FinTech, Big Tech and the Safety of the Banking System
Keeping the US banking system safe and stable has been a persistent challenge for policymakers. Over the past 150 years, Congress has enacted several measures to strengthen the legal and regulatory framework for banks in response to episodic banking crises, and through its actions, deepened the social compact with banks.
Through the passage of laws like the
- National Bank Act (1864);
- Federal Reserve Act (1913);
- Federal Deposit Insurance Act (1950); and
- Bank Holding Company Act (1956)
Congress articulated a clear view that to enjoy the benefits of being a bank – the right to accept deposits, lend and process payments with the benefit of the federal safety net (FDIC insurance or access to the discount window) –banks are expected to act prudently and comply with a meaningful regulatory and supervisory framework.
Unfortunately, the safety and stability of our system is at risk as technology companies seek to act more and more like banks, but without adhering to a prudential framework. They seek all the benefits of being a bank without taking on the duties and responsibilities that come along with it.
Banking is safe, strong and stable. Keep it that way.
Latest Content
- BPI and ICBA Comment on Albert Corporation’s Application for Deposit Insurance
- Fed Payment Accounts Need Strong Guardrails to Protect Financial System
- Joint Trades Comment on Federal Reserve Payment Account Framework
- Hotel Fed: You Can Check In, But Can You Ever Leave?
- BPI Comments on Payward National Trust Company Charter Application
- 9 Takeaways from the Prudential Regulators Hearing
- Open Banker: Fintechs with Fed Accounts Will Harm Consumers, Not Help Competition
- The Evolving Competition from Nonbanks in Retail Banking Markets from the Perspective of the Survey of Consumer Finances
- The Evolving Competition from Nonbanks in Retail Banking Markets: Evidence from the Survey of Consumer Finances
- BPI and ICBA Comment on Affirm Bank’s Application for Deposit Insurance