The House Financial Services Committee (“HFSC”) announced that it will convene hearings this month to consider both the trend of financial technology firms partnering with chartered banks to provide financial services and the rise of mobile payments. More information about the hearing schedule is available on the HFSC’s website.
On January 30, the full Committee will hold a hearing entitled “Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps.” The hearing will likely address issues related to partnerships between fintech companies and banks, including payday lender-bank partnerships that have been scrutinized by HFSC members. Although the OCC is attempting to create special purpose charters for fintech companies in order to provide a mechanism for fintech companies to enter the banking system, this approach is the subject of ongoing litigation, and bank-fintech partnerships have become the predominant way for fintech companies to work together with banks to provide financial products and services. See e.g., Lacewell v. Office of the Comptroller of the Currency, 1:18-cv-08377 (S.D.N.Y. Sept. 14, 2018); Conference of State Bank Supervisors v. Otting et al., 1:18-cv-02449 (D.D.C. Oct. 25, 2018). The hearing will likely also consider the recently proposed rules by the OCC and FDIC regarding the “valid when made” doctrine and the aftermath of the Second Circuit’s decision in Madden, which you can read more about here.
On January 31, the HFSC’s newly created Task Force on Financial Technology will convene to consider a topic entitled “Is Cash Still King? Reviewing the Rise of Mobile Payments.” This hearing will review the modern trend of digital payments and what that means moving forward for both cash and the financial services industry more broadly.