Republican Reps Say FDIC has “Moved Innovation Backwards”

Feb 8, 2024Congressional Legislation, Federal Regulation, News

Representatives Patrick McHenry, chairman of the House Financial Services Committee; Andy Barr, chairman of the Financial Institutions and Monetary Policy Subcommittee; and French Hill, chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, recently asked the Federal Deposit Insurance Corp. (FDIC) for information regarding how it plans to provide regulatory guidance for fintech firms and other financial innovators.

The request came after the FDIC dismantled the external-facing portion of the FDITech Office. In the Representatives’ letter to FDIC Chair Martin Gruenberg, they wrote that during Gruenberg’s tenure, “the FDIC has moved backwards on innovation.” They shared concerns that there is no publicly available information about the FDIC’s stance on innovation.

“The FDIC has a troubling history of using extralegal pressures to attain anti-business results,” they wrote. “We are concerned that the FDIC’s approach could, within the examination processes or otherwise, be used to prevent the development of innovative products and services that benefit consumers and businesses.” 

The representatives addressed concerns that FDITech has been reorganized with less focus on competition and innovation in the financial sector. They requested that the agency provide information about how it examines and supervises financial institutions by the end of the month.

Along with Rep. Mike Flood, McHenry and Hill recently sent a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, urging him to reopen public comments on its proposed rule that would allow the agency to supervise nonbank companies that offer digital services

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