Breaking Down Treasury's Fintech Report

Waters also balked at the OCC providing "little opportunity" for deliberation on "this new charter regime," and questioned OCC's legal authority to take such a step.

There's "concern that the OCC's fintech charter could allow nonbanks to pre-empt state laws that are meant to protect consumers," Thaddeus King, officer for The Pew Charitable Trusts' consumer finance project, told me in a Friday email message.

However, he added, the OCC "has expressed an unfavorable view of banks partnering with payday lenders and has also made clear that it does not want OCC-chartered institutions to offer unaffordable and unsafe loans. As the OCC moves forward, it must keep consumer protection front and center."

Nick Bourke, director of The Pew Charitable Trusts' consumer finance project, said on a Wednesday webcast that there was "not a lot" in Treasury's fintech report "about consumer protection or how to ensure that we have a safe and sound marketplace," and he cautioned against "rushing ahead to encourage more financial innovation before we have those strategies sorted out."

Indeed, Pew's just released report suggests that U.S. regulators take a cue from international regulators and create a more coordinated approach to encouraging innovation, "one that reduces regulatory ambiguity and protects consumers."

Like in Australia, "where the Treasury Department took steps to be a coordinating agency among all the various government actors, it's probably a positive step for a [U.S.] federal regulator [like Treasury] to try to convene and create a sense of coordination among regulators," Bourke said.

However, "it's way too soon to know if this [Treasury] process is going to lead to the kind of clear goals for why regulators should even be involved in fostering financial innovation in the first place," Bourke opined. "If this kind of collaboration leads to a sense of clear goals for why the regulators should be fostering financial innovation and how they're going to do it in a way that protects consumers," that's positive.

Former Treasury official Jonah Crane, previously spotlighted in Human Capital, opines that Treasury's white paper on fintech "recognizes the important role of consumer data access in facilitating innovation that benefits consumers."