Republican lawmakers voice concerns with FDIC over public engagement with fintechs

A group of Republican House leaders expressed concerns with the Federal Deposit Insurance Corporation (FDIC) over what they perceive as a lack of engagement with the public on financial technology and innovation.

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The lawmakers cited several examples, including the dismantling of the external facing portion of the agency’s FDITech Office. They also mentioned the shift in FDITech’s mission to focus solely on adoption of technologies within the FDIC. Further, they want to know how the FDIC will provide regulatory guidance for burgeoning FinTech firms and financial innovators moving forward.

“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.,” they wrote in a letter to FDIC Chair Martin Gruenberg. “Yet, during your tenure, the FDIC has moved innovation backwards.”

The letter was sent by U.S. Reps. Patrick McHenry (R-NC), chair of the Financial Services Committee, Andy Barr (R-KY), chair of the Financial Institutions and Monetary Policy Subcommittee, and French Hill (R-AR), chair of the Digital Assets, Financial Technology and Inclusion Subcommittee.

“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,” they wrote.

The lawmakers also expressed concerns that there is no publicly available information detailing how the FDIC’s posture on innovation will manifest in examinations.

“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,” they added.

They asked the FDIC chair to respond to a series of questions and requested information by Feb. 29.