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US politicians weigh response to OCC payments charters

With financial technology firms growing fast and big tech outfits increasingly moving into the FS sector, a senior US politician has warned about the risks of "too-big-to-fail" fintechs.

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US politicians weigh response to OCC payments charters

Editorial

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In a hearing of the House of Representatives Task Force on Financial Technology, chair Congressman Stephen Lynch said: "Technology and tech companies are playing an ever-increasing role in our finances, and our laws and regulations are struggling, to be kind, to keep pace."

Lynch noted the battle over the Office of the Comptroller's fintech and payments charter efforts, saying they "raise questions about the traditional separation of banking and commerce, and the entry of technology firms with their move fast and break things approach into the financial services arena".

The American Bankers Association (ABA), the Bank Policy Institute (BPI), the Independent Community Bankers of America (ICBA), and The Clearing House all wrote to Lynch this week outlining their opposition to the OCC's plans.

Lynch says that the legal questions and regulatory issues should be addressed by Congress, arguing that regulators and courts have been "forced to resort to 19th century texts to interpret the intentions of Congress from a time when these issues were far less apparent".

He continued: Banking has changed. We can't afford to allow outdated laws to create opportunities for regulatory arbitrage and additional consumer harm. We need to update our regulatory framework to provide clarity, opportunity for innovation and, most importantly, safeguard the consumer."

In contrast to Lynch, Republican ranking member Congressman Tom Emmer offered support for the OCC payment charter, saying it is "by no means a license to operate free from regulation".

He added: "It is not even regulation-lite, as some of the testimony today will portray. It in fact imposes many responsibilities and duties to adhere to safe business practices and disclose information in an effort to ensure market stability."

Emmer used the hearing to call for the creation of a Financial Technology Subcommittee to focus attention on the expanding influence of fintech developments on the financial sector and wider economy.

“The consequences of Congress’ action, or inaction, on these topics stand to greatly influence the economy as well as the location of the next great technological innovation like the internet," he said. "As a body, we have already fallen behind on our knowledge and understanding of technology issues. If we don’t catch up on fintech, these innovations will pass us by."

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