Protecting the stability of the banking system, which is inherently unstable (borrowing short, lending long) is a requirement for defending the value of a nation's currency and national debt.

Protecting consumers from predatory financial practices is not the same sort of regulatory requirement and shouldn't be regulated by the same people.

The CFPB is similar to the FDA, it protects consumers from predatory producers. That's completely different to the Fed/OCC protecting the banking system.

For the OCC to say that part of their scope is "providing fair access to financial services" is regulatory overreach and scope creep. There's a reason they're called the Comptroller of the Currency.

Consumers do things not in their own best interest all the time. Think MLMs, rent-to-own appliances and furniture, upside down leases, etc.

For me the point of regulation is when some of these fintech companies start to hold deposits, which some of them represent themselves as doing even though the actual account is with a traditional institution. The consumer doesn’t necessarily know that though.

It’s sort of like regulating hotdog stands that are everywhere at once. There has to be something keeping those hot dog stands clean and the steam trays warm and full, and it apparently isn’t the operator’s good manners and sense of fair play.

But every coin has its flipside. Consumer protection many of these regulations also include consumer protection. This is what most people I discuss this with forget....

Does the same entity that handles all other consumer protection not work in this case? Why, what makes it unique?

I don't see it as any different than the mortgage brokers of the 2008's: stripping fees off transactions with ZERO value add to the consumer...

If you want to really fix things start with the national market system. At this point between dark pools, HFT and non-public company markets it is an unqualified effing disaster from both a price discovery and accessibility perspective.

#justsayin

Prior to fintechs getting into the remittance space, fees were as much as 20% on average of transactions.

Prior to microfinance institutions and then true fintechs such as Tala, Branch, GoPay, Ant, etc. there were 10 of millions of merchants who could get no access to credit.

Prior to fintechs, you needed to physically go to a bank to become eligible for a loan and fill out paper forms. This may not seem like a high barrier to you.

Short of it is, heavy regulation leads to: * High compliance costs * Low appetite for risk * Slow to little innovation

There are regulations that don't make sense for small merchants: Anti-money laundering laws for instance which are generally good, but impose a completely undue burden on merchants that want to borrow $500.

Or a risk modeling team at a bank that has dozens of staff may make sense cost-wise for loans of $100k+, but they don't make sense for < $10k loans and their risk models also don't work at those levels.

This also isn't just Silicon Valley. It's a common problem in most countries of the world, speaking from experience.

The explosion of online shops made possible by companies like Stripe enabling secure credit card processing without imposing PCI DSS compliance on small businesses would disagree with you on whether there’s value to the consumer. If nothing else, greater variety of shops available means greater choice, which is generally considered good for the consumer.

Or PayPal, which allows the unbanked population to load funds to a widely-accepted online wallet and actually participate in online marketplaces, which they might otherwise be unable to do.

Or Affirm, which provides on-demand credit to consumers and lets them amortize large one-time costs over a few months, enabling them to afford, e.g., tuition when they otherwise might not be able to. (Tuition is maybe a bad example since most universities already offer tuition financing options; but online education services frequently don’t)