Washington, D.C. – As a new Administration and new Congress start to take shape, they will be forced to confront an issue that is reaching a tipping point – should tech firms be granted banking powers but allowed to ignore banking regulations designed to protect consumers, keep the system safe and hold executives accountable if problems arise? That’s exactly what is happening – for example, last year we saw the FDIC grant deposit insurance for ILCs after a 14-year hiatus (paving the way for tech giants to own insured banks), state banking regulators issue special purpose depository institution charters to cryptocurrency firms and the OCC propose to grant novel types of national bank charters to any variety of FinTech firms.
If these policy ideas take off, consumers and the safety and soundness of the banking industry will be put at risk. Congress and incoming regulators must take action to ensure technology companies aren’t allowed to exploit existing or create new loopholes to gain access to the banking system without adhering to the safeguards that apply to regular banks. BPI highlights these risks through a new website launched today that provides a comprehensive look at how regulatory half-measures put consumers at risk. If tech companies want to get into the business of banking, they need to be subject to the same consumer, safety and soundness and financial stability protections that apply to banks.
“Innovation shouldn’t come at the cost of banking’s most foundational cornerstone: banks are built on the trust that they keep customers’ money and data safe,” BPI President and CEO Greg Baer said. “Policymakers should keep this crucial balance in mind in their approach to overseeing national banks.”
BPI’s new website is a dynamic hub of issue-relevant content that provides fact sheets, policy analysis, videos, survey results and recent news articles. It will be updated with additional content as legislative and regulatory developments advance.
The American public has made preventing FinTech loopholes a priority: A majority (64 percent) of adults want companies that offer them financial services or handle their finances to be regulated like a bank, according to recent Morning Consult survey data. The nation’s lawmakers and incoming financial regulators should do the same.
About Bank Policy Institute.
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.