Lawmakers Say FDIC Has ‘Moved Backwards on Innovation’

Three members of Congress have asked the Federal Deposit Insurance Corp. (FDIC) for information about how it will provide regulatory guidance for FinTech firms and other financial innovators.

This request was driven by the FDIC’s dismantling of the external facing portion of its FDITech Office, according to a Friday (Feb. 2) press release issued by the House Financial Service Committee (HFSC).

Rep. Patrick McHenry, chairman of the HFSC; Rep. Andy Barr, chairman of the Financial Institutions and Monetary Policy Subcommittee; and Rep. French Hill, chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, outlined their demands in a Friday letter to FDIC Chair Martin Gruenberg.

They said in the letter that during Gruenberg’s tenure, “the FDIC has moved backwards on innovation.”

“You have not only dismantled the external facing portion of the agency’s FDITech Office, which was focused on ‘engaging and collaborating with the private sector to support innovation the promotes economic inclusion, consumer protection, competition and identification of risk,’ but shifted FDITech’s mission to focus solely on adoption of technologies within the FDIC,” the letter said.

Reached by PYMNTS, an FDIC spokesperson declined to comment on the letter, saying the FDIC will respond directly to the members.

In their letter, the members of Congress also said that FDITech has been reorganized in such a way that it no longer focuses on competition or innovation within the financial sector, and that there is no publicly available information about the FDIC’s posture on innovation.

“The FDIC has a troubling history of using extralegal pressures to attain anti-business results,” the letter said. “We are concerned that the FDIC’s approach could, within the examination processes or otherwise, be used to prevent the development of innovative products and services that benefit consumers and businesses.”

The letter asks the FDIC to provide information about its examination and supervisory actions toward financial institutions and FinTechs by Feb. 29.

This communication with the FDIC comes three days after McHenry, Hill and Rep. Mike Flood addressed a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, urging the CFPB to reopen and extend the public comment period on its proposed rule that would allow it to supervise large nonbank companies that offer services like digital wallets and payment apps.