Fintech Takes S9 E7: Bank Nerd Corner: CFPB, All Day, Every Day
Nov 13, 2024
Evan Weinberger, Bloomberg Law’s banking and fintech regulatory correspondent, joins the discussion on the latest in fintech regulation. They tackle the complex tug-of-war between traditional banks and fintechs over tighter regulations. The conversation highlights recent CFPB actions revealing cracks in fintech-bank partnerships and the vagueness of the Bank Service Company Act. With humor, they share memorable moments from CFPB history, while emphasizing the critical need for clearer guidelines to protect consumers in this evolving landscape.
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BSCA's Potential and Challenges
- Banks and consumer advocates agree that regulators can police fintechs under the Bank Service Company Act (BSCA).
- However, the act's vagueness, limited resources, and regulatory overload hinder its effectiveness.
PNC's Concerns about Fintech Partnerships
- PNC argues that fintechs' high-risk nature and lack of regulatory penalties incentivize excessive risk-taking.
- They suggest regulatory arbitrage via Durbin interchange cap encourages community bank partnerships with fintechs.
Mercury's Shift from Synapse
- Mercury claims their initial partnership with Synapse, an intermediate platform provider, proved unworkable as they scaled.
- They now favor direct bank relationships, citing compliance issues with Synapse, despite reports suggesting otherwise.