US legislators have proposed that student loan debt be discharged in the case of bankruptcy; the current law gives added protection to student loan lenders by requiring the debt to be repaid in bankruptcy; lawmakers and lobbyists are also considering other provisions that would provide debt relief to student loan borrowers who have filed for bankruptcy; while the debt relief initiatives will benefit borrowers, the effects will add increased default risk for investors in private student loans and private student loan securitizations. Source
Funding Circle was approved for a 7(a) license by the SBA but now there are some in Congress that want to take that away from them.
With the recent news from the OCC and a new administration in Washington, regulation of fintech is top of mind for everyone in the industry. The president of the San Francisco Fed, John C. Williams, joined us at LendIt USA 2016 to discuss fintech regulation in his keynote address.
He believes right now is a critically important time to have an open and honest dialogue about fintech and its role in the financial system. Fintech holds a lot of promise, it can help to improve efficiencies in the current system and can help the overall economy be more successful in achieving its fundamental goals.
The laws of innovation often mirror the laws of physics, for every great stride there is an equal and opposite risk. While he discussed the fact that innovation holds a lot of potential, the regulatory structure needs to asses the risks and ensure correct protections are in place.
Fintech companies are currently lowering costs, increasing access to the underbanked and helping to revitalize impoverished neighborhoods. One of his biggest points was even though fintech is looking to help the impoverished, it can actually hurt them the most as bad actors will prey upon the vulnerable.
Williams covers vigilance and a level playing field, looking at how the industry can help improve many different facets of the financial system but at the same time ensuring those in this burgeoning market do not pose a risk to the financial system. As he was beginning to wrap up his speech to allow for an interactive Q&A with the audience, Mr. Williams said he sees the potency of the possible in fintech.
Check out the full video here:
The Consumer Financial Protection Bureau (CFPB) will appeal the court's unconstitutional ruling in the case of CFPB v. PHH in which PHH argued the CFPB's authoritative powers were too broad following enforcement actions that resulted in penalties primarily for referring consumers to mortgage insurers for compensation; the CFPB is requesting that the case be heard by all judges in the D.C. Circuit Court of Appeals rather than a panel of only three judges which provided the October ruling; if the verdict in the case is unchanged, the president will still be able to replace the CFPB director at his discretion; it's likely that Director Cordray could be replaced by President-Elect Donald Trump given his plans for Dodd-Frank. Source
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To really address the racial wealth gap fintech companies need a new mindset. Traditional products, even with a fintech twist, are not making a big enough difference.
The central bank of Indonesia has opened a fintech office; the central bank will use the fintech office to maintain its regulatory oversight while also providing support for new fintech startups; it plans to collect information on the industry for regulatory development; it will also facilitate the development of fintech companies and their introduction to the economy both in Indonesia and globally. Source
In a speech at the Money 20/20 conference in Las Vegas, the head of the CFPB said he was troubled by banks who would shut off access to third-party data providers and believes consumers should have access to their data; though the agency declined to comment on the possibility of a new rule, they did make it clear that consumers should be the ones who decide when and who should have access to their data; this puts banks in a tough position as they work to comply with the current regulations and burgeoning fintech market that has given consumers a variety of technology options to use their personal data. Source