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an important reminder: “everybody’s got a sacred story” August 18, 2018

Posted by Bradley in : ethics , add a comment

From Jeanne Marie Laskas’ article in the Guardian, Dear Mr President:

“I learned in that process that if you listen hard enough, everybody’s got a sacred story,” he said. “An organising story, of who they are and what their place in the world is. And they’re willing to share it with you if they feel as if you actually care about it. And that ends up being the glue around which relation­ships are formed, and trust is formed, and commu­nities are formed. And ultimately – my theory was, at least – that’s the glue around which democracies work.”

fintech developments August 2, 2018

Posted by Bradley in : financial regulation , add a comment

The OCC has announced that it will begin to accept applications for national banking charters from Fintech companies via a policy statement, and a supplement to the Comptroller’s Licensing Manual. The Department of the Treasury published another in the series of papers on A Financial System That Creates Economic Opportunities, this time on Nonbank Financials, Fintech, and Innovation. The report summarizes its recommendations as falling within four categories:

Adapting regulatory approaches to changes in the aggregation, sharing, and use of consumer financial data, and to support the development of key competitive technologies; Aligning the regulatory framework to combat unnecessary regulatory fragmentation, and account for new business models enabled by financial technologies; Updating activity-specific regulations across a range of products and services offered by nonbank financial institutions, many of which have become outdated in light of technological advances; and Advocating an approach to regulation that enables responsible experimentation in the
financial sector, improves regulatory agility, and advances American interests abroad.

The report identifies regulatory fragmentation as an impediment to responsible innovation in many areas, is largely deregulatory, and endorses the idea of regulatory sandboxes, suggesting Congress enact legislation to provide for these. But the report uses words like appropriate a lot to describe what regulation might look like, and there are recognitions of some risks associated with Fintech (such as cybersecurity and other operational risks). So, a bit cagey about how deregulatory the plan is. I imagine a lot, but it’s written in a way that doesn’t always make that completely clear. However, note that whereas in many cases the report argues for federal rules (supposedly to eliminate complexity) in the case of payday lending the report argues that the CFPB’s payday lending rule should be rescinded in favour of state regulation.

The NYDFS expressed reservations about both initiatives. The NYDFS’ recent Online Lending Report emphasized the need for consumer protection in the online lending context.

The Treasury Report did not address blockchain and distributed ledger technologies in any detail the report notes that FSOC is leading a working group on these issues although there’s not much information publicly available about what the working group is doing. And we know that the SEC has concerns about initial coin offerings.

Towards the end of the report there are some comments about the US needing to be involved in the work of international forums and standard-setters, and to work with regulators in other jurisdictions. But international standards should let domestic regulators establish their own approaches before setting international standards, and they should be careful to adhere to their core mandates.