On July 21, 2016, Senators Sherrod Brown (D-OH) and Jeffrey A. Merkley (D-OR), members of the Senate Committee on Banking, Housing and Urban Affairs, sent a letter to the heads of several banking regulators (the Federal Reserve, FDIC, OCC, NCUA) and the Consumer Financial Protection Bureau requesting a comprehensive suite of information on the regulatory approach these agencies take regarding financial technology.
In part, the Senators request information related to the following areas:
- what these agencies have done to study financial technology, including distributed ledger technology (i.e. blockchain),
- what role the agencies have in regulating or supervising fintech firms, and what considerations should be given to enabling non-bank fintechs the ability to obtain a full or limited federal banking charter,
- detailing how agency guidance related to third-party vendors (including the OCC’s Risk Management Guidance on Third Party Relationships) applies to fintechs,
- the ability of the agencies to enforce consumer protection and fair lending laws in the fintech space, and
- any interagency and international coordination that the agencies have taken with respect to regulating financial technology.
For any firms involved in the fintech space, the letter is a stark reminder that although financial technology is applying innovative, disruptive technologies and methods to many functions that were traditionally housed in brick-and-mortar banks and lenders, both Congress and regulatory agencies will be looking to evaluate whether financial technology firms are complying with laws that govern banking and lending; and, to the extent those firms are not, politicians and regulators will almost certainly query whether existing banking and lending law should be extended to apply to fintech as well in order to close any perceived “gaps”.