The Marketplace Lending Association has called on Congress, and the incoming Trump Administration, to become a catalyst for Fintech innovation and not an obstacle.
In a letter addressed to House and Senate leaders, Nathaniel Hoopes, Executive Director of the MLA, asked Congress to move away from an obstructionist approach and become a catalyst for financial innovation which benefits both consumers and businesses – most importantly smaller ones;
“…ensuring that America is a place where new ideas in finance can flourish and the federal government is a partner, rather than an obstacle, in promoting the innovation that will bring better products and services to all our citizens and businesses.”
That is the hope for Fintech. Better and less costly financial services for all. Yet there are some elected officials that prefer the status quo of big bank dominance.
The MLA letter requested a series of regulatory reforms and improvements that will benefit US citizens. One challenging area is the federal & state regulatory environment. The convoluted rule and compliance structure
One challenging area is the combination federal & state regulatory environment. The convoluted rule and compliance structure creates a significant barrier to competition, creating a virtual moat protecting old finance and diminishing the ability of Fintech startups to challenge established finance.
Hoopes told Crowdfund Insider;
“Consumers and business borrowers always benefit from greater transparency, competition, and choice, and that’s exactly what fintech companies are bringing to the market. That’s what we’re going to be advocating for in Washington – both with Congress and the new Administration.”
Late last year, the Office of the Comptroller of the Currency (OCC) recommended a new Fintech Charter for innovative financial firms. If the Fintech Charter makes it easier for Fintech firms to establish a nationwide presence without asking for the blessing of every state, this could be a win for the country.
“A federal OCC charter would ensure that all Americans, no matter where you come from, have the opportunity to access – and benefit from – the technological revolution in financial services,” said Hoopes.
The missive lists a series of potential reforms including;
- Reducing the burden of state and federal securities laws on retail investors who want to invest in small business loans. Creating a new category of security, a “crowdfunding debt security” or “marketplace debt security”.
- Revisiting the current accredited investor requirements. Existing laws largely prohibit non-accredited investors from investing in a range of innovative financial products. Greater democracy in investing can help level the playing field at a time when inequality of opportunity in America remains a significant concern.
- Recommending tax incentives to reduce the burden of student loans
Congress and the Trump administration will have their hands full this year. Regulatory overreach has created a “considerable drag on the economy” diminishing GDP and burdening consumers. One study stated that “if regulation had been held constant at levels observed in 1980, the US economy would have been about 25 percent larger than it actually was as of 2012.”
Let’s hope the Trump administration and Congress follow through on their mandate to fix things – and not just for Fintech.
The MLA letter is embedded below.
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