HR 7437 — Fostering the Use of Technology to Uphold Regulatory Effectiveness in Supervision Act

7437 IntroducedReported in House (IH)](RH)] <DOC> 118thUnion CONGRESSCalendar 2dNo. Session H.

615 118th CONGRESS 2d Session H.

7437 To[Report requireNo. certain supervisory agencies to assess their technological vulnerabilities, and for other purposes.

118-728] To require certain supervisory agencies to assess their technological vulnerabilities, and for other purposes.

which was referred to the Committee on Financial Services _______________________________________________________________________November A1, BILL2024 ToAdditional requiresponsor: certain supervisory agencies to assess their technological vulnerabilities, and for other purposes.

Ms.

Pettersen November 1, 2024 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on February 23, 2024] _______________________________________________________________________ A BILL To require certain supervisory agencies to assess their technological vulnerabilities, and for other purposes.

(2) BureaucracyRisk and risk surrounding technology procurement presentsmay apresent difficultchallenges challenge for updating supervisory technology.

(4) New technologytechnological tools are also necessary in order for agencies to effectively fulfill mandates other than prudential supervision, including their mandates to assure consumer protection and monitor Bank Secrecy Act compliance.

(C) reliance on limited and outdated tools for data analysis;

(C)(D) difficulties in using data to identify risk trends;

(D)(E) difficultydifficulties in producing accurate and timely reports;

(E)(F) inadequacy of cybersecurity safeguards;

and (F)(G) failure to detect illegal activities.

(6) The rapid expansion of financial firms' use of artificial intelligence ismay generatinggenerate opportunities to improve the financial system,system while also introducing a range of risks, making it essential that agencies be equipped with the technology and skills needed to analyze these opportunities and potential risks.

(a) In General.-- (1) Technological vulnerabilities assessment.--Each covered agency shall, not later than 180 days after the date of the enactment of this section, assess how its existing technological systems used by the covered agency prevent anthe covered agency from conducting real-real-time time supervisory assessments overof entities over which the covered agency has supervisory authority, including the effects stemming fromfrom-- the agency's-- (A) core information technology infrastructure;

(B) technology used to supervise entities, including supervisory technologytechnological tools;

(2) Procurement practices assessment.--Each covered agency shall, not later than 180 days after the date of the enactment of this section,section-- (A) assess the procurement rules and protocols adhered to by such covered agency when such covered agency acquires or develops new technological systemssystems; and identify any challenges created by such procurement rules and protocols, including the impact such rules or protocols have on the ability of the covered agency to test new technological systems.

(b)and Report.--Not(B) lateridentify thanany 180challenges dayscreated afterby thesuch completionprocurement ofrules the assessments set forth in this section, and everyprotocols, 5including years thereafter, the coveredimpact agenciessuch shallrules coordinateor andprotocols submithave to the Committee on Financial Services of the Houseability of Representatives and the Committeecovered onagency Banking, Housing, and Urban Affairs of the Senate a report that includes the following with respect to eachtest coverednew agency--technological (1)systems. a general overview of hardware and software used for informational gathering during supervision activities, including products purchased from technology vendors and products developed by the covered agency or contractors;

(b) Report.--Not later than 1 year after the completion of the assessments required under subsection (a), and every 5 years thereafter, the covered agencies shall coordinate and jointly submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report that includes the following with respect to each covered agency-- (1) a general overview of hardware and software used for information gathering and advanced analytics during supervision activities, including products purchased from technology vendors and products developed by the covered agency or contractors of the covered agency;

and (B) any challenges resulting from such practices and protocols thatand haverelevant hinderedfactors, theif abilityany, ofthat have impacted the covered agencyagency's ability to obtain new technology;

(3) a general overview of the agency'sportion of workforce of the covered agency that is engaged primarily in technology development within the covered agency, including-- (A) an overview of the ability of the covered agency to recruit and retain appropriate technology experts;

and (B) aemployee descriptionself-reported ofworkforce thedata; degree to which the covered agency relies on outside contractors to design technology and perform technology-related tasks;

and (C) a description of the degree to which the covered agency relies on contractors to design, develop, or deploy technology and perform technology- related tasks;

(5) a description of the ways in which the covered agency shares information or system access with other covered agencies;

(6) an evaluation of the level of ease or difficulty experienced by the covered agencyagency, including any legal or regulatory challenges, when-- (A) sharing data with other government agencies;

andor (B) collecting data from entities supervised by the covered agency;

and (7) aan descriptionevaluation of anycost plansfor thesupervised coveredentities agency has with respect to howmodify thesystems covered agency will implement future upgrades to theshare technologydata usedwith by the covered agencyagencies; to supervise entities supervised by the covered agency, including-- (A) a general description of any planned upgrades;

(B)and (8) a description of any plans the anticipatedcovered timelineagency has that relate to how the covered agency will implement future upgrades to the technology used by the covered agency to supervise entities supervised by the covered agency, including-- (A) a general description of any planned upgrades;

(B) the anticipated timeline for any planned upgrades;

(F) any aspects of any planplanned upgrades that should be addressed on an interagency basis;

and (G) any anticipated challenges and solutions associated with entities supervised by the covered agency adapting to new reporting requirements, includingincluding-- the(i) needs and plans for supervised entities adaptation to new reporting requirements, including estimates of transition costscosts; and potential cost reductions over time.

(c)and Covered(ii) Agencyestimates Defined.--The term ``covered agency'' means the Federal Reserve System, Federal Deposit Insurance Corporation, Office of theany Comptrollerpotential ofcost thereductions. Currency, Consumer Financial Protection Bureau and the National Credit Union Administration.

<all>(c) Covered Agency Defined.--In this section, the ``covered agency'' means the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, the Bureau of Consumer Financial Protection, and the National Credit Union Administration.

Union Calendar No.

615 118th CONGRESS 2d Session H.

R.

7437 [Report No.

118-728] _______________________________________________________________________ A BILL To require certain supervisory agencies to assess their technological vulnerabilities, and for other purposes.

_______________________________________________________________________ November 1, 2024 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed