McHenry, Barr, Hill Denounce FDIC’s Lack of Guidance for FinTech Firms and Financial Innovation
Lawmakers sound alarm on Gruenberg’s dismantling of FDITech office
Washington,
February 2, 2024 -
Today, the Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), Chairman of the Financial Institutions and Monetary Policy Subcommittee, Andy Barr (KY-06), and Chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, French Hill (AR-02) sent a letter to Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg expressing concern over the agency’s persistent efforts to minimize engagement with the public on financial technology and innovation. The lawmakers note the dismantling of the external facing portion of the agency’s FDITech Office as a catalyst for their inquiry and demand information regarding how the FDIC will provide regulatory guidance for burgeoning FinTech firms and financial innovators moving forward.
Read the lawmakers’ full letter to FDIC Chair Gruenberg here and key excerpts below:
“We write to express our concern about the Federal Deposit Insurance Corporation’s (FDIC’s) ongoing regulatory agenda pertaining to innovation in the financial services sector. As you are well aware, financial technology (fintech) firms provide access to innovative products and services by partnering with highly regulated financial institutions to meet the evolving needs of consumers and businesses of all sizes.
“Yet, during your tenure, the FDIC has moved innovation backwards. You have not only dismantled the external facing portion of the agency’s FDITech Office, which was focused on “engaging and collaborating with the private sector to support innovation that promotes economic inclusion, consumer protection, competition, and identification of risk,” but shifted FDITech’s mission to focus solely on adoption of technologies within the FDIC.
“Moreover, under your direction, FDITech was also reorganized within the agency’s Division of Information Technology. Thus, it no longer focuses on competition or innovation within the financial sector. While the FDIC indicated that FDITech still “engages with industry participants…separate from examinations,” we are concerned this transformation has actively discouraged innovation within the banking sector. This move, together with the recent establishment of the Office of the Comptroller of the Currency’s Office of Financial Technology, which incorporated the former Office of Innovation established in 2016, suggests that you are more interested in aligning with your fellow prudential regulators and not protecting innovation.
“We are also concerned that there is no publicly available information detailing how the FDIC’s posture on innovation will manifest in examinations and whether this change will be in compliance with the FDIC’s Compliance Examination Manual. The FDIC has a troubling history of using extralegal pressures to attain anti-business results. We are concerned that the FDIC’s approach could, within the examination processes or otherwise, be used to prevent the development of innovative products and services that benefit consumers and businesses.”
###
