Senators Sherrod Brown (D-OH) and Jeff Merkley (D-OR) urged the heads of numerous federal regulatory agencies to provide insight about the tools they currently utilize to ensure effective oversight over financial technology firms ("fintech"), particularly for the areas concerning consumer protections and the risks posed by new technologies. Their letter was sent to Federal Reserve Chair Janet Yellen, Comptroller Thomas Curry of the Office of the Comptroller of the Currency, FDIC Chair Michael Gruenberg, National Credit Union Administration Chair Rick Metsger and Consumer Financial Protection Bureau Director Richard Cordray.
Regarding the regulation of third-party service providers, the Senators urged the agencies to elaborate on their respective:
- guidance on how third-party relationships apply to fintech companies, and any expectations for financial institutions that partner or engage with fintech companies;
- considerations used to determine how to use their authority to examine and regulate third-party service providers;
- steps taken to ensure financial institutions of all sizes are aware of the risks and regulatory expectations for partnering with or acquiring fintech companies; and
- examinations of third-party service providers that are fintech companies, and whether or not they have sufficient examination and enforcement authority over third-party service providers.
With respect to "Diverse Business Models," the Senators requested that the agencies describe their respective:
- efforts "to study and understand the various types of companies involved in marketplace lending, alternative payments, consumer lending, blockchain and distributed ledger, virtual currencies, personal finance management, robo-investing or saving";
- roles in supervising or regulating these firms, including what considerations should be given to enable non-bank companies to obtain a full or limited federal banking charter; and
- views on the impact of fintech firms on the institutions they regulate.
Concerning consumer and small business protections, the Senators asked that the agencies clarify their respective:
- direct and indirect authority to supervise companies that make consumer and small business loans or advances;
- opinions on alternative data used to underwrite loans or advances;
- capacity to enforce consumer protection and fair lending laws to ensure that fintech companies are compliant with the Community Reinvestment Act; and
- plans to implement Dodd-Frank Act Section 1033 (Consumer rights to access information).
The Senators called on the agencies to clarify their efforts regarding:
- interagency coordination, as well as international coordination; and
- balancing a culture that fosters innovation with their regulatory and supervisory responsibilities.
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