Pandemic Forces Seismic Shift in Financial Protection Mindset
By Michael Herman, AdvantEdge Digital President
August 25, 2021 – While the economic impact of COVID-19 on individuals and families has been about as divergent as possible, most people experienced a financial awakening of one form or another. Whether it was the financial devastation of a job loss or the influx of savings from going nowhere and doing nothing, unprecedented times forced most Americans to confront entirely new household economics.
Anyone who’s had to adjust a family budget knows the exercise conjures up the need to choose. Most often, decisions around budgeting come in the form of trade-offs: Do we drive a new car and cook meals at home or drive used and enjoy the occasional meal out? Obviously, there are Americans facing much more difficult, even unfathomable, trade-offs, like the choice between food or shelter, medicine or clothing. Those are circumstances no one should have to face. For the financially well, however, trade-offs are a manageable way of living within an individual’s or family’s means.
Other budgeting decisions come in the form of risk assessment. Insurance is a prime example. How likely is it that our home will sustain storm damage? How much life insurance makes sense based on our ages and the family’s income needs?
These are the basic budgeting choices families have been making for decades. But during the pandemic, even the basic became complex. As the day-to-day grind came to a grinding halt, we were faced with a whole new set of choices, risks and worries. Seemingly overnight, trade-off and risk-mitigation decisions we’d grown accustomed to making were upended. This left many, including credit union members, understandably anxious about their financial situations.
March 12, 2021–Read the introduction and entire summary here.
Effort to tax a non-profit
Early in the session our contract lobbyists picked up a rumor that the senate president was going to stick it to Intermountain Healthcare by revoking their tax exemption. While not directly connected to us, it was entirely plausible that we, through our tax exemption, could get pulled into a public dialogue we would prefer to avoid. After a little more sniffing around, we connected with the senate president, who confirmed his intent—and who, I should state, has no intention of harming us. We had a chance to discuss our proximity concern and mentioned a few distinctions. We spent most of the session expecting that to unfold, and got word that the tax would eventually just apply to real property—something much less threatening to us. Ultimately, nothing materialized. That sort of gamesmanship and unexpected outcome is standard fare for lawmaking.
HB370 Earned Wage Access Services Act
There’s a rising industry that literally makes every day… a payday. Essentially, an employee is paid every day a wage is earned. There are employer-sponsored versions of this, made popular by new economy companies like Uber or GrubHub. Of more concern are the 3rd party providers who essentially advance pay to a person every day and then ACH the person’s account on their traditional payday. If that last part sounds like payday lending, it should, because it’s very close. Like the previous sandbox bill, we watched this bill to make sure that this new product type would have similar regulatory treatment as similar industry. It’s not so much that we care about this product in particular, but there’s the overarching policy philosophy that we’re always trying to cultivate. This bill died on the vine. It did not receive a final vote.
SB200 Consumer Privacy Amendments
This bill is Utah’s answer to the California Consumer Privacy Act (CCPA). We first saw it in the waning days of last year’s session where it died. As an industry that was germinated as consumer protection, and already subject to heavy regulation (CFPB), we’ve actively tried to steer this bill. Proponents of this bill wanted to regulate privacy by product. We, on the other hand, wanted our entire business category addressed in a carveout so future product delivery would not be impeded by this bill. We made that case, with the banks, and the sponsor agreed and amended the bill to exclude institutions already subject to Graham-Leach-Bliley. In spite of that intermediate success, the bill died on the vine at the end of the session—which is also ultimately success.
HB217 Regulatory Sandbox Program Amendments
This sandbox is the government’s attempt to create a near-regulation-free space where innovation and entrepreneurship can meet—which makes great economic development sense. We believe this sandbox could give life to a direct credit union competitor (fintech) that isn’t subject to the same regulatory pressures as us. Should those consequences be addressed? We worked to make sure DFI had a role in the sandbox monitoring for just that reason. This bill passed with our concerns tackled.
March 1, 2021 — Today, the Department of Financial Institutions for the State of Utah authorized Square Financial Services, Inc. to open for business as a state-chartered industrial bank.
On September 17, 2017, Square, Inc. submitted an application to the Department to establish Square Financial Services, Inc. as a Utah-chartered, FDIC-insured, industrial bank. The application was materially amended on December 18, 2018. The Commissioner of Financial Institutions granted conditional approval of the application in an Order dated March 17, 2020. Having satisfied all opening requirements, the Department authorized the bank to open for business effective today’s date.
Square Financial Services, Inc. is a wholly owned subsidiary of Square, Inc., a publicly traded corporation headquartered in San Francisco, California. Square Financial Services, Inc., located in Salt Lake City, Utah, will offer banking products and services, including deposits, primarily to a nationwide market of small businesses, including those who operate as merchants on Square’s payment processing platform.
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