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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7440 Reported in House (RH)]

<DOC>

                                                 Union Calendar No. 654
118th CONGRESS
  2d Session
                                H. R. 7440

                          [Report No. 118-792]

  To promote innovation in financial services, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 23, 2024

 Mr. McHenry introduced the following bill; which was referred to the 
                    Committee on Financial Services

                            December 4, 2024

             Additional sponsors: Mr. Donalds and Mr. Emmer

                            December 4, 2024

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           February 23, 2024]

_______________________________________________________________________

                                 A BILL

 
  To promote innovation in financial services, and for other purposes.

 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Innovation Act of 2024''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Agency identification of regulatory areas.
Sec. 4. Establishment or designation of FSIO at agencies.
Sec. 5. FSIO Liaison Committee and chair.
Sec. 6. Petition to agency.
Sec. 7. Agency determination of petition.
Sec. 8. Enforceable compliance agreement.
Sec. 9. Report to Congress.

SEC. 2. DEFINITIONS.

    In this Act, the following definitions shall apply:
            (1) Agency.--The term ``agency'' means each of the Board of 
        Governors of the Federal Reserve System, the Bureau of Consumer 
        Financial Protection, the Department of Housing and Urban 
        Development, the Department of the Treasury, the Federal 
        Deposit Insurance Corporation, the Federal Housing Finance 
        Agency, the National Credit Union Administration, the Office of 
        the Comptroller of the Currency, and the Securities and 
        Exchange Commission.
            (2) Agency regulation.--The term ``agency regulation'' 
        means--
                    (A) a rule (as defined in section 551 of title 5, 
                United States Code) issued by an agency;
                    (B) guidance issued by an agency; or
                    (C) a published, proposed, or interim rule, policy 
                statement, directive, adjudication, or interpretation 
                of an agency.
            (3) Bank secrecy act.--The term ``Bank Secrecy Act'' 
        means--
                    (A) section 21 of the Federal Deposit Insurance Act 
                (12 U.S.C. 1829b);
                    (B) chapter 2 of title I of Public Law 91-508 (12 
                U.S.C. 1951 et seq.); and
                    (C) subchapter II of chapter 53 of title 31, United 
                States Code.
            (4) Enforceable compliance agreement.--The term 
        ``enforceable compliance agreement'' means an agreement 
        described under section 8.
            (5) Financial innovation.--The term ``financial 
        innovation'' means a financial product or service (as defined 
        in section 1002 of the Consumer Financial Protection Act of 
        2010 (12 U.S.C. 5481))--
                    (A) the delivery of which is enabled by technology; 
                and
                    (B) that is or may be subject to an agency 
                regulation or Federal statute.
            (6) FSIO.--The term ``FSIO'' means a Financial Services 
        Innovation Office established pursuant to section 4.
            (7) Person.--The term ``person'' means an individual, 
        partnership, company, corporation, association, trust, estate, 
        cooperative organization, or other entity.

SEC. 3. AGENCY IDENTIFICATION OF REGULATORY AREAS.

    Not later than 60 days after the date of the enactment of this Act, 
and biannually thereafter, each agency shall publish in the Federal 
Register a nonexclusive list that identifies 3 or more areas of 
existing agency regulation--
            (1) that apply or may apply to a financial innovation; and
            (2) that the agency would consider modifying or waiving if 
        the agency were to receive a petition under section 6 relating 
        to that regulation.

SEC. 4. ESTABLISHMENT OR DESIGNATION OF FSIO AT AGENCIES.

    (a) In General.--Each agency shall establish or designate an office 
within the agency to be known as the ``Financial Services Innovation 
Office''. Each such Financial Services Innovation Office shall promote 
financial innovations and assist persons whose petitions are approved 
under section 7.
    (b) Administration.--Each agency shall designate an individual to 
serve as the head of the agency's FSIO.
    (c) Duties.--
            (1) General duties.--The head of each agency's FSIO shall--
                    (A) support the development of financial 
                innovations;
                    (B) coordinate with FSIOs at other agencies to 
                share information and data about financial innovations;
                    (C) upon request, coordinate with relevant State 
                regulatory entities to provide information to the 
                public with respect to financial innovations and agency 
                regulations related to such financial innovations; and
                    (D) establish procedures to reduce the regulatory 
                burden of offering a financial innovation to the public 
                and enable greater access to financial innovations.
            (2) Duties for petitions.--With respect to a person with an 
        approved petition under section 7, the head of each agency's 
        FSIO shall--
                    (A) work with the person to address issues of how 
                existing regulatory frameworks of the agency apply to 
                the financial innovation that is the subject of the 
                petition;
                    (B) assist the person in complying with any 
                requirements of the agency with respect to the 
                financial innovation; and
                    (C) assist the person in responding to any 
                challenges to a modification or a waiver granted under 
                subsection (d).
    (d) Waiver Authority.--The head of each agency, acting through the 
agency's FSIO, may modify or waive the application of an agency 
regulation of the agency or a Federal statute under which the agency 
has rulemaking authority if--
            (1) a petition has been approved under section 7; and
            (2) the agency determines that compliance with such agency 
        regulation or Federal statute would impede the ability of a 
        person to offer the financial innovation that is the subject of 
        the petition.
    (e) Termination of Other Programs; Transfer of Authority.--
            (1) In general.--Not later than 90 days after the 
        establishment or designation of a FSIO at an agency, the agency 
        shall modify any offices or programs at the agency that promote 
        financial innovations or assist persons in offering financial 
        innovations, and merge or transfer the operations of such 
        offices or programs into the FSIO.
            (2) Transfer of authority.--On the date that is 90 days 
        after the establishment or designation of a FSIO at an agency, 
        the administration of any rule, policy, or prior agency 
        determinations relating to promoting financial innovations or 
        assisting persons in offering financial innovations, including 
        no-action letters and staff advisory opinions, shall be 
        transferred to the FSIO of that agency.
    (f) Report.--Not later than 6 months after the date of the 
enactment of this Act, and annually thereafter, each agency shall 
present testimony to the Congress and submit a report to the Congress 
and to the Financial Stability Oversight Council on the activities of 
the FSIO of such agency, including a description of the petitions 
considered, the rationale for acceptance or rejection of petitions, and 
the efforts of the FSIO to encourage financial innovations.

SEC. 5. FSIO LIAISON COMMITTEE AND CHAIR.

    (a) Establishment.--Not later than 60 days after the date of the 
enactment of this Act, the agencies shall establish a committee to be 
known as the ``FSIO Liaison Committee''.
    (b) Members.--The FSIO Liaison Committee shall be composed of the 
head of each FSIO described under section 4 and a State banking 
supervisor selected by the Conference of State Bank Supervisors (or a 
successor organization).
    (c) Duties.--The FSIO Liaison Committee shall--
            (1) consult on the administration, coordination, and 
        oversight with the FSIO of each agency;
            (2) facilitate the cooperation of each FSIO to ensure that 
        agencies share information and data on petitions submitted 
        under section 6;
            (3) monitor proposals for agency regulation and 
        developments related to financial innovations;
            (4) encourage the application of uniform principles and 
        standards at each FSIO; and
            (5) facilitate collaboration with relevant State regulatory 
        entities to provide information to the public with respect to 
        financial innovations and agency regulations related to such 
        financial innovations.
    (d) Meetings.--The FSIO Liaison Committee shall meet at least twice 
a year.
    (e) Chair.--
            (1) Establishment.--The first Chair of the FSIO Liaison 
        Committee shall be elected by the members. The Chair shall 
        serve for a term of 2 years and thereafter the chairmanship 
        shall rotate among the members of the committee.
            (2) Powers of the chair.--The Chair is authorized to carry 
        out the internal administration of the FSIO Liaison Committee, 
        including the appointment and supervision of employees and the 
        distribution of tasks among members, employees, and 
        administrative units.
    (f) Testimony.--Not later than 6 months after the date of the 
enactment of this Act, and annually thereafter, the Chair of the FSIO 
Liaison Committee shall present testimony to the Congress on the 
activities of the FSIO Liaison Committee.
    (g) Funding.--
            (1) Compensation of members.--Each member of the FSIO 
        Liaison Committee shall serve without additional compensation 
        but shall be entitled to reasonable expenses incurred in 
        carrying out official duties as such a member.
            (2) General expenses.--The costs and expenses of the FSIO 
        Liaison Committee, including the salaries of employees, shall 
        be split equally between, and paid by, each agency.

SEC. 6. PETITION TO AGENCY.

    (a) In General.--A person may submit a petition to an agency, 
through the agency's FSIO, in such form and in such manner as the 
agency's FSIO may require, to request to enter into an enforceable 
compliance agreement containing a modification or waiver of an agency 
regulation of the agency or the Federal statute under which the agency 
has rulemaking authority with respect to--
            (1) the person; or
            (2) a financial innovation the person offers or intends to 
        offer.
    (b) Contents.--In a petition submitted under this section, the 
person shall--
            (1) identify any requirement under which the agency has 
        rulemaking authority or the agency regulation of the agency for 
        which the person is requesting a modification or waiver;
            (2) explain why such modification or waiver is essential to 
        the operation of the person;
            (3) submit an alternative compliance strategy that proposes 
        a method to comply with such requirement or agency regulation;
            (4) demonstrate that under the alternative compliance 
        strategy, the financial innovation--
                    (A) would serve the public interest;
                    (B) improves consumer access to a financial product 
                or service;
                    (C) would not present a national security risk to 
                the United States;
                    (D) would meet the purposes of anti-money 
                laundering and countering the financing of terrorism 
                obligations under the Bank Secrecy Act;
                    (E) would not present systemic risk to the United 
                States financial system; and
                    (F) would promote consumer protection;
            (5) provide a detailed business plan; and
            (6) propose a date on which an enforceable compliance 
        agreement would terminate and explain why such termination date 
        would be appropriate.
    (c) Multiparty Petitions.--One or more persons that offer or intend 
to offer similar financial innovations may jointly submit a petition 
under this section.
    (d) Notice and Comment.--
            (1) In general.--Not later than 30 days after receiving a 
        petition, the agency that receives the petition shall publish 
        the petition in the Federal Register and provide a 60-day 
        period for public notice and comment.
            (2) Exception for notice and comment period.--The agency 
        that receives the petition may waive the notice and comment 
        period described in paragraph (1) if such agency determines 
        that the person submitting the petition is similarly situated 
        to another person that has been granted approval of a petition 
        pursuant to section 7.
            (3) Confidentiality.--The agency shall maintain the 
        confidentiality of any nonpublicly available data or 
        information in any petition submitted under this section. The 
        agency shall give reasonable consideration to maintaining the 
        confidentiality of data or information identified by the person 
        in the petition submitted under this section.

SEC. 7. AGENCY DETERMINATION OF PETITION.

    (a) In General.--Not later than 30 days after the end of the 
comment period described under section 6 (or if the comment period was 
waived, not later than 90 days after receipt of a petition under 
section 6), the head of the agency receiving the petition shall 
complete a review of the petition and notify the person who submitted 
the petition, in writing, of the agency's determination of the 
petition.
    (b) Approval of Petition.--
            (1) In general.--An agency shall approve a petition if the 
        agency has determined that--
                    (A) the alternative compliance strategy proposed by 
                the person in the petition satisfies the requirements 
                described in section 6(b)(4); and
                    (B) the person who submitted the petition has, with 
                respect to the financial innovation the person offers 
                or intends to offer, sufficiently identified--
                            (i) the regulations and Federal statutes of 
                        which the person is seeking waiver or 
                        modification; and
                            (ii) other applicable regulations and 
                        Federal statutes with which the person intends 
                        to comply.
            (2) Notification to state regulatory agencies.--If an 
        agency approves a petition, the agency shall, with respect to 
        each State regulatory agency with jurisdiction over the person 
        who submitted the petition or the financial innovation about 
        which the person submitted the petition--
                    (A) notify such State regulatory agency that the 
                agency has approved the petition; and
                    (B) provide such State regulatory agency 
                information about the terms of the enforceable 
                compliance agreement entered into between the person 
                and the agency.
    (c) Disapproval of Petition.--
            (1) In general.--An agency may disapprove a petition if the 
        agency has determined that--
                    (A) the alternative compliance strategy proposed by 
                the person in the petition does not satisfy the 
                requirements described in section 6(b)(4); or
                    (B) the person who submitted the petition has not, 
                with respect to the financial innovation the person 
                offers or intends to offer, sufficiently identified--
                            (i) the regulations and Federal statutes of 
                        which the person is seeking waiver or 
                        modification; and
                            (ii) other applicable regulations and 
                        Federal statutes with which the person intends 
                        to comply.
            (2) Written notice required.--If an agency disapproves a 
        petition the agency shall provide the person who submitted the 
        petition with a written notice explaining the reason for such 
        disapproval and such written notice shall include a description 
        of--
                    (A) any benefits of disapproving the petition, 
                including an identification of persons likely to 
                benefit from the disapproval of the petition;
                    (B) any costs, including potential costs, of 
                disapproving the petition, including an identification 
                of persons likely to bear the costs associated with the 
                disapproval of the petition; and
                    (C) the baseline used by the agency to determine 
                the likely economic consequences of disapproving the 
                petition.
    (d) Resubmittal.--Receipt of a notice of disapproval of a petition 
under this subsection shall not preclude a person from revising and 
resubmitting such petition to the agency under section 6.
    (e) Judicial Review.--A person may seek judicial review of an 
agency's determination on a petition in accordance with subchapter II 
of chapter 5 of title 5, United States Code, and chapter 7 of such 
title (commonly known as the ``Administrative Procedure Act'').

SEC. 8. ENFORCEABLE COMPLIANCE AGREEMENT.

    (a) In General.--If an agency approves a petition under section 7, 
the person who submitted such petition shall enter into an enforceable 
compliance agreement with such agency, which shall include--
            (1) the terms under which the approved financial innovation 
        may be developed or offered to the public; and
            (2) any requirements of the person and such agency with 
        respect to the financial innovation.
    (b) Requirements.--Each agency, by rule, shall establish 
requirements relating to enforceable compliance agreements that 
include--
            (1) procedures for modifying the terms of the agreement;
            (2) consequences for failure to comply with the terms of 
        the agreement;
            (3) a compliance examination process that--
                    (A) solicits feedback from other agencies on the 
                agreement; and
                    (B) occurs not less frequently than annually;
            (4) a termination date for the agreement that is at least 1 
        year and not more than 3 years after the date on which the 
        agreement is entered into;
            (5) procedures and standards for extending the termination 
        date, including procedures and standards for evaluating the 
        effectiveness of the agreement; and
            (6) procedures for maintaining the confidentiality of any 
        information disclosed to the agency during the process of 
        drafting and entering into agreement.
    (c) Joining of Agreement by Additional Agencies.--With respect to a 
financial innovation that is the subject of an enforceable compliance 
agreement entered into under this section, an agency that did not enter 
into such enforceable compliance agreement may join as a party to the 
enforceable compliance agreement entered into pursuant to this section.
    (d) Enforcement Actions by Non-party Agencies.--An agency that is 
not a party to an enforceable compliance agreement entered into under 
this section--
            (1) may not attempt to enforce, against the person who is 
        party to the enforceable compliance agreement, any regulation 
        or Federal statute modified or waived by the enforceable 
        compliance agreement; and
            (2) may continue to enforce, against the person who is 
        party to the enforceable compliance agreement, any regulation 
        or Federal law over which the agency has enforcement authority 
        that has not been modified or waived by the enforceable 
        compliance agreement.
    (e) Arbitration.--A person who is party to the enforceable 
compliance agreement may elect to arbitrate any action initiated by 
another person relating to a financial innovation that is the subject 
of the enforceable compliance agreement.
    (f) Rule of Construction.--Nothing in this Act shall be construed 
to limit the ability of an agency to enforce the requirements of an 
enforceable compliance agreement entered into under this Act.

SEC. 9. REPORT TO CONGRESS.

    Not later than 1 year after the date of the enactment of this Act, 
and annually thereafter, the Financial Stability Oversight Council 
shall submit to the Congress a report on the aggregate impact of 
enforceable compliance agreements entered into under this Act, which 
shall include--
            (1) the number and characteristics of the agreements;
            (2) the most innovative and least burdensome tools that the 
        agencies' FSIOs have implemented to allow a financial 
        innovation that is the subject of an enforceable compliance 
        agreement to be offered;
            (3) strategies implemented to coordinate and facilitate 
        cooperation among FSIOs;
            (4) the existing Federal laws, regulations, or practices 
        that the Financial Stability Oversight Council identifies as 
        the most burdensome to innovation that adversely affect 
        competition in the financial services industry, or that 
        restrict improvements for consumers of financial products or 
        services; and
            (5) an identification of the overlap or fragmentation of 
        agency regulations of financial products or services and 
        recommendations for reducing, consolidating, or eliminating 
        such overlap or fragmentation.
                                                 Union Calendar No. 654

118th CONGRESS

  2d Session

                               H. R. 7440

                          [Report No. 118-792]

_______________________________________________________________________

                                 A BILL

  To promote innovation in financial services, and for other purposes.

_______________________________________________________________________

                            December 4, 2024

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```