December’s on the way out.
Congress is quiet, on recess until the beginning of next year. The Supreme Court’s not hearing arguments at the moment. The regulators are wrapping up as vacations loom.
And so, 2023 draws to a close as key themes of competition, data access, artificial intelligence (AI) and the reach of regulators are all likely be to be revisited in various marbled hallways in the nation’s capital in 2024. And that’s just the tip of the iceberg.
The CCCA, which was reintroduced by Sens. Roger Marshall and Dick Durbin in June, has the potential to impact the “swipe fees” that are levied on merchants when consumers use their cards to pay. The legislation would also require card-issuing banks with at least $100 billion in assets to offer at least two payments networks to merchants.
Proponents charge that the act would lower the costs of doing business, as merchants would (theoretically) opt to choose networks sporting cheaper fees. Those savings would then ostensibly be passed on to consumers.
Opponents, including the payment networks, say the proposal would negatively impact the availability and creation of rewards programs, and would adversely impact consumers. Additionally, the Federal Reserve has already proposed significant cuts to debit interchange fees — a move that is still in commentary period.
Big Tech has been making inroads into finance. But the Consumer Financial Protection Bureau (CFPB) has been increasing its scrutiny of the space — and as signaled in recent days in a speech by Director Rohit Chopra, in the wake of a report by the Financial Stability Oversight Council, the risks tied to data collection, misuse and advanced technologies “sets us all on a path for actually using our legal authorities, rather than relegating them to dead letter law.”
In November, the CFPB proposed more oversight on tech companies and digital wallet providers. The bureau’s proposed rule aims to bring these nonbank financial companies, particularly those handling more than 5 million transactions per year, under the same regulatory scrutiny as large banks, credit unions and other financial institutions already supervised by regulators.
Open banking promises to bring more financial data to third parties as consumers consent to have that data shared.
In October, a Notice of Proposed Rulemaking from the CFPB stipulated that “depository and non-depository entities would have to make available to consumers and authorized third parties certain data relating to consumers’ transactions and accounts; establish obligations for third parties accessing a consumer’s data, including important privacy protections for that data; provide basic standards for data access.”
The commentary period wraps up at the end of next week — and the development of standards, with input from agencies and the private sector, are likely to be illuminated as 2024 dawns.
The state and structure of the CFPB itself will be in the spotlight in 2024. During the spring term, the U.S. Supreme Court is likely to rule on the ways in which the agency is funded, as well as the very constitutionality of the CFPB. Arguments have already been heard, and as we noted back then, if the structure of the agency is ruled unconstitutional, the CFPB could be severely hobbled or restructured.
The seismic impact would be that the entire roster of past activities, and actions by the CFPB, touching on everything from consumer complaints to fines levied on companies, may be called into question — and conceivably even struck down entirely.
Far from the U.S., the European Union is nearing at least some agreement, and is in the midst of debate, over AI rules and regulation. The framework governing the technology mandates transparency on models, and there are limits on the use of real-time biometric surveillance in public spaces by government.
A bit closer to home, and as we reported earlier in the month, the AI landscape has been the subject of various committee hearings in Congress, and it’s a certainty that more hearings will be on the agenda in the year ahead.
Bipartisan legislation through the Schatz-Kennedy AI Labeling Act introduced in the senate would, among other things, require more transparent disclosure of AI-generated content and would seek to establish a working group aimed at establishing technical standards.
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