What banks should care about in the defense spending bill

WASHINGTON — The Senate Thursday night approved a $858 billion annual defense authorization bill, sending it to President Biden's desk just before the year-end deadline. 

Defense spending and other must-pass pieces of legislation have long been a way for financial policy measures to pass into law, and this bill is no exception. 

While the final version dropped the Secure and Fair Enforcement Banking Act, a popular cannabis banking provision, other key priorities wound up in the final bill passed by the Senate, including one long fought for by banks to hire more people with minor criminal records, and another that requires the Federal Reserve to create and maintain a public, online, searchable database of institutions that have access to a master account. 

Bloomberg News

The National Defense Authorization Act includes a provision championed by Sen. Pat Toomey, R-Pa., the outgoing ranking member on the Senate Banking Committee, that requires the Fed to create and maintain a public, online, searchable database of institutions that have access to a master account, as well as entities that have requested access to a master account. The database must be updated quarterly and include the status of any request for access, including whether a request was rejected.

"Events and information gleaned over the last year have raised significant policy questions about the Fed's approach to awarding master accounts," Toomey said in a statement. "Access to the Fed's payment system is a highly valuable public good, and Congress has a responsibility to taxpayers to ensure regulators give out public goods in a fair and consistent manner." 

Bank trades also got a win, with Congress passing a provision that will  amend Section 19 of the Federal Deposit Insurance Act to clear certain barriers to hiring candidates with minor criminal records by expanding the process for automatic waivers from the law's limits. For instance, a job candidate with an offense seven years old or older would receive certain exemptions.  

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"Banks have supported second-chance hiring for a long time, but statutory restrictions have limited their ability to offer job opportunities to qualified candidates with records," Greg Baer, the CEO of the Bank Policy Institute, said in a statement. "This legislation will wisely streamline access to those opportunities in a way that benefits both job seekers and the overall economy." 

A third provision important to banks would require seven of the financial regulatory member agencies in the Financial Stability Oversight Council to adopt and apply uniform data standards in the information they collect from their regulated entities. For banks, that should mean there will eventually be little difference between the data and the way it's collected among the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Fed. 

Congress was also working on another must-pass measure, passing a one-week extension of federal government funding. That will avert a partial government shutdown scheduled to begin Saturday, but will punt the issue to next week.