Many of the same associations signed off on a similar letter in support of H.R. 2205 in October (see Banking and Finance Law Daily, Oct. 16, 2015).

Increase in asset threshold. H.R. 3791, introduced by Reps. Mia B. Love (R-Utah) and Blaine Leutkemeyer (R-Mo), proposes to increase the “consolidated assets threshold” from $1 billion to $5 billion for small bank holding companies and savings and loan holding companies. The bill would revise the Federal Reserve Board’s “Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors” contained in Appendix C of Reg. Y—Bank Holding Companies and Change in Bank Control (12 CFR Part 225). A conforming amendment would be made to the Dodd-Frank Act as well.

ICBA encourages support. In a letter written by Camden R. Fine, president and CEO of the Independent Community Bankers of America, Fine “strongly encourage all committee members to vote YES” on H.R. 2205 and H.R. 3791. The letter stated that “H.R. 3791 is a key provision of ICBA’s Plan for Prosperity and a long-standing goal of ICBA and community banks. It would provide additional capital for community banks to serve their customers and communities.” Taken together, the letter continued, H.R. 2205 and H.R. 3791 “would provide for more secure consumer data and allow community banks to better serve their local businesses and create new jobs.”

Other bills and resolutions. According to the committee memorandum, the following bills and resolutions are also under consideration:

  • H.R. 2187, the Fair Investment Opportunities for Professional Experts Act, introduced by Rep. David Schweikert (R-Ariz), which would amend the definition of accredited investor under the Securities Act of 1933;
  • H.R. 2287, the National Credit Union Administration Budget Transparency Act, introduced by Rep. Mick Mulvaney (R-SC), which would amend the Federal Credit Union Act to require the National Credit Union Administration Board to print a draft of the budget in the Federal Register, hold a public hearing to receive comments, and detail how the budget will address comments submitted, before submitting its annual budget;
  • H.R. 3700, the Housing Opportunity Through Modernization Act of 2015, introduced by Luetkemeyer, would reform and streamline certain HUD and Rural Housing Service programs;
  • H.R. 3784, the SEC Small Business Advocate Act of 2015, introduced by Reps. John Carney (D-Del) and Sean Duffy (R-Wis), would establish the Office for Small Business Capital Formation (Office) within the SEC;
  • H.R. 4168, the Small Business Capital Formation Enhancement Act, introduced by Reps. Bruce Poliquin (R-Maine) and Juan Vargas (D-Calif), would require the SEC to respond to any findings or recommendations put forth by the SEC’s annual Government-Business Forum on Small Business Capital Formation; and
  • The Task Force to Investigate Terrorism Financing Resolution of 2016, which would authorize the task force for a six-month period from January to July 2016.

Companies: American Bankers Association; American Land Title Association; Consumer Bankers Association; Credit Union National Association; Financial Services Roundtable; Independent Community Bankers of America; National Association of Federal Credit Unions; The Clearing House

MainStory: TopStory BankHolding ConsumerCredit CreditDebitGiftCards DoddFrankAct FederalReserveSystem IdentityTheft Privacy PrudentialRegulation

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