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2021 banking legislation focuses on mortgages, transparency, inclusion


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2021 banking legislation focuses on mortgages, transparency, inclusion

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In the first half of the year, U.S. lawmakers focused on banking transparency, mortgages and loans, pandemic relief and financial inclusion across a broad range of legislation.

Democrats, who hold majorities in both chambers following the 2020 elections, have pressed to enhance oversight of banks while also seeking clarity on their operations and goals.

Both chambers voted to overturn a "true lender" rule allowing financial technology companies to partner with banks in ways that could let some fintechs avoid state interest rate limits on loans. President Joe Biden subsequently signed the action.

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In the House, the Promoting Transparent Standards for Corporate Insiders Act would instruct the U.S. Securities and Exchange Commission to consider revising standards for trading plans that currently allow certain employees of publicly traded companies to sell their shares without violating insider trading prohibitions.

House Financial Services Committee Chairwoman Maxine Waters, D-Calif., introduced the House-passed legislation.

Also in the House, the Greater Supervision in Banking Act would require holding companies of global systemically important banks to annually report their activities and goals to the Federal Reserve Board of Governors. Rep. Ayanna Pressley, D-Mass., sponsored the bill, which has not yet seen action by the full chamber.

Lawmakers also introduced two bills targeting mortgage lending.

The House passed the Improving FHA Support for Small-Dollar Mortgages Act. Sponsored by Rep. Rashida Tlaib, D-Mich., it directs the U.S. Department of Housing and Urban Development to report on barriers to making Federal Housing Administration single-family mortgage insurance available for mortgages under $70,000.

Specifically, HUD must report on policies, practices and products used by the FHA and actions that will be taken to remove such barriers.

In the Senate, the Home Loan Quality Transparency Act would take away a reporting exemption for depository institutions and credit unions for mortgages and home equity lines of credit. Currently, these institutions are not required to do this reporting if they originate fewer than 500 mortgage loans or lines of credit annually.

Introduced by Sen. Catherine Cortez Masto, D-Nev., the measure has not yet reached the Senate floor.

Two other bills address issues related to credit union loans and microloans.

The Expanding Access to Lending Options Act, which has not yet seen a Senate vote, would give the National Credit Union Administration flexibility to increase federal credit union loan maturities. Sen. Tim Scott, R-S.C., sponsored the legislation.

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Meanwhile, the House passed the Microloan Improvement Act. Introduced by Rep. Andy Kim, D-N.J., it would amend the Small Business Act to optimize the operations of the microloan program and lower costs for small-business concerns and intermediary participants.

Moving to debt collection, Democrats focused on helping consumers mired in health costs following the COVID-19 pandemic, including those now in bankruptcy.

Three bills introduced by Senate Democrats would offer such relief. These bills are the Medical Bankruptcy Fairness Act, introduced by Sen. Sheldon Whitehouse, D-R.I.; the COVID-19 Medical Debt Collection Relief Act, sponsored by Sen. Chris Van Hollen, D-Md.; and the Medical Debt Relief Act, introduced by Sen. Jeff Merkley, D-Ore. None has yet been passed by the Senate.

Waters unveiled the House-passed Comprehensive Debt Collection Improvement Act, intended to protect consumers from a broad range of collection activities.

Another bill would create a working group to help consumers and investors who experienced fraud during the pandemic. Rep. Cynthia Axne, D-Iowa, introduced the COVID-19 Fraud Prevention Act, which the House has since passed.

Finally, the House passed the Financial Inclusion in Banking Act, which was sponsored by Rep. David Scott, D-Ga., and seeks to develop strategies to get the unbanked into the banking system — a top priority for the Biden administration. It has not yet been passed by the Senate.

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