An effective Fintech Fox on Regulatory Henhouse

Benjamin Lawsky (the first DFS superintendent) beefed up the department’s criminal division and built an agency of 1,400 employees, armed with New York’s powerful financial laws like the Martin Act. Lawsky threatened to revoke Standard Chartered Bank’s New York banking license after a federal investigation uncovered money laundering. This state-level scrutiny in turn forced federal regulators to dole out harsher penalties, such as the record $1.9 billion fine against HSBC for similar violations. When led by committed fighters, DFS can be a major boon in the fight against financialization.

Contrast Lawsky’s record with Harris’s own vision of what financial regulation should look like. “The way we tend to regulate financial services, and most industries in the United States, is-and I always took a little bit of an issue with this-it’s sort of like the list of no-no’s,” Harris said last year in an interview with the University out of Michigan’s Ross College out of Company. “It’s like ‘Go forth, free market, but here are the list of no-no’s,’ and then when somebody finds a new no-no you’re like ‘OK, we’ll add that to the list of no-no’s.’ Instead of what I always thought was a better approach, which is ‘What’s the outcome you’re looking to drive?’ Is it financial inclusion? Financial health? Consumer protection? Whatever it is. And how do you work toward the affirmative outcome that you want?”

This seems to especially irk Harris when it comes to fintech. “We’re so used to thinking about financial services in the predatory sense. Then they [regulators] come to fintech and then they’re like ‘Okay, where’s the hidden fee? Where’s the icky thing?’ Instead of approaching it, again, with this affirmative mindset,” Harris said.

The problem is Harris’s individual thinking off control

Toward face of it, it’s without a doubt necessary for government understand the underlying reason for their framework. But we would say that government setting up “no-no’s” and seeking to possess “undetectable costs” or “icky one thing” form they’ve been carrying out their job, hence is not to take world stars in the the keyword. Bodies instead are meant to believe firstly the public you to could be harmed in the event the industry is not being forthright-and that, naturally, it scarcely try.

The newest “no-no’s” have there been firstly as there isn’t really any way to force compliance into a regulated payday loans in New Hampshire organization in place of articulating exactly what they may be able and cannot carry out

Concurrently, of a lot forms of “economic creativity” are extremely the latest a means to mine individuals, either due to undetectable usurious rates otherwise the latest ways of helping gaming together with other man’s money. The “no-no’s” are there to cease economic exploitation, that’s a need you to definitely only authorities can also be see.