An insider's account: The making of the MOBILE Act
Some of you might remember the Schoolhouse Rock animation from the 1970s about how a bill becomes a law, with the central character being “Bill” himself. The words of ol' Bill and his dream of becoming a law stuck with me my entire life, and through the confluence of circumstance, time and opportunity, I have been able to see it play out in real life.
Back in 2015, I was an in-house lawyer with Compass Bank and we were expanding its online operations — particularly online account origination. One of the first hurdles we had to overcome was how to verify the identity of the customer/potential customer without ever meeting them face-to-face.
There are plenty of vendors in the marketplace ready to provide this service, but it is a hard dollar cost, and given the number of data breaches we have seen over the last few years, not as secure as most people would like. A suggested process was asking the applicant to submit a selfie and a copy of their driver's license electronically, so they could be compared just like with an in-person application. It seemed like a viable option until we started our legal research.
It turns out that there were several states where this would be a problem. They had laws on their books that prohibited copying state issued driver's licenses and identification cards. Even though we were told that those laws were to prohibit counterfeiting and would not be applied against the bank, we could not advise a course of action that would entail a knowing violation of the law.
As we considered alternatives, workarounds and programming options, it occurred to me that the most direct and certain avenue was one we had not considered — a superseding federal law.
Once we had a draft bill, we were ready to see if we could pitch it. I was lucky that Compass Bank had a federal lobbyist. He had to find willing legislative sponsors, which entailed meetings and materials that presented the case for this bill. When we got a potential sponsor interested, they wanted to know what industry groups, trade associations and consumer advocates thought of the bill. So, we had to have meetings and conversations with these groups to get their buy-in. Some groups had specific concerns that would require some tweaking and revising of the bill as we went along.
Now, keep in mind months and months have now gone by since the writing of the original bill. However, we were able to find a House sponsor and the measure was introduced as the MOBILE Act (Making Online Banking Initiation Legal and Easy). It was a huge day for me — my idea went all the way to the U.S. House of Representatives. But, with elections looming in 2016, that's as far as it went, and the bill died in the House at the end of the term.
In 2017, with all the changes the election had wrought, we had a renewed sense of optimism that the bill could actually pass. Bank regulation reform had become a hot topic and the majority in the House and the Senate were publicly advocating change. So, our lobbyist went to work again. The additional security this process could add for online account origination was a key selling point with the Equifax data breach fresh on everyone’s minds. It was again introduced in the House and passed in January of this year. It was then incorporated into the Senate deregulation bill that passed on March 14, 2018. Assuming that the House and the Senate can come to an agreement on the Senate package, President Trump has indicated he is anxious to sign this legislation into law.
Once the MOBILE Act is law, banks will be able to take a copy of driver’s license from any state to verify an identity. It will allow additional security and efficiency in online account origination, which is not only the wave of the future, it is the way of the present. Following years of depressed interest rates and fee-income limitations, anything like the MOBILE Act that can potentially cut costs without exposing the bank or consumers to additional risk should be very welcome.
Sometimes the simplest solutions are the best. We don't need things more complex than they have to be and Congress needs to understand that the banking industry needs action and relief. Bankers can get in touch with their representatives and tell them to move the deregulation package forward. As my experience shows, the financial industry can initiate and facilitate positive change.