S7 E10: Dissecting Federal Preemption Laws, Citibank Dodges Consumer Protections, and Why We Don’t Have a National Fintech Charter

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Jun 12, 2024

The podcast delves into the Supreme Court's decision on bank laws, Citibank's consumer protection issues, and the debate on national fintech charters. They discuss the importance of real-time data, challenges in banking industry disruption, and complexities of regulatory oversight.

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INSIGHT

Federal Preemption Complexity

The Supreme Court's decision on Cantero vs. Bank of America highlights the complexity of federal preemption.
It emphasizes the need to analyze if a state law significantly interferes with national bank powers.

INSIGHT

Reputational Risk and Regulatory Role

The NRA vs. Vullo case emphasizes the importance of reputational risk for banks.
It questions regulators' role in assessing risk beyond financial and safety impacts.

ANECDOTE

Citibank's EFTA Loophole

New York regulators are suing Citibank for not protecting consumers from scammers.
Citibank argues EFTA doesn't apply because scammers used wire transfers, not ACH.

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Summer’s almost here, and Kiah Haslett is braving the swarms of Tennessee cicadas to join Alex for another session of Bank Nerd Corner.

First up on the docket, Alex and Kiah tackle the Supreme Court’s decision on Cantero vs. Bank of America. Bank of America contests that they don’t have to pay interest on escrow accounts in accordance with federal law because hey, the state law says something different. But which law do federally chartered banks have to follow if both state and federal laws speak to the same conflict? Should banks be granted the freedom of choice? After all, it’s a free market, and that’s capitalism, baby!

And a big round of applause for Citibank for finding a new way to make consumers feel even less protected when it comes to making wire transfers. Alex and Kiah unpack the current case against the banking giant by several consumers (represented by New York state regulators) who have lost money to scammers after being locked out of their accounts. What legal loophole is Citibank using to defend itself from paying consumers back? And shouldn’t they be a wee bit more concerned about losing trust with their clients?

Plus, Alex and Kiah ask some big questions, including why banks and regulators aren’t relying on real-time data more often and why fintech banks don’t have national charters. But more importantly, how much hubris do you have to have to rant about disrupting the banking industry while knowing absolutely nothing about it? Let’s rant about it!

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Twitter: https://twitter.com/khaslett

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