House bill aims to grant financial regulators oversight of tech vendors

As outlined in FedScoop, a new bill in the House of Representatives seeks to grant the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA) the authority to oversee technology providers used by the financial institutions they regulate. This proposed legislation, H.R.10230, titled the Strengthening Oversight for the Financial Sector Act, is championed by Rep. Bill Foster, who argues it is crucial in the evolving landscape of artificial intelligence and cybersecurity threats.

The bill addresses a perceived gap in regulatory power, as the NCUA's temporary authority to oversee third-party vendors has lapsed, leaving financial systems vulnerable. Rep. Foster highlighted concerns that sophisticated AI-powered cyberattacks could exploit weaknesses in these third-party relationships, potentially compromising sensitive data and financial assets. The legislation would amend existing acts to provide the FHFA director with regulatory authority over services used by Federal Home Loan Banks and government-sponsored enterprises, among others.

While supported by previous regulators and the Government Accountability Office, the Defense Credit Union Council has voiced opposition, arguing the bill's scope is too broad and urging for a more targeted approach after identifying specific regulatory gaps and consulting with affected credit unions.

Source: FedScoop