The Power of Regulators and Regulations

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The Power of Regulators and Regulations
The Power of Regulators and Regulations


It has been more than a decade since the Great Recession and the Dodd-Frank regulations were handed down. 

Following the 2018 midterms, Democrats in the House focused on protecting consumers, and the Republican-led Senate Banking Committee is simplifying rules that  weren’t addressed in 2018’s deregulatory bill. 

Forbes writes that although the momentum has swung one way, there is a new force: state authorities regulating lenders within state borders.

“States already flex their regulatory muscle—today they’re the primary regulators of tech companies offering peer-to-peer payments … So it’s no surprise tech companies including Facebook, Google, Apple and Amazon have money transmitter licenses in over 40 states. Fintech companies like Fundable and Kabbage are also monitored by states,” Forbes says. 

According to Forbes, states jumped in because of tech lenders not being regulated. The article states there have recently been conversations, but political leaders have taken a hands-off approach. 

“Regulators hate vacuums because they increase risks of predatory lending. The second reason is that tech companies pay fat license fees to state treasuries,” the post states. 

The Federal Housing Finance Agency (FHFA) in June released its 2018 annual Report to Congress, meeting the requirements of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The report included commentary from FHFA Director Mark Calabria, encouraging Congress to act on housing finance reform while also requesting chartering authority similar to the Office of the Comptroller of the Currency.

“There is urgent need for Congress to act on housing finance reform,” Calabria said. “To promote competition in the marketplace, I encourage Congress to authorize additional competitors and provide FHFA the same powers as other federal financial regulators.”

Calabria also spoke on the GSEs, Fannie Mae and Freddie Mac, noting the need to put an end to conservatorship.

“The Enterprise conservatorships were established as a short-term measure to address instability and ensure market function during the financial crisis,” Calabria noted. “They are now of unprecedented duration and scope and leave the mortgage market, and American taxpayers, vulnerable to another market downturn. FHFA will set an ambitious agenda that ensures that the mortgage market and FHFA’s regulated entities do not return to pre-financial crisis business models.”





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