Hi fintech friends,
Another big week at the CFPB, positive news for millions of people struggling with medical debts, and more activity around crypto’s polarizing impact on the war in Ukraine and Russian sanctions.
- CFPB expands enforcement on algorithmic discrimination: The regulator in charge of overseeing all consumer financial services already has jurisdiction over the Equal Credit Opportunity Act, which requires providers to ensure fairness in their underwriting practices, and Fair Credit Reporting Act, which oversees credit bureaus and other report-makers. But having seen the proliferation of algorithmic decisionmaking across a broader range of financial services, the Bureau is upping its efforts to “crack down” on algorithmic bias. Specifically it issued a new set of examination procedures, which its examiners use to analyze providers and their services and determine whether enforcement is needed. The procedures address Unfair or Deceptive Acts and Practices (UDAAP), and provide clear examples of violations.
- Bureaus to remove medical debts from credit reports: Consumer advocates cheered the news that the big three credit reporting agencies will be scrubbing many consumers’ medical debts from their credit reports. This move comes just a few weeks after the CFPB published research showing the harmful impact America’s medical billing system has on consumer debts and credit scores. Urban Institute research shows that 15% of Americans have medical debt in collections, including millions unaware that they haven’t paid their bills due to billing errors. Medical billing and debt has long been a fintech target; even with reporting changes there’s still a massive market filled with pain points needing solutions.
- CFPB Director Chopra calls America’s payments system “noncompetitive”: Director Rohit Chopra has not made many public appearances, focusing on the steady stream of research, rulemaking, and enforcement under his reinvigorated CFPB. Director Chopra joined CNBC to talk about the CFPB’s work on junk fees, focusing on auto markets and payments. When asked about the role of payments system, Director Chopra said “I don’t think we have a competitive payments system in America… many businesses cannot survive if they stop accepting (major card networks).”
- Two Federal Reserve Board Nominees advance, after Raskin withdraws: Nominee Sarah Bloom Raskin withdrew her nomination to become a Governor of the Federal Reserve Board after scrutiny over both her climate focus, and her close connection to a fintech company that sought direct access to Fed payment rails. The Senate voted last week to advance President Biden’s two other nominees - Lisa Cook and Phillip Jefferson - who now head to the House for confirmation. With Raskin’s withdrawal the President will seek to introduce another candidate in short order, as the Board is currently understaffed in the midst of unprecedented macroeconomic challenges.
- Backlash over Sen. Warren’s crypto compliance bill: Senator Elizabeth Warren, well known for skepticism over crypto, introduced a bill to block Russian oligarchs from evading sanctions by hiding their money in cryptocurrencies. The bill would require reporting of offshore crypto transactions of more than $10k to FinCEN. Chainalysis CEO testified that transparency in crypto transactions make it easy to trace illicit activities, and crypto lobbyists fired back curiously calling the bill unconstitutional.