SAN DIEGO, Feb 6 (Reuters) - Philadelphia Federal Reserve Bank President Patrick Harker on Monday called for more regulatory oversight of the growing fintech sector, which includes a broad range of companies from payment apps like Square to online lending platforms such as Lending Club.
Harker, who votes on monetary policy this year on the Fed’s policy-setting panel, did not comment on the economy or on the outlook for interest rates in his prepared remarks.
Instead he focused on the state of regulation of technology-based financial services companies, some of which have been wary of new rules or licensing requirements for fear they could stifle innovation. Because they do not accept customer deposits, fintech companies are not now subject to many federal banking laws.
Beefing up rules for the industry now, before the inevitable future crisis or economic downturn, would not only better protect consumers, but would also protect the companies themselves, Harker argued Monday.
“It’s unlikely that increased oversight will be welcomed with open arms, but I should say now that it’s actually in the interest of fintech firms,” Harker said in remarks prepared for delivery to the Global Interdependence Center. “What fintech outfits don’t want is regulation that comes in after a crisis.”
Harker’s remarks come as President Donald Trump has begun an effort to roll back banking reforms put in place after the last financial crisis, that Trump says have held back lending.
Fed officials have largely defended those reforms, saying they have made the financial markets safer and less prone to future crises. Harker did not comment on the Wall Street reforms, or efforts to roll them back, in his prepared remarks. (Reporting by Ann Saphir; editing by Diane Craft)