WASHINGTON — Several Democratic senators are calling for the Government Accountability Office to investigate whether financial technology companies are properly regulated.
"Observers have questioned what the appropriate role of federal regulators should be in supervising fintech companies that provide small-business capital and consumer lending," Sens. Sherrod Brown D-Ohio, Jeff Merkley D-Ore., and Jeanne Shaheen D-N.H., said in a letter Monday to the GAO. "It is possible that the current online marketplace for small-business loans falls between the cracks for federal regulators."
It has been five years since the GAO conducted its last study of fintech regulation, and fintech has "grown significantly and branched out into new areas, including small-business lending," the letter said.
The 2011 report only looked at peer-to-peer lenders and concluded that fintech companies could be either regulated by the multiple federal regulators that already existed or that oversight could be consolidated within a single regulator like the Consumer Financial Protection Bureau.
Pressing questions include how the relationships between financial institutions and fintech companies affect the broader financial system, and what are the implications of using nontraditional data for loan underwriting, the letter said. The GAO should also examine what sort of anti-money-laundering and data-security requirements should apply to fintech companies, the letter said.
"We are very interested in ensuring that fintech provides credit to small businesses and consumers in a way that prevents abusive practices while expanding economic opportunity," the letter said.