The American Fintech Council (AFC) has sent a letter to the FDIC [Federal Deposit Insurance Corporating] for its activity directed towards innovative financial services firms.
The letter, signed by Phil Goldfeder, CEO of AFC, claims the FDIC has “systematically changed its posture towards innovation,” utilizing “regulation by enforcement,” mainly targeting Fintechs or firms that enlist the services of Fintechs.
The letter states:
“… according to recent industry research, over a quarter of the FDIC’s formal enforcement actions have been issued against banks that partner with Fintech companies. While the Office of the Comptroller of the Currency and the Federal Reserve have also recently issued enforcement actions against Fintech-partnered banks under their jurisdictions, the FDIC’s enforcement activities show a concerted, years-long effort against responsible bank-Fintech partnerships. The unbalanced enforcement activity has disproportionately targeted banks who partner with Fintech companies and has resulted in a significantly increased chance of receiving a formal enforcement action from the FDIC based solely upon the business model. Simply put, under your leadership, it appears that the FDIC has developed an approach towards its examinations of and enforcement actions for innovative banks that is improperly targeting certain institutions and severely limiting consumer choice in financial services.”
AFC adds that the FDIC has shifted its priorities away from supporting innovation by aiming to impede innovation.
AFC notes that Fintechs are supporting smaller banks, enabling them to remain competitive in an increasingly digital banking ecosystem.
The FDIC’s activity may reflect the posture of the current administration, which has arguably been anti-Fintech innovation.
