Testimony: License to Bank – Examining the Legal Framework Governing Who Can Lend and Process Payments in the Fintech Age

Chairman Lynch, Ranking Member Emmer, and Members of the Financial Technology Task Force, thank you for inviting me to testify regarding the legal framework governing who can lend and process payments. I offer my testimony as Policy Counsel to the Demand Progress Education Fund (DPEF) and a Fellow at the Americans for Financial Reform Education Fund (AFR Education Fund).

I have previously served as Special Counsel to the Enforcement Director at the Consumer Financial Protection Bureau (CFPB). Today, I would like to provide a public interest perspective on developments in the fintech sector. While many relatively new “bank-like” technologies may provide benefits to individual users, they also present risks to the integrity of the financial system, consumer protections, and our civil rights (especially our rights to privacy). Moreover, many of these innovations only serve to entrench the power of Big Tech and further erode our democracy. I echo previous calls for policymakers to adopt a bright-line, precautionary approach to digital “bank-like” activities.

What industry calls “innovation” is often easily mapped to a longstanding financial service and therefore the existing laws should apply. At the same time, certain tools and certain forms of partnerships should have no place in our economy whatsoever. Treating innovation as an unqualified good leads regulators to ignore both considerations of equity and long-term, sustainable innovation. Give the interface between powerful corporations, complex products, and the public, precaution should be the norm, as it is in food and drug regulation.