WASHINGTON — As the outgoing administration stresses the need for stricter regulatory requirements on new fintech companies, technology companies are urging President-elect Donald Trump to lower the barriers to entry for new financial industry players.
In a speech Thursday to the annual investors conference on marketplace lending, Antonio Weiss called for Congress to pass legislation to expand disclosure requirements for small-business lending, an area that is being increasingly targeted by marketplace lenders.
"If a borrower takes out a loan as a consumer, he or she is protected," said Weiss, the counselor to the Treasury secretary. "The same borrower seeking to expand his or her small business is not. This represents a regulatory gap where there is often no recourse against irresponsible or incomplete financial disclosures."
Weiss suggested that small-business loans of less than $100,000 should face the same types of mandatory financial disclosures as consumer loans.
He also called for federal regulators to be careful in how they handle nontraditional types of credit underwriting.
"Data-driven algorithms may expedite credit assessments and reduce operational friction," said Weiss. "However, these algorithms also carry the risk of disparate impact in credit outcomes and the potential for fair lending violations."
His comments come as large tech companies are urging the Trump transition team to ease restrictions on fintech companies seeking to access the financial system.
In a letter Wednesday, Financial Innovation Now — an advocacy group that represents Amazon, Apple, Google, Intuit and PayPal — asked the incoming administration to create a new position of Treasury undersecretary for technology.
FIN Executive Director Brian Peters asked Trump to "foster competition and innovation in financial services to better serve consumers and the economy."
For instance, he called for imposing limits on banks' ability to close off their payment networks from fintech companies.
"FIN urges your administration to scrutinize technological barriers to payment security innovation and explore authentication methods that are truly standards-based, open, and interoperable," the letter said.
In addition, FIN asked for the creation of a federal licensing system for money transmitters — which include many marketplace lenders and other fintech companies — as well as uniform lending laws that would replace state-by-state rules.
The group also called for the Trump administration to side with fintech companies in the debate over financial data access — in which banks have been accused of shutting out financial advisers and other third-party companies from accessing bank account information with the permission of users.