Main Street Ledger: Washington Is Legislating on Financial Services Again. Keep Going.
In a town where progress can often be measured in inches, the past several months have produced something worth recognizing: Congress has been legislating on financial services.
The House Financial Services Committee and Senate Banking Committee have advanced consequential work across housing, digital assets, consumer financial protection, fraud and regulatory modernization. Some initiatives have become law. Others have moved substantially further through the legislative process. And in several areas, lawmakers from both parties have demonstrated that agreement is still possible on complicated financial policy—putting good policy and the people they represent ahead of politics.
As Congress leaves Washington ahead of the midterm elections, that progress deserves recognition. It also provides a roadmap for what should come next.
Housing is perhaps the clearest example. After years of concern about rising housing costs and constrained supply, Congress enacted the 21st Century ROAD to Housing Act in July. The legislation grew out of bipartisan work in the Senate Banking Committee and House Financial Services Committee and represents a significant congressional effort to address housing supply and affordability. The House has separately advanced the bipartisan Main Street Capital Access Act by a 270–155–1 vote.
Consumer financial protection reform aimed at a credible, stable, durable CFPB. This week, the House Financial Services Committee advanced the Consumer Financial Protection Accountability and Reform Act, 28–21. The package would make statutory changes to the CFPB's structure and operations, including its rulemaking, supervision and accountability.
There has been bipartisan agreement that the seismic shifts in Bureau policy, and the often political nature of the Bureau, needs to be reformed. Executive and regulatory actions can change from administration to administration; statutory changes require Congress to determine what should endure. With the House Financial Services Committee passing a significant CFPB reform package there are new and refreshing discussions happening about how to reform the CFPB into the credible, stable, durable regulator consumers deserve.
Congress has also taken on the rapidly changing digital-asset marketplace. Following enactment of a federal payment-stablecoin framework, lawmakers have spent months working through the considerably more complicated question of digital-asset market structure. The CLARITY Act did not clear its procedural hurdle in the Senate this week, but the debate has moved well beyond whether Congress should establish rules of the road to the harder questions of what those rules should contain.
Senate Banking Chairman Tim Scott has indicated negotiations will continue.
The work to establish clear guardrails is incredibly important. A durable framework should support innovation while addressing concerns about impacts to lending from banks around the country, consumer protection, financial stability, and other key issues.
Congressional Fraud Fighters Forged Ahead. The Committee approved the TRAPS Act 49–0, creating a coordinated public-private effort focused on payment scams. It also advanced the Civil Investigative Demand Reform Act and the American Lending Fairness Act.
The unanimous TRAPS vote is particularly notable. Fraud and scams increasingly cross the boundaries between banks, technology platforms, telecommunications companies, law enforcement and government agencies. A 49–0 committee vote demonstrates significant agreement that combating them requires greater coordination and focusing on stopping fraud and scams on the front end to better protect American consumers.
Meanwhile, Senate Banking has continued its work on agency leadership and other financial services priorities. This week the Committee approved out of committee, CFPB Director nominee Brian Johnson alongside other nominees.
After the Election, Important Work Remains
When lawmakers return after the November election, important legislative work remains in the financial services arena.
There is meaningful unfinished work already in motion: CFPB leadership and longer-term reform; fraud and scam prevention; housing affordability; and regulatory modernization—to name a few. Not every issue will produce bipartisan agreement. But the past several months demonstrate that Congress can still do the difficult work of financial policymaking: hold hearings, develop legislation, negotiate differences and, find substantial common ground.
That matters because financial markets are changing faster than any regulatory cycle or election calendar.
The productive work of the House Financial Services and Senate Banking Committees over the past several months should therefore be viewed not as an ending before November, but as a foundation.
When Congress returns, the opportunity is to build on it.
Credit Card Politics on the Campaign Trail
What’s Happening: Scranton Mayor Paige Cognetti (D) says she is planning to crack down on credit card fees as a part of her campaign to flip Rep. Rob Bresnahan’s (R-Pa.) seat in Pennsylvania’s Eighth District.
Why It Matters: This is the latest example of credit card issues making their way into key races across the country – with swipe fees being a growing political problem for issuers.
Between the Lines: Credit card issues have loomed larger in Congress after the Trump Administration’s embrace of the swipe fee bill from Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.) and call for a cap on credit card interest rates.
What They’re Saying: Cognetti told Punchbowl News that she plans to crack down on swipe fees as part of her small business agenda, in addition to capping credit card fees:
- “Those fees are just — they’re just so difficult for every small business,” Cognetti said, adding that she understands credit card companies have to make money but that the annual costs for small businesses are “pretty astonishing.”
What We’re Saying: CBA has pushed back against the narrative that capping credit card fees will help ease affordability pressures for consumers, highlighting that oftentimes credit cards are what help consumers bridge the gap between paychecks during emergencies or periods of high inflation.
Dive Deeper: To read more, click HERE.
Bessent: AI Companies ‘Could Stop Any Time They Want To’
What Happened: Treasury Secretary Scott Bessent last week brushed aside calls from leading AI executives to slow the development of the technology, telling lawmakers that the companies can hit the brakes themselves.
Why It Matters: Top executives at leading U.S. AI companies like Anthropic and OpenAI endorsed a slowdown in the development of frontier models due to existential safety concerns – a sentiment not shared by the Trump Administration.
- In response, the President rejected warnings about AI as a “hoax” and pushing back against more guardrails for the technology.
What They’re Saying: During his testimony before the U.S. House Financial Services Committee), Secretary Bessent defended the Trump Administration’s approach to overseeing advanced AI models:
- "This Administration has been at the forefront of examining the models […] We began model examination more than five or six months ago.”
He also urged Congress not to give AI developers any liability shield, accusing AI companies of trying to have it both ways:
- “They are saying that ‘we would like to all slow down, but please give us a waiver on liability,’ which should not be done […] and I would encourage everyone in this committee and in both houses not to consider that.”
Yes, but: Lawmakers have been skeptical of the lack of safeguards put in place regarding AI and the potential threat to Americans.
- “President Trump continues to blindly push for AI and data centers with absolutely no safeguards,” said Ranking Member Maxine Waters (D-Calif.). “He’s doing this even as constant threats skyrocket for Americans.”
Looking Back: Secretary Bessent has played a key role this year in coordinating the Administration’s efforts to strengthen the financial sector’s cyber defenses against advanced AI models that could overwhelm existing safeguards.
Dive Deeper: To read more, click HERE.
How Banks Can Counter the Threat of AI Agent Swarms
What Happened: A recent report on OpenAI AI agents’ July attack on AI company Hugging Face found the agents collaborated to attack another company and talked themselves into taking malicious behaviors unprompted.
Why It Matters: The report is a look into how AI agents can become dangerous without the right guardrails in place – indicating that banks need to strike a balance between preventing risks and quickly detecting and taking action on those risks when deploying AI agents.
What They’re Saying: Some bank leaders say the report reinforces the need for proper guardrails, identity, forensics, and monitoring:
- “Every additional agent at the table increases the odds that some emergent, unplanned interaction will walk around a guardrail you put in place,” Grasshopper Bank Chief Technology Officer Peter Chapman said. “Those agents were supposed to be fully isolated, and they found each other through a shared package cache, turning directory names into a message board.”
Others say this should not be a reason to avoid AI agents, and focusing too much on guardrails may stifle other lines of AI agent development for banks:
- "Used properly, they are probably too valuable to avoid,” Georgia Institute of Technology professor Mark Braunstein said. “However, it's a preview of what can go wrong when a company gives an agent too much freedom and not enough supervision, so the focus should be on what a bank needs to get right before it deploys one.”
- "If you over-index on prevention, your risk is you stifle innovation and speed,” PNC Bank Head of Data and Automation Ned Carroll said. “If you over-index on detection, you likely expose yourself to unnecessary risk. This is why we have seasoned, experienced risk professionals and senior leaders who have a risk mindset around striking that balance between prevention and detection.”
Looking Back: Bank regulators’ model risk guidance does not yet support agentic and generative AI, but regulators have begun asking banks about agentic AI, how they use vendors, safeguarding client data, and if they have the necessary controls in place.
Between the Lines: There are steps banks can take to protect themselves against rogue AI agents, internal or external – including creating defensive AI agents, keeping AI agents on a short leash, preventing communication between agents, building kill switches, and more.
Dive Deeper: To read more, click HERE.
