Consumer Financial Regulation
As of Jult 1, 2010 -
As we previously reported, the House and Senate have been working to reconcile the differences between their versions (H.R. 4173/S. 3217) of the financial regulatory reform legislation – the Wall Street Reform bill. Earlier this week, they completed their work which included important provisions that ACR and others worked hard to include (see letter from ACR and Nonprofit Coalition here). These provisions remove most nonprofits that offer charitable giving advice and group financial education from regulation, fees and oversight.
These provisions are a big win for the nonprofit community. Our advocacy efforts coupled with your examples about this bill’s impact on your day-to-day operations resonated with Members of Congress.
A final financial services reform conference report must now be approved by both the House and Senate. We expect the House and Senate to pass the final bill shortly.
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ACR update on the new Consumer Financial Protection Agency
The Obama Administration and the relevant committees in Congress earlier this year proposed sweeping reforms of the financial services regulatory system, including the creation of a new Consumer Financial Protection Agency (CFPA) to regulate “consumer protections” relating to financial products, services and activities. Organizations engaged in “financial activity,” as defined by the legislation, would have been subjected to CFPA authority including potential certification/registration/examination processes and fees. Early versions of the legislation included definitions of “financial activity” that were extremely broad and would have potentially subjected nonprofits to CFPA authority because of their fundraising efforts or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management of tax planning (other than return prep) as part of their programming.
ACR, along with a growing coalition of interested parties from the charitable community, including Independent Sector, engaged Members of Congress on this issue due to the potential impact upon nonprofits broadly. After successfully working with the relevant Members in the House of Representatives to clarify in the legislation (H.R. 4173) that nonprofits’ charitable giving activities (solicitation of/communications with donors, etc.) would not be a trigger for CFPA regulation/authority, ACR and the coalition turned our focus to the Senate and their version of this legislation.
Senate Banking Committee Chairman Christopher Dodd’s (D-CT) initial draft of the CFPA legislation closely mirrored the original House legislation, containing the same concerning potential regulations for nonprofits. ACR and CFPA coalition members quickly began to engage Senate Banking Committee members, including Chairman Dodd to share our concerns with the legislation. Because of these efforts, the Senate’s latest draft is even more encouraging than the House-passed legislation.
Specifically, the Senate version contains a narrowed definition is a great step in the right direction and is at least in part a result of ACR and CFPA coalition members’ efforts. Additionally, while this legislation still creates a CFPA entity, now renamed the Consumer Financial Protection Bureau (CFPB), within the Federal Reserve, the CFPB would not charge covered nonprofits (or others) any registration fees or assessments (unless proven to harm consumers). This development should be a great relief to nonprofits generally, as it would at least ensure that no outside financial burden is placed upon them as they work on financial literacy activities, or other activities clearly defined as a financial product or service in the legislation such as credit counseling or debt management counseling.
The Senate voted 59-39 on Thursday, May 20, 2010 to pass its version of this legislation (S. 3217). Next, the Senate bill be must be reconciled with the previously-passed version from the House of Representatives. ACR will continue to work through the coalition and monitor this issue as the legislation working to ensure these improvements remain in place as the bill makes its final pass through Congress on its way to the President’s desk.
As always, please feel free to contact us with any questions or concerns you may have.
ACR recaps highlights from the President’s State of the Union Address
Following is a broad summary of the proposals offered by the President (select ‘Continue reading’).
The important take-away from his speech is that the Administration has made a hard pivot away from health care reform, which wasn’t mentioned until half an hour into the speech, toward job creation in a clear effort to win back some of the political favor lost over the last few months. This new focus, combined with his plan to freeze government spending, will no doubt send Congress searching for additional revenue raisers – potentially including higher marginal tax rates for those singles earning more than $200,000 and couples earning more than $250,000.
ACR will be carefully monitoring both the President’s FY 2011 Budget and Congress’ work on the budget for any potential issues relating to the nonprofit sector. As always, we will continue to keep you updated on the latest.
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ACR’s accomplishments for 2009
As 2010 begins, the Alliance for Charitable Reform takes a moment to reflect back upon a busy and productive 2009 and share new initiatives for the year ahead.
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New regulations may still affect non-profit ogranizations
In an article today, the Wall Street Journal reported that Senate Banking Committee Chairman Christopher Dodd (D-CT) may be willing to drop the Consumer Financial Protection Agency (CFPA) from the broader financial regulatory reform legislation, in order to ensure the passage of the broader bill with bipartisan support. Aides close to the negotiations have said that in return, Republicans must agree to create a strong consumer-protection division within another federal agency.
What this means for the nonprofit world is unclear. We will have to pay close attention to the directive and authority given to any new consumer division within the Treasury. ACR has been concerned about the current legislation’s expansive definition of “financial activity” (which would be regulated by the proposed CFPA). This definition could draw in nonprofits because of organization’s fundraising efforts (charitable giving advice/planning/donor instruction) or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management, or tax planning (other than return prep) as part of their programming.
ACR will continue to monitor developments on this legislation and will keep you posted on the latest.
It’s not to late share your (or your grantees’) story on how CFPA may affect your work with Congressional offices. Contact us today(.(JavaScript must be enabled to view this email address))!
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Further Reading
Article in Reason Magazine online exposes impacts of consumer financial regulation on charities
An aticle today on Reason.com sheds light on the impacts of the consumer financial protection legislation (making its way through Congress) on organizations such as the Girl Scouts.
Sandra Swirski, the executive director of ACR, is quoted as saying “We became concerned because financial activity is defined broadly. It could capture a small solicitation at the bottom of a college brochure to alumni, foundation advice to grantees, and other day-to-day garden variety financial information.” ACR’s work on this legislation is highlighted as well.
Read the entire article here.
For more on ACR’s efforts on CFPA, click on the “consumer financial protection” tag (button) below.
Further Reading
Positive news but we need your help
ACR is pleased to report that the charitable giving language that we negotiated with House Financial Services Committee Chairman Frank’s staff and our champions Reps. Ed Perlmutter (D-CO) and Erik Paulsen (R-MN) has been included in Chairman Frank’s Manager’s Amendment to the financial services regulatory reform package. The legislation passed the U.S. House of Representatives on Friday as part of the Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, by a vote of 223-202.
However, we still need your help as this legislation heads to the Senate.
What can you do? We need to continue engaging senators with clear examples of the vast number of nonprofits that will be significantly impacted by this legislation for offering any type of financial education as part of their programming – including teaching the basics of establishing financial security or holding a budget or check-balancing seminar. As such, we would appreciate any examples that you can send as to how this legislation may affect your organization – particularly if you are using any type of financial education as part of your services - please let Amy Takeuchi on our ACR staff know immediately (.(JavaScript must be enabled to view this email address)). We would like to provide Members of Congress with concrete examples of how this legislation may affect the nonprofit community in our meetings and discussions.
Click ‘continue reading’ for background on the Consumer Financial Protection legislation.
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ACR needs your feedback: How will the Consumer Financial Protection Agency affect your organization or grant recipients?
Following the financial crisis, the Obama Administration and the relevant committees in Congress have proposed sweeping reforms of the financial services regulatory system, including the creation of a new Consumer Financial Protection Agency (CFPA). The CFPA will regulate “consumer protections” relating to financial products, services and activities with potential for new certification/ registration/ examination processes and fees.
The definition of “financial activity” is extremely broad and would potentially subject nonprofits to CFPA authority because of their fundraising efforts or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management of tax planning (other than return prep) as part of their programming.
ACR, along with a growing coalition of interested parties from the charitable community including the Independent Sector, has engaged members of Congress on this issue due to the potential impact upon nonprofits broadly.
If you can offer any examples as to how this proposed legislation may affect your organization – particularly if you are using any type of financial education as part of your services - please let ACR staff know immediately (.(JavaScript must be enabled to view this email address)). We would like to provide Members of Congress with concrete examples of how this legislation may affect the nonprofit community in our meetings and discussions.
Continue reading...
