Peace Garden News

WASHINGTON – U.S. Senators Kevin Cramer (R-ND) and Elizabeth Warren (D-MA), members of the Banking Committee, reintroduced the Bank Service Company Examination Coordination Act, legislation they led in the 116th and 117th Congresses. The bipartisan bill would define states’ authority to examine third-party Technology Service Providers (TSPs), improve information sharing and oversight mechanisms, and reduce regulatory inefficiencies.

“Financial institution partnerships with TSPs have become standard practice, and our laws need to catch up,” said Senator Cramer. “This bill would establish needed clarity for state and federal regulators, and in doing so, enhance data security for every American who invests their earnings or keeps them in a bank.”

“I’m glad to partner with Senator Cramer on this bipartisan effort to strengthen consumer protection and ensure the safety and stability of our financial system,” said Senator Warren. “The Bank Service Company Examination Coordination Act will close gaps in our current regulations by promoting more efficient oversight and improving information sharing between federal and state banking regulators.”

Banks use TSPs to outsource services like loan and deposit taking, payment processing, IT security and testing, and call center operations. Similarly, partnerships with fintech firms allow them to provide investment and personal finance services through mobile apps. While common, these relationships can expose banks and consumers to unique compliance and data security risks.

The Bank Service Company Act (BSCA) authorizes federal regulators to evaluate TSPs, but is silent on the role of state regulators, resulting in duplicative supervision. Senator Cramer’s Bank Service Company Examination Coordination Act would amend the BSCA to address this.

Joining Senators Cramer and Warren are Senators Cynthia Lummis (R-WY), Mazie Hirono (D-HI), John Boozman (R-AR), and Mike Rounds (R-SD).

The bill has also garnered support from stakeholders on the state and national levels.

“This legislation will enable better information sharing and exam coordination between state and federal regulators.  Addressing risks to the banking system is more efficiently done when regulators work together. I appreciate this bi-partisan effort to ensure better coordination between regulators and the recognition that state regulators have a seat at the table,” said North Dakota Department of Financial Institutions Commissioner Lise Kruse.

“State bank regulators applaud Sens. Cramer and Warren for common-sense legislation that appropriately removes any perceived barriers to information sharing between state and federal regulators when examining third-party providers. This bill will help make financial services safer and provide better protections for consumers nationwide,” said Conference of State Bank Supervisors President and CEO Jim Cooper.

Click here for bill text.

Original source can be found here.