New York Looks to Lead Line in Financial Services Regulation

New York Department of Financial Services (NYDFS) head Maria Vullo recently reiterated her intention to keep NYDFS in the poll position regulating Financial Technology (FinTech) firms operating in financial services. Her comments come at a time in which one federal regulator, the Office of the Comptroller of the Currency (OCC), is moving forward with a special purpose bank chartering program for FinTech firms that would preempt many state finance laws and bring these institutions under the federal regulatory umbrella. NYDFS has been a consistent and vocal opponent of the OCC’s proposal, even going so far as to file a lawsuit to block implementation of the chartering program. Along with New York initiated its suit, the Conference of State Bank Supervisors are also challenging the OCC.

At the heart of the battle for FinTech supremacy is the debate over who can better regulate banking institutions- the states or the federal government. In its letter to the OCC, NYDFS promoted its decades of experience regulating financial institutions. As Vullo pointed out, “we’re regulating the institutions; we’re not regulating the technology.” Regardless of which agency wins out in the end, the current skirmish is creating regulatory uncertainty for thousands of FinTech companies across the United States. Resolution to this battle of authorities should free up firms to once again press innovation and responsible financial solutions for millions of underserved Americans.