To: Members of the Banking Committee
From: National Taxpayers Union
Date: March 17, 2023
Subject: NTU priorities
- Introduction and Key Taxpayer Considerations
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, we write to inform you of a number of NTU’s top financial services and banking priorities in the 118th Congress for your consideration. As your committee begins to plan for the 118th Congress, we hope that you will advance pro-taxpayer policies.
Oppose: Credit Card Competition Act (S.4674)
- NTU strongly suggests leaving the Credit Card Competition Act (S.4674) on the cutting room floor. This bill, if enacted, would be incredibly damaging to taxpayers by implementing price controls and constricting the free competition of credit card processors. This bill would do little to nothing to dampen inflationary pressure on taxpayers and would in fact harm taxpayers' access to critical credit card benefits and programs that many rely on, especially in times of need. The mandates in the legislation would also encourage merchants to divest from advanced payments networks in favor of cheaper, less secure, and less reliable alternatives. This would result in user data being at risk due to weakened cybersecurity for electronic payments putting the financial stability of millions of taxpayers at risk.
Support: The CFPB Act of 2021 (S.2790)
- The Consumer Financial Protection Bureau Accountability Act of 2021 (S.2790) would provide a fix for the source of funding for the Consumer Financial Protection Bureau (CFPB), which is currently provided by transfers from the Federal Reserve System. The 5th U.S. Circuit Court of Appeals recently ruled this funding mechanism was unconstitutional. NTU recommends that the CFPB should be funded through the annual appropriations process. It is important that Congress acts swiftly to address this oversight and better rein in its controls over the CFPB.
Support: SAFE Banking Act (S.910)
- The SAFE Banking Act (S.910) would prohibit federal banking and credit union regulators from sanctioning regulated lenders or limiting their access to deposit insurance on the grounds that they provided service to legitimate cannabis businesses in jurisdictions that have legalized marijuana consumption. This legislation is vital to the banking industry, and to ensure taxpayers across the country are protected. More than 428,059 full-time equivalent jobs are now supported by legal cannabis as of January 2022 according to the 2022 Leafly Jobs Report. The industry also created, on average, 280 new jobs per day last year. By enacting the SAFE Banking Act we can ensure those taxpayers' jobs are better protected against fraud, theft and abuse, and ensure the industry is in compliance with its tax responsibilities.
Export-Import Bank of the United States
- With respect to the Export-Import Bank of the United States (Ex-Im), NTU urges your committee to keep the interests of taxpayers at the forefront. It is taxpayers who are ultimately on the hook for Ex-Im financing and insurance obligations. Ex-Im recently bypassed Congress and expanded the Bank’s mission to include manufacturing for domestically used goods, as opposed to just exports. NTU encourages your committee to reverse such “mission creep.” Moreover, Ex-Im financing should support exports from a broad range of small businesses, not a handful of large corporations. Finally, as Congress looks to level the playing field with our international competitors, NTU encourages your committee to make the reduction of foreign subsidies the priority, as opposed to the escalation of domestic subsidies.
- The National Flood Insurance Program (NFIP) is in dire need of reforms. Year after year, Congress and taxpayers are forced to stabilize a crucial but fundamentally flawed system to address flood risk. With the cost of natural disasters like flooding increasingly straining the nation’s finances, the current status quo is unsustainable.
- Flooding is the most expensive type of natural disaster in the United States. Between 1980 and 2021, the U.S. endured 36 separate flooding events that each had an economic cost of over $1 billion, with a total economic cost of over $168 billion. According to FEMA, of every $1 spent in mitigation the U.S. government saves $6 in unspent recovery funds. Years of heavily subsidized policies and natural disasters have left the NFIP with a debt of $20.5 billion and no clear way of managing its financial obligations in the long-run. Therefore it is essential for reforms to NFIP in order for it to be on sound financial standing to be able to reverse years of persistent deficits and to ensure the program does not receive a taxpayer-funded bailout.
- In order for the NFIP to become self-sufficient, it must share risk with the private flood insurance market, implement risk based pricing, and invest in mitigation measures. Congress should modify NFIP to avoid incentivizing construction of properties in dangerous floodplains and encourage FEMA to work with the private sector to develop improved mapping to better assess flood risk.
- NTU is a member of the SmarterSafer coalition which consists of a wide variety of stakeholders that support fiscally sound and environmentally responsible policies to improve natural catastrophe responses. We would be happy to facilitate more dialogue on these matters with the coalition.
Financial Data Privacy
- As the financial industry continues to innovate it is becoming increasingly urgent that Congress acts to protect consumer privacy and the financial data they share with existing and emergency industry participants. Chairman McHenry recently released a draft bill that we hope the Senate will consider and work in partnership with the House to accomplish real solutions that will protect consumers and taxpayers privacy alike.
- Few can deny that the misuse of customer funds, extreme leverage, and the subsequent collapse of FTX was catastrophic for retail investors that trusted disgraced crypto wunderkind, Sam Bankman-Fried. Politicians, companies, and celebrities that had lucrative partnerships with the company will certainly need to come to terms with the baggage and potential lawsuits that may arise.
- Despite this well-deserved backlash against an extremely bad actor, it’s crucial that Congress doesn’t crush the potential out of this industry with a new wave of stiflingly strict red tape. Similar to the internet revolution of the 1990s, cryptocurrencies and blockchain more broadly can unleash productivity and prosperity with the help of tailored legislation that creates guardrails for innovators to rely on.
- Over the past decade, Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) both have issued substantial guidance on their respective treatments of cryptocurrencies. Unfortunately, there has not yet been clarity on the division of crypto regulatory authority between the CFTC and the SEC. Even some of the largest crypto company CEOs have been quoted recently asking for regulatory clarity. For a nascent industry with tough growing pains, it’s of the utmost importance to get the definitional language correct. It’s far past time to bring the crypto industry out of the regulatory shadows and into a workable legal framework where it belongs.
- NTU has developed a definition that is close to comprehensive and solves many of the problems in clearly delineating the difference between crypto tokens covered by CFTC and SEC jurisdictions. It also draws much clearer lines between CFTC and SEC authority while avoiding many of the past definitions’ pitfalls. It is intended to be a reasonable compromise between many of the different perspectives on this topic, from regulators, to industry, to other think tanks as well. Contrary to some maximalists’ thinking, building a consensus framework in a Congress with tight margins will be key for legislative success in shaping a new crypto future.
- Contact Information
We look forward to working with each of you in the new Congress and welcome the opportunity to meet with you or your staff on these priorities as the 118th Congress gets underway. Should you have any questions about the recommendations in this memo, please do not hesitate to reach out to Alex Milliken at Amilliken@ntu.org, Bryan Riley at Briley@ntu.org, or Nicholas Johns at NJohns@ntu.org.