Fintech regulations

Income share agreements, which allow college graduates to repay tuition financing as a percentage of their future income, have come under fire lately from consumer advocates for questionable marketing and other potential legal violations. Some hope a partnership between a Virginia bank and an ISA provider will give the product more legitimacy, while others worry it just masks risks for borrowers.

A congressional resolution that invalidates the regulation issued last fall by the Office of the Comptroller of the Currency would help regulators crack down on so-called rent-a-bank schemes that promote predatory lending, the president said before signing the measure.

Six online lenders and the National Community Reinvestment Coalition have asked the Consumer Financial Protection Bureau for clarity on whether disparate-impact rules apply to lending decisions made by machines.

Some worry the Senate’s rejection of the OCC rule hampers efforts to clarify legal standards for banks selling loans to fintechs.

Rohit Chopra, President Biden’s nominee to lead the Consumer Financial Protection Bureau, has not minced words in calling out private companies for wrongdoing. He could get a grilling from Banking Committee Republicans and some opposition on the Senate floor.

A panel appointed by the Consumer Financial Protection Bureau said Congress should consider authorizing the bureau — and not the Office of the Comptroller of the Currency — to issue federal charters to fintech companies.

As it attempts to craft policy on access to consumers’ financial account information, the agency is wading into a battle between those who want data to flow more freely and those who prioritize security.

The OCC is trying to seize jurisdiction by arguing that current supervision is haphazard. But states are already working together to streamline regulation while continuing to enforce consumer protections and encourage innovation.

A second-term Trump administration would likely continue its deregulatory efforts, focus on Fannie Mae and Freddie Mac's exit from conservatorship, and seek to facilitate fintech participation in the banking system.

In signing off on deposit insurance for the payments giant and student loan servicer, the FDIC sanctioned the first new industrial loan companies in over a decade.

Most states have some kind of pricing limit on consumer loans. But proposals for a national usury law divide even Democrats, some of whom are concerned about restricting credit.

Former CFPB Director Richard Cordray and consumer advocates have designed a proposed state consumer agency that would subject more financial firms and fintechs to state oversight.

With fintech firms appearing stuck in neutral in their efforts to seek bank charters from federal regulatory agencies, observers say state licensing options could be in vogue again in 2020.

The Consumer Financial Protection Bureau faces a busy policy agenda heading into the new year, as well as strong external forces that are beyond its control.

In October, U.S. District Judge Victor Marrero ruled against the OCC in a case brought by the New York State Department of Financial Services.

Despite assurances by Director Kathy Kraninger that the agency is cracking down on discrimination, it hasn't sent a Department of Justice referral on a fair-lending violation in two years.

The two Democratic senators said the bureau's policy could allow companies to circumvent consumer finance laws.

Many in the space are seeking the creation of a "flexible" supervisory regime that relies on existing authorities and a hands-off approach from state agencies, but such a plan faces an uphill battle.

It should offer some form of guidance to spur innovation, a former official with the bureau says.

Jelena McWilliams told community bankers that policymakers should be a resource for banks trying to adopt new technology.