The financial sector offered plenty of feedback indicating the widely-held belief that federal banking regulators should take on a bigger role in supervising third-party relationships between banks and fintechs. Attorneys at one trade group also were busy crafting court filings for multiple cases, two of which involved questions about preemption.
Learn more about these matters and more in this roundup:
ICBA urges agencies to publish supervisory highlights on bank-fintech partnerships
In a stated effort to counteract “regulation through enforcement,” the Independent Community Bankers of America wrote to federal banking regulators, urging them to periodically publish a report on key examination findings related to bank-fintech partnerships. The trade group indicated such a report could be similar to the supervisory highlights published periodically by the Consumer Financial Protection Bureau. ICBA’s comment letter came in response to an interagency request for information on the nature of bank-fintech arrangements, effective risk-management practices, and whether enhancements to existing supervisory guidance may be helpful. ICBA said it appreciated the agencies’ efforts to revisit the existing regulatory framework and that the current system has significant shortcomings. Learn more here.
BPI, TCH comment on third-party oversight proposal
The Bank Policy Institute and The Clearing House Association submitted a joint comment letter to banking regulators, asserting they should exercise their authority to regulate and supervise fintechs directly to relieve banks of the burden of having to serve as “quasi-regulators.” The letter was sent to the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve in response to a request for information regarding the agencies’ proposed third-party oversight plans. The trade groups also emphasized the need for more public education to help consumers better understand the potential risks of doing business with a nonbank, such as the potential unavailability of federal deposit insurance. Read more here.
MBA economist offers Q3 analysis
Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni noted a 2.8 percent rate of growth in the U.S. economy in the third quarter in his latest commentary posted on the association’s website. He attributed the growth primarily to strong consumer spending for both goods and services, while stating that a half-percentage point of the growth was due to government spending on national defense, much stronger than recent quarters.
“MBA forecasts that economic growth will slow next quarter and through 2025, and that this slowdown will lead to some softening of the labor market, with the unemployment rising through next year,’ Fratantoni said. “The inflation measures in this third quarter report show further progress towards the Fed’s inflation target, with the core PCE metric growing at a 2.2 percent rate. All in, these data are in line with our forecast, and we expect that the Federal Reserve will cut rates by 25 basis points at its meeting next week.”
ABA files multiple amicus briefs in cases involving banks, financial statute
The American Bankers Association’s (ABA) legal team has been busy voicing support for banks through amicus briefs in federal court. It’s latest court filings include an amicus brief supporting JP Morgan Chase in a credit card debt lawsuit and a pair of amicus briefs in the Ninth Circuit Court and the Second Circuit Court arguing the National Bank Act preempts state laws pertaining to mortgage escrow accounts. Dodd Frank Update will continue to follow these cases and reporting on major developments.