I expect to see more of these comment letters as battle lines have clearly been drawn regarding the debate on the proposed Office of the Comptroller of the Currency (OCC) Fintech Charter.
In brief, the OCC has proposed crafting a Fintech Charter for innovative financial firms to be able to operate across the country. In theory, the Charter would be structured like the national bank charter that big banks use today to pre-empt certain state oversight. But this is a situation where no good deed will go unpunished as the OCC has managed to upset two powerful constituencies: big banks and state regulators.
Yes, as with all good battles, this is about money and power.
The banks do not like the thought of having to compete with pesky startups that may undermine their long established (and entrenched) services. In a twist of Shakespearean irony, the costly mandates applied to big finance has created a stiff regulatory barricade that only the best-financed financed startups can breach.
State regulators would prefer the Feds leave well enough alone and let financial firms come directly for them for approval. The states do not like to have their authority (potentially) usurped.
Who stands to lose out? Consumers and small business of course. But that is beside the point. Remember how competition can drive better services and lower prices?
The New York Department of Financial Services (DFS) Superintendent Maria T. Vullo has submitted a comment letter in stern opposition to the OCC proposal to create a new Fintech charter. DFS has licensed nonbank financial services companies, including money transmitters, online lenders, and virtual currency exchanges under state law. Vullo believes that “the OCC should not use technological advances as an excuse to attempt to usurp state laws”.
DFS is of the opinion that a Fintech Charter will encourage “too big to fail”, stifle innovation, encourage regulatory arbitrage and devastate the financial system. Wow. I am afraid to open my eyes.
Remember, there are 50 states each with their own set of financial rules and mandates. It is a wonder we even have a Fintech community in the US of A.
You can read the DFS comment letter below.
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