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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across a range of products and services offered by nonbank financial institutions, many of which have become outdated in light of technological advances; and Advocating an approach to regulation that enables responsible experimentation in the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to eliminate complexity) in the case of payday lending the report argues that the CFPB’s payday lending rule should be rescinded in favour of state regulation.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.

janelle monae July 28, 2018

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Went to see Janelle Monae yesterday evening. She was awesome.

three tall women review March 29, 2018

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Here. I saw this play in previews. It was wonderful – a really interesting play with splendid acting by all 3 of the main actors.

two exceptional pieces in the guardian: anne enright and deborah levy March 24, 2018

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My day started with Anne Enright’s article on abortion and Deborah Levy’s piece on starting again at 50. Two beautiful and powerful articles to begin a day with.

eu statement on the 25th anniversary of the single market March 20, 2018

Posted by Bradley in : brexit , add a comment

A joint statement from Antonio Tajani, President of the European Parliament, Jean-Claude Juncker, President of the European Commission, and Boyko Borissov, holder of the rotating Council Presidency and Prime Minister of Bulgaria with the title, One Market- One Europe highlights a positive view of what the UK is seeking to leave behind (as it moves from being an internal (but perhaps not completely reliable) source of strength for the EU to being an external source of potential risk):

Over the past 25 years, the integration of our economies throughout the Single Market has generated millions of jobs, and made the EU the world’s largest economy. The Single Market is the jewel in the crown of our integration and this domestic market of 500 million people is the foundation for Europe’s strength, at home and abroad.
The Single Market provides Europe’s citizens with the freedoms and opportunities that were only a dream for our parents and grandparents, and our social market economy benefits us all. There are no second-class Europeans in our Single Market and so there is no room for second-class products or for second-class workers; meaning, the same pay for the same work in the same place, the same quality of food and the same safety of toys and other products….
The European Single Market is 25 years young. A generation of Europeans has grown up with it and benefitted from it. We will keep making it stronger so that the next generation will benefit even more.

art 50 notification withdrawal case to proceed March 20, 2018

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The Court of Session (Inner House) addressed a challenge to the rejection of a petition for a preliminary reference on the issue of withdrawal of the Art. 50 notification. The case should proceed to a full hearing. The Court said:

if this petition were shorn of its rhetoric and extraneous and irrelevant material and were reduced, after adjustment, to a manageable size which conformed to Lord Hope’s guidance in Somerville v Scottish Ministers … a case of substance, albeit not necessarily one which is likely to succeed, can be discovered. The issue of whether it is legally possible to revoke the notice of withdrawal is, as already stated, one of great importance. On one view, authoritative guidance on whether it is legally possible to do so may have the capacity to influence Members of Parliament in deciding what steps to take in advance of, and at the time of, a debate and vote on the European Union (Withdrawal) Bill. After all, if Parliament is to be regarded as sovereign, the Government’s position on the legality of revoking the notice may not be decisive. Whether such guidance falls within the proper scope of judicial review aises yet another issue. However, that scope is wide and … the law is always developing and, in certain areas,it can do so quickly and dramatically.The scope of judicial review of Government policy may be one such area, at least where no issue of questioning what is said in Parliament arises.

flowers misconduct leads to financial services ban March 6, 2018

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The Financial Conduct Authority banned Paul Flowers, ex Chair of the Co-Operative Bank, from the financial services industry. I’m not sure whether this decision reinforces confidence in the FCA’s approach to policing misconduct or not. The Final Notice singles out his inappropriate use of his work telephone and email accounts to call chat lines and send and receive inappropriate messages (including sexually explicit messages) and his conviction for possession of illegal drugs. And the notice states:

The misconduct…. occurred notwithstanding that Mr Flowers had agreed to uphold high standards, as the Chair of Co-op Bank, as an Approved Person and as a Methodist Minister. Mr Flowers has demonstrated through his actions that he lacks the readiness and willingness to comply with standards to which he is subject, including those of the regulatory system. As such, he lacks the fitness and propriety required to operate in the financial services industry.

It may be that a Methodist Minister would appear by virtue of that status to be more trustworthy than a non-Minister, thus disappointment about moral and legal failings may be greater. But I am not sure why this belongs in the final notice.

my article on european (dis)union published February 27, 2018

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European (Dis)union: Dis)union: From the 1992 Single Market to Brexit, 25 U. Miami Int’l & Comp. L. Rev. 1 (2017).

johnson on brexit:”the great liberal project of the age” February 14, 2018

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The web page where the speech appears states “Delivered on:14 February 2018 (Transcript of the speech, exactly as it was delivered).” But I imagine that the Foreign Secretary did not in fact say “[political content removed].” I wonder what that political content was that is omitted from this “exactly as it was delivered” transcript. And this makes me wonder (as if I didn’t already) how much of what is left in is to be trusted. It’s mostly more careful than I expected, but it’s also all political rhetoric and magical thinking.

uk “technical note” on international agreements: let’s all eat cake February 8, 2018

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According to the technical note:

The UK proposes that these third country agreements which apply to the UK in its capacity as an EU Member State (as referred to at paragraph 15 of the EU’s negotiating directives of 29 January) should continue to apply to the UK in the same way for the duration of the implementation period. In other words, the UK would continue to be bound by the rights and obligations flowing from the agreements for this period. Multilateral agreements to which the EU is a party raise different considerations and are not covered by this note.

I don’t see what is “technical” about pretending that the UK has a status it will not have. This seems the opposite of technical. I.e. fantastical. But, of course, that is now par for the course.