Treasury Department Releases Report on Nonbank Financials, Fintech, and Innovation
Today, the U.S. Department of the Treasury released a report to the President titled A Financial System that Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation. The report is Treasury’s fourth report in response to Executive Order 13772, issued by President Trump in February 2017, which called on the department to identify laws and regulations that are inconsistent with the Core Principles for financial regulation that it set forth.
The report includes more than 80 recommendations designed to embrace the efficient and responsible use of consumer financial data and competitive technologies, streamline the regulatory environment to foster innovation and avoid fragmentation, modernize regulations for an array of financial products and activities, and facilitate “regulatory sandboxes” to promote innovation. Previous reports have covered Banks and Credit Unions, Capital Markets, and Asset Management and Insurance.
“American innovation is a cornerstone of a healthy U.S. economy,” said Treasury Secretary Steven Mnuchin in a press release announcing the report. “Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector. America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”
As outlined in a fact sheet accompanying the report, one of the areas that is featured is the role of short-term, small-dollar installment lending. The report recommends that the Department recognize and support the authority of states to establish comprehensive requirements for these products and recommends that the CFPB rescind its Payday Rule. Treasury also recommends that regulators take steps to encourage sustainable and responsible short-term, small-dollar installment lending by banks.