Fintech

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Democratic Senators Elizabeth Warren and Doug Jones have sent a letter to the CFPB, Federal Reserve, OCC, and FDIC expressing concern that fintech and traditional lenders using algorithms in their underwriting processes may be engaging in unlawful discrimination.  (Such algorithms are often referred to as “artificial intelligence.”)

In their letter, the Senators reference research results showing that “the algorithms used by FinTech lenders are as discriminatory as loan officers.” … Continue Reading

Utah Governor Gary Herbert signed H.B. 378, Regulatory Sandbox, into law on March 25, 2019.  This bill created the nation’s third regulatory sandbox program for fintechs, after Arizona, which enacted sandbox legislation in March 2018, and Wyoming, which enacted sandbox legislation in February of this year.

Regulatory sandboxes are laboratories for the development of innovative technologies in an environment that is free from onerous government restrictions. … Continue Reading

Opposition from state regulators to the OCC’s decision to issue special purpose national bank (or fintech) charters continues to be vigorous.  In this podcast, we review the charter’s potential benefits, assess the legal arguments made by its opponents, discuss the federal court decision refusing to dismiss the NY banking regulator’s lawsuit, why we think it’s incorrect, and possible next steps for the OCC, and look at fintech charter alternatives.… Continue Reading

Earlier this year, Wyoming became the second state to create a financial technology (fintech) sandbox by enacting the “Financial Technology Sandbox Act” (Sandbox Act).  (Arizona was the first state to create a fintech sandbox and we will soon be publishing a blog post about Utah’s new fintech sandbox.)  The provisions requiring Wyoming’s Banking Commissioner and Secretary of State to adopt implementing regulations became effective on February 19, 2019. … Continue Reading

Last Thursday, the OCC filed a letter with the New York federal district court hearing the lawsuit filed by the New York Department of Financial Services (NYDFS) seeking to block the OCC’s issuance of special purpose national bank (SPNB) charters to fintech companies in which the OCC advised the court that it will be conferring with the NYDFS on a proposed final judgment. … Continue Reading

The FTC has launched a dedicated FinTech page on its website where it has assembled FinTech-related materials.

The materials that can be accessed on the new page include Guidance (which consists of various FTC publications), Videos (which include excerpts from FTC workshops), Related Posts (which address ongoing FTC developments), and Legal Resources (which include staff reports and filings in enforcement actions).… Continue Reading

The OCC’s Semiannual Risk Perspective report focuses on key issues that pose threats to bank safety and soundness and legal compliance.  Among such issues discussed in the Spring 2019 report, which generally reflects bank data as of December 31, 2018, are risks arising from financial innovation and new technologies.

One of the most significant issues discussed in the report involves artificial intelligence and alternative data, with the OCC highlighting the potential fair lending risks arising from these innovations. … Continue Reading

The Federal Reserve Board has published in the Federal Register a notice of proposed rulemaking with request for comment on a proposal to simplify and increase transparency of its rules for determining control of a banking organization.  The proposal’s comment period closes on July 15, 2019.

The proposed revisions to the Board’s control regulations would significantly expand the number of presumptions used by the Board to determine control and would, in codifying those presumptions, provide transparency to investors (including private equity investors) regarding what types of relationships and what types of activities would constitute control of a financial institution or holding company under the Bank Holding Company Act (the “BHC Act”). … Continue Reading

Last week, the House Financial Services Committee established two task forces, one on financial technology and the other on artificial intelligence.  Both task forces were established pursuant to resolutions adopted by unanimous consent.

The “Task Force on Financial Technology” will examine the current legal framework for fintech, how fintech is used in lending, and how consumers engage with fintech.  … Continue Reading

A dark cloud is now hanging over the OCC’s decision to accept applications for special purpose national bank (SPNB) charters from fintech companies as a result of the opinion issued last week by a New York federal district court in the lawsuit filed by the New York Department of Financial Services (NYDFS) seeking to block the OCC’s issuance of the charters. … Continue Reading