New Congress is in session and fintechs have their wish list

In case you hadn't noticed, control of the U.S. federal government recently changed hands. While not exactly breaking news, a new Congress and administration create opportunities for lobbying groups to take a fresh approach to advance legislation, and the business of fintech is no different. The American Fintech Council has jumped into the fray and hopes Congress will take action on four issues. The trade group has made a number of statements in support of new congressional committee leadership. Will anything actually get done? Who can say, but what's clear is the speed at which fintechs are developing new services and banking methods vastly outpaces any legislation crafted to clarify the rules..The AFC represents a growing number of fintechs serving banks of all sizes and has a very specific wish list. After extending a "special welcome" to the newly appointed leaders and members of the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee, the group asks these committees to focus on the following areas..True Lender Legislation: As previously introduced, the Modernizing Borrower Credit Opportunities Act would establish a clear federal legislative standard that explicitly clarifies financial institutions as the originators of loans in a bank-fintech partnership, and preserves the protections afforded to financial institutions under the Depository Institutions Deregulation and Monetary Control Act, and National Bank Act. This legislation aims to "promote consistency and clarity in lending markets and increase the availability of affordable credit across the nation, ensuring that state-chartered community banks can partner with fintech companies to offer much-needed responsible, safe and affordable credit to consumers," AFC said..The Earned Wage Access Consumer Protection Act: This bill looks to create a single framework to govern earned wage access (EWA) products, ensuring they remain "accessible, consumer-friendly and appropriately regulated," AFC said. EWA is a financial service that allows employees to access a portion of their earned wages before their scheduled payday. The AFC contends EWA is not a loan, and should not be regulated as such, and says this bill would create needed rules for this emerging industry..The FAIR Exams Act: This bill has already been championed by House Financial Services Chair French Hill (R-Ark.) and would attempt to bring transparency and accountability to financial institution examinations and, therefore, enhance confidence in the regulatory process of emerging fintech. AFC said the legislation would increase transparency and accountability in bank examinations and create a robust appeals process for legitimate disagreements between financial institutions and their regulators.."We are at a pivotal moment for American consumers and families," said Hayden Cole, director of federal government affairs at AFC. "The 119th Congress has a unique opportunity to advance policies that enhance financial security, expand access to financial services, and support the everyday financial needs of working families across the country. The swift consideration and passage of the critical pieces of legislation we identified will show the nation that the 119th Congress is here to get things done.".Phil Goldfeder, AFC's CEO, underlined the group's confidence in Rep. Hill's grasp of fintech issues and is hopeful the 119th is listening. Hill previously served as vice chair of the House Financial Services Committee and chaired the Subcommittee on Digital Assets, Financial Technology and Inclusion.."Congressman Hill has demonstrated a keen understanding of the complex realities of the financial industry, and the need to craft smart, effective and pragmatic policies," Goldfeder said. "We particularly appreciate his advocacy pushing the FDIC to prioritize greater understanding of responsible fintech innovation after the agency reorganized its FDITech office, as well as his support for clear and consistent regulations governing bank-fintech arrangements.".Artificial intelligence legislation is another project pursued by the AFC, but its goals are less clear. They are not alone. AI is impacting industries in ways too numerous to list, and rules governing the use of AI have so far been focused on defense and not finance, but this issue is sure to be ongoing for banks and their fintech partners.."The use of AI in financial services represents one of the most impactful areas for the future of banking," Goldfeder said. "It is crucial that policymakers and regulators understand the relevant distinctions between AI-centric offerings and seek to craft the correct regulatory structure for each financial product."