Fintech regulations

Six online lenders and the National Community Reinvestment Coalition have asked the Consumer Financial Protection Bureau for clarity on whether disparate-impact rules apply to lending decisions made by machines.

The House voted on Thursday to dismantle a Trump-era rule that sought to make it easier for national banks to make and sell loans through fintech partnerships.

A state regulator group has agreed to pause its lawsuit challenging Figure Technologies’ application as the federal agency reviews chartering policies. But analysts caution that the underlying conflict over nontraditional firms seeking banking powers is far from resolved.

The appointments of former senior leaders from a rival regulator could force the Office of the Comptroller of the Currency to embrace interagency cooperation after taking a go-it-alone approach during the Trump administration, some observers say. Others worry about another extreme: the Federal Reserve having outsize influence over financial policy.

A new public-private network is pursuing a more comprehensive approach than other states to cultivate a strong financial technology industry by uniting banks, insurance companies, startups, government agencies, investors, universities and students.

Manny Alvarez, the head of California’s Department of Financial Protection and Innovation, told staff that he plans to leave on June 18. Chief Deputy Commissioner Chris Shultz will be appointed to lead the agency on an interim basis.

State regulators had notched a victory in 2019 when a judge sided with the New York State Department of Financial Services in a case challenging the Office of the Comptroller of the Currency's charter. But an appeals court panel overturned that decision.

Acting Comptroller of the Currency Michael Hsu faces a host of “pressing issues” from fintech charter decisions to reforming the Community Reinvestment Act. But in contrast to predecessors, he suggests some decisions should be left to a Senate-confirmed head of the agency.

The Federal Reserve's Randal Quarles, in testimony before the Senate Banking Committee, sought to fend off criticism from Sen. Elizabeth Warren that the central bank treated with kid gloves some foreign banks under its jurisdiction that later took heavy losses. The hearing also featured a discussion about a new framework for digital assets.

The Department of Financial Protection and Innovation has tapped Christina Tetreault as the head of the newly created Office of Financial Technology and Innovation.

Some worry the Senate’s rejection of the OCC rule hampers efforts to clarify legal standards for banks selling loans to fintechs.

The Biden administration may finally be close to naming an acting comptroller of the currency. Whoever gets the interim job or is confirmed to run the agency over the longer term will have a lengthy to-do list, from Community Reinvestment Act reform to deciding the fate of divisive Trump-era rules.

The industry has raised concerns about nontraditional bank owners, and some lawmakers have backed limits for industrial loan companies and cryptocurrency firms. But members of the House and Senate have been unable to reach a consensus on legislation.

Ten companies this week joined the American Fintech Council, which debuted March 3 after the Marketplace Lending Association and Online Lending Policy Institute combined.

Rohit Chopra, President Biden’s nominee to lead the Consumer Financial Protection Bureau, has not minced words in calling out private companies for wrongdoing. He could get a grilling from Banking Committee Republicans and some opposition on the Senate floor.

Lost in the debate about whether to make fintechs comply with the Community Reinvestment Act is that many of them already partner with banks to make loans in low-income neighborhoods.

As the bureau writes data-sharing rules, the third-party firms that work with fintechs say oversight by the agency would be more efficient — and better for consumers — than being policed by their bank partners.

The jockeying over who President Biden should appoint to head the Office of the Comptroller of the Currency has focused attention on how to regulate the fintech sector, but the discussion has glossed over flaws in the agency's funding structure that have persisted across administrations.

Several financial tech companies that applied to become national banks are seeking exemptions from many provisions of the Community Reinvestment Act. A consumer advocacy group and the American Bankers Association say the OCC mustn't allow this.

U.S. banks and payment companies are looking to Europe's example to see how open banking can push the market beyond its reliance on credit and debit cards.