The Congressional Fintech Task Force heard new arguments in a hearing held on Tuesday about the new rules that would possibly expand banking regulations for accommodating more technology firms that offer financial services. The Fintech Task Force is a subunit of the Financial Services Committee and it heads the examination of emerging technologies conducted by the committee. Stephen Lynch (D-MA) the Task Force Chair, said that banking was no longer as centralized as before since consumers now have more options than ever before. Most of the arguments in today’s hearing were about whether loosening the banking rules would or wouldn’t extend financial access properly.
These rules include enabling more firms to offer loans, amongst other features. Lynch said that one of the promises of fintech was to help in banking the unbanked, but they have received mixed evidence so far. Demand Progress Education Fund’s Raul Carrillo was questioned by Representative Rashida Tlaib (D-MI) about whether fintechs had lived up to their claims. He said that there wasn’t any sufficient evidence to indicate they had done so, but there were increased concerns that transactions are taking place without appropriate protection. He also warned about Big Tech firms entering the financial space, concerns that were shared by Chairwoman of the full committee, Maxine Waters (D-CA).
Carrillo said that they were concerned about the move of dominant tech platforms into the payments world, such as the proposed Libra project by Facebook. Conversely, CEO and founder of Lendistry, Everett K. Sands, had a more optimistic opinion regarding the role of good actors. Lendistry is a Community Development Financial Institution (CDFI) and a fintech. He asked Congress to provide less ‘sticks’ to the bad ones and more ‘carrots’ for the good ones. He said that current rules of Small Business Administration (SBA) were aimed at risk management.
However, he said that a review was needed so good guys don’t have one hand tight behind their backs in a fight. Part of the reason for the hearing is the changes proposed to the payments charter by the US’s regulator for federal banks, the Office of the Comptroller of the Currency. They have been quite active in extending crypto engagement and fintech in the world of traditional finance. A number of people noted the role crypto has played in the payment evolution.
Sands said that regulatory adjustment was required for both lending and payments. He added that payments should first be focused on by the OCC because new technology entrants, such as blockchain, crypto and Bitcoin are gaining traction. Representative French Hill (R-AK) took an even more direct approach and said that a crypto payment rail should be part of the currency reforms for payment systems. Acting head of the OCC, Brian Brooks had noted previously that their authority in payments predates their authority in banks, but there is some pushback in regard to the new federal payments charter.