By Jim Puzzanghera
Los Angeles Times
WWR Article Summary (tl;dr) As LA Times columnist Jim Puzzanghera reports, “A Treasury Department report released Tuesday calls for regulatory changes to advance new financial technology companies and services, known in the industry as fintech.”
Some of the recommendations are controversial, including endorsing the ability of fintech firms to operate nationwide and urging Congress to develop national rules for data security and data breach notifications. Both moves would preempt tough regulations in California and other states.
In addition, the long-awaited Treasury report urges the Consumer Financial Protection Bureau to rescind tough new nationwide rules on payday and other short-term loans.
Treasury Secretary Steven T. Mnuchin said changes were needed to keep the U.S. competitive as the financial industry evolves.
“American innovation is a cornerstone of a healthy U.S. economy. Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector,” Mnuchin said in releasing the 222-page report.
“America is a leader in innovation,” he said. “We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”
Companies such as San Francisco online lender SoFi have sprung up in recent years to leverage technology and offer consumers, particularly younger ones, new ways beyond traditional bank accounts to manage their money and make payments.
Most of those companies fall outside the existing banking system and a regulatory framework largely designed years before the internet and smartphones.
“Financial services are being significantly reshaped by several important trends, including (1) rapid advances in technology; (2) increased efficiencies from the rapid digitization of the economy; and (3) the abundance of capital available to propel innovation,” the report said.
The Treasury report is the last of four ordered by President Trump in early 2017 to review the nation’s financial regulations.