Senator Sherrod Brown and Senator Jeffrey Merkley, both members of the Senate Banking Committee, sent a letter last week to several governmental agencies inquiring about Fintech and regulations. The letter was addressed to: Janet Yellen, Chair of the Federal Reserve, Martin Gruenberg, Chair of the FDIC, Richard Cordray, Director of the CFPB, Thomas Curry, Comptroller of the Currency, and Rick Metsger, Chair of the National Credit Union Administration.
The letter was ostensibly a request to gather additional information and perhaps a bit of prodding regarding regulatory approach;
“As we think about the role of Fintech, we must be mindful that some of these products, activities, and business models may be new and innovative, while others may largely resemble those of existing, federally regulated firms. We write to seek more information about the tools the regulators have to ensure effective oversight over Fintech companies. Recently in the Financial Stability Oversight Council (FSOC) Annual Report, FSOC identified financial innovation and migration activities as an area that “merit(s) special attention from financial regulators who must be vigilant to ensure that new products and practices do not blunt the effectiveness of existing regulations or pose unanticipated risks to markets or institutions.”
The letter itemized a list of inquiries regarding how alternative financial services operate along with potential risks and concerns. Of course for innovative financial firms that are seeking to challenge traditional financial services, governmental curiosity like this may generate a different sense of anxiety. There has been much chatter regarding traditional financial firms, like big banks, lobbying for help on Capitol Hill.
This is not the first time a letter has been fired off by elected officials under the guise of concern for Fintech. In April of this year, three Democratic Senators including Jeff Merkley, Sherrod Brown, and Jeanne Shaheen, posed similar questions to the GAO. In November, Senators Brown, Merkley, and Shaheen sent a letter to Treasury Secretary Jack Lew and the head of the U.S. Small Business Administration, Maria Contreras-Sweet, requesting information about Fintech’s impact on consumers and small businesses who use this market to access credit.
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