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

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118th CONGRESS
  2d Session
                                H. R. 7440

  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

_______________________________________________________________________

                                 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 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.
            (2) 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 Board, the 
        Office of the Comptroller of the Currency, and the Securities 
        and Exchange Commission.
            (3) Covered person.--The term ``covered person'' means a 
        person that offers or intends to offer a financial innovation 
        by submitting a petition to a Financial Services Innovation 
        Office at one or more agencies.
            (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) Financial services innovation office; fsio.--The term 
        ``Financial Services Innovative Office'' or ``FSIO'' means an 
        office established in an agency pursuant to section 4.

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'' of the ``FSIO''. Each such Financial Services Innovation 
Office shall to promote financial innovations and to assist a covered 
person with an approved petition 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.--Each agency, acting through the 
        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 covered person 
        with an approved petition under section 7, each FSIO shall--
                    (A) work with the covered person to address issues 
                of how existing regulatory frameworks apply to the 
                financial innovation that is the subject of the 
                petition;
                    (B) assist the covered person in complying with the 
                requirements of Federal regulators of the financial 
                innovation; and
                    (C) assist the covered person in responding to any 
                challenges to a modification or a waiver granted under 
                subsection (d).
    (d) Waiver Authority.--An agency, acting through the agency's FSIO, 
may modify or waive the application of an agency regulation of the 
agency or the Federal statute under which the agency has rulemaking 
authority if--
            (1) a petition of the covered person 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 
        covered 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 covered persons in offering 
        financial innovations, and merge or transfer the operations of 
        such offices or programs into the FSIO.
            (2) Legal actions or proceedings.--On the date that is 90 
        days after the establishment or designation of a FSIO at an 
        agency, any legal action or proceeding commenced by or against 
        any other offices or programs at the agency that promote 
        financial innovations or assist covered 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 Congress and submit a report to 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.
    (g) Elimination of FSIO.--If an agency has not received a petition 
described in section 6 within 5 years of the date of the establishment 
of the FSIO of such agency, the agency shall eliminate the FSIO. Such 
agency shall continue to comply with the requirements of any multiparty 
agreement entered into pursuant to section 8(c) on or before the date 
of such elimination.

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 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, the Chair of the FSIO Liaison Committee shall 
present testimony to 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 other than 
        an agency that has eliminated the agency's FSIO pursuant to 
        section 4(g).

SEC. 6. PETITION TO AGENCY.

    (a) In General.--A covered 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 covered person; or
            (2) a financial innovation the covered person offers or 
        intends to offer.
    (b) Contents.--In a petition submitted under this section, the 
covered person shall--
            (1) submit an alternative compliance strategy that proposes 
        a method to comply with the agency regulation or Federal 
        statutory requirement; and
            (2) 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 systemic risk to the United 
                States financial system; and
                    (D) would promote consumer protection.
    (c) Multiparty Petitions.--One or more covered persons that offer 
or intend to offer similar financial innovations may jointly submit a 
petition under this section.
    (d) Safe Harbor.--
            (1) In general.--During the period after a covered person 
        submits a petition under this section and before the agency 
        receiving the petition makes a determination on the petition 
        pursuant to section 7, an agency may not take an enforcement 
        action against a covered person relating to the financial 
        innovation that was the subject of the petition.
            (2) Injunctive relief.--If an agency determines that a 
        financial innovation described under paragraph (1) presents an 
        immediate danger to consumers or presents systemic risk to the 
        United States financial system, the agency may apply to a court 
        of competent jurisdiction for an injunction to prohibit a 
        covered person from offering such financial innovation during 
        the period described in paragraph (1).
            (3) Preservation of anti-fraud authority.--This subsection 
        shall not apply to the authority of an agency to take an 
        enforcement action against a covered person with respect to 
        fraud relating to the financial innovation that was the subject 
        of the petition.
    (e) 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 covered person submitting the petition is similarly 
        situated to another covered 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 
        covered person in the petition submitting under this section as 
        nonpublicly available data or information.

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 60 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 covered person, in 
writing, of the agency's determination of the petition.
    (b) Approval.--If the covered person submitting the petition shows 
that it is more likely than not that the covered person meets the 
requirements for establishing an alternative compliance strategy, the 
agency shall--
            (1) approve the petition; and
            (2) enter into an enforceable compliance agreement with the 
        covered person in accordance with the requirements of section 
        8.
    (c) Disapproval.--
            (1) Explanation.--If the agency disapproves a petition, the 
        agency head shall provide the covered person with a written 
        notice explaining the reason for such disapproval, including--
                    (A) evidence that the covered person did not 
                satisfy the requirements for establishing an 
                alternative compliance strategy;
                    (B) an identification of any agency regulations or 
                Federal statutes applicable to the covered person with 
                respect to the financial innovation that were omitted 
                from the petition; and
                    (C) a description of--
                            (i) any beneficial effects, including an 
                        identification of persons likely to benefit, 
                        from rejecting the petition;
                            (ii) any potential costs, including an 
                        identification of persons likely to bear the 
                        costs, of rejecting the petition; and
                            (iii) the baseline used by the agency to 
                        measure the likely economic consequences of 
                        rejecting the petition.
            (2) Resubmittal.--Receipt of a notice of disapproval of a 
        petition under this subsection shall not preclude a covered 
        person from revising and resubmitting such petition to the 
        agency under section 6.
    (d) Moratorium.--If an agency disapproves a petition submitted in 
good faith under this section, the agency shall provide the covered 
person a reasonable amount of time before the agency takes an 
enforcement action against the covered person relating to the financial 
innovation that was the subject of the petition.
    (e) Judicial Review.--A covered 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 covered person shall enter into an enforceable compliance agreement 
with the 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 covered person and any 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 after the date on which the agreement is entered into;
            (5) procedures for extending the termination date;
            (6) procedures for judicial review of another agency's or 
        State's challenge to the agreement 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''); and
            (7) procedures for maintaining the confidentiality of any 
        information disclosed to the agency during the process of 
        drafting and entering into agreement.
    (c) Multiparty Agreements.--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) Limitation on Enforcement Actions.--
            (1) In general.--If a covered person and an agency enter 
        into an enforceable compliance agreement--
                    (A) another agency that is not party to the 
                multiparty agreement described in subsection (c) may 
                not commence an enforcement action against the covered 
                person with respect to the financial innovation that is 
                the subject of the enforceable compliance agreement; 
                and
                    (B) a State may not commence an enforcement action 
                against the covered person with respect to the 
                financial innovation that is the subject of the 
                enforceable compliance agreement, if the covered person 
                provides the State with--
                            (i) the enforcement compliance agreement; 
                        and
                            (ii) a statement of policies and procedures 
                        the covered person has in place to comply with 
                        State laws that are applicable to the financial 
                        innovation.
            (2) State exception for consumer harm.--Notwithstanding 
        paragraph (1)(B), a State may commence an enforcement action 
        against a covered person with respect to a financial innovation 
        that is the subject of an enforceable compliance agreement if, 
        in an action brought by the State in a court of competent 
        jurisdiction, the court determines that the agency's action was 
        arbitrary and capricious and the financial innovation has 
        substantially harmed consumers within such State.
    (e) Arbitration.--A covered person may elect to arbitrate any 
action initiated by another person relating to a financial innovation 
that is the subject of the enforceable compliance agreement.

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 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 
        agency's FSIO has 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 and State laws, regulations, or 
        practices (including guidance materials, examinations, and 
        enforcement proceedings and settlements) 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.
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