Republican lawmakers send questions to OCC about bank-fintech partnerships | Ballard Spahr LLP
In a letter dated October 11, 2022 to Acting Comptroller Michael J. Hsu, House Financial Services Committee Ranking Member Patrick McHenry and four other Republican representatives asked Hsu to answer pointed questions about the OCC’s planned role in supporting banks – fintech partnership. The letter cites benefits for consumers and the economy offered by innovation and “new financial products and services” available due to bank-fintech partnerships, which “foster greater inclusion and competition in our financial system”:
Let’s be clear. Technological innovation fostered by fintech partnerships has enabled banks to reach segments of the population that may have been left behind and increase customer engagement. Much of this innovation has been driven by newcomers to the industry who have developed a new product or business model. When properly regulated, these partnerships can provide greater financial inclusion, spur technological innovation and promote competition that ultimately benefits consumers.
The letter goes on to point out that “[when] done right, the benefits of these partnerships far outweigh the risks.” The letter goes on to denounce the “political controversy” that led to the repeal of the OCC’s true lender rule “along party lines,” claiming “[t]his single act will have ramifications for communities across the United States, including those who need the honor the most.” The subsequent seven questions posed by the letter examine issues including whether the OCC, in determining what terms will be acceptable in bank-fintech partnerships, will “consider the impact on underbanked, communities of color, rural communities and small businesses”; what specific risks are posed by bank-fintech partnerships; and how the OCC will “ensure that examiners do not discourage innovation through fintech partnerships and will not impose unreasonable burdens on banks and fintechs.”
We look forward to the OCC’s response to the letter, which comes at a pivotal time for bank-fintech partnerships. OCC support for bank-fintech partnerships is especially important right now in light of ongoing litigation between Opportunity Financial, LLC and the California Department of Financial Protection and Innovation.
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