Republicans aren’t the only ones bracing for changes when Democrats take control of the U.S. House come January. Financial technology startups, which have been exploding in numbers, are likely to face new scrutiny.
It’s no secret Democrats want more oversight of this burgeoning industry that’s disrupting the businesses of well-heeled financial services titans. Ever since The Office of the Comptroller of the Currency said it would grant fintechs national bank charters, some Democrats have been up in arms, calling for more oversight.
Take Maxine Waters, the Democrat from California who is widely expected to chair the powerful House Financial Services Committee come January. In August she requested a meeting with Comptroller of the Currency Joseph Otting to discuss the fintech banking charters. Like other lawmakers she wants fintechs to do more to promote better access to fair and affordable financial services products for everyone and questioned the rationale behind the charters. Waters isn’t alone in raising the alarm bells. The OCC is being sued by New York’s Department of Financial Services, which argues it’s overstepping its boundaries and will put consumers at risk if non-banks receive national banking charters.
Meanwhile, Rep. Emanuel Cleaver, the Democrat from Missouri has been calling for more regulation of the fintech industry, warning that left unchecked, financial technology companies could spur the next crash. He also happens to be a member of the House Financial Services Committee and is the ranking Democrat on the Housing and Insurance subcommittee. In August Cleaver issued a report arguing fintechs don’t do enough to prevent discrimination in the algorithms that determine the interest rate small businesses pay on loans and raised the prospect that some were using information about borrowers without their knowledge.