Financial services industry waits on US presidential election
With this wacky and wild U.S. presidential election season near its end, some executives in the payments industry wonder how the result will affect financial regulations going forward.
At least one observer believes that the current state of financial regulation is in "enormous flux" in the days leading into Election Day on Nov. 8.
"It's hard to watch what's going on and not have the sense that the elections matter enormously," said Neal Wolin, the former deputy secretary of the U.S. Treasury Department. "Not only is the presidency at stake, with the presidency comes appointments in cabinet that could affect the financial services sector.
"It's an enormous moment in time we should be paying attention to."
Wolin's comments came during the first day of the annual Money20/20 conference Sunday in Las Vegas. His panel about the impact of the U.S. presidential election on financial services regulation happened a couple of hours before Richard Cordray, the director of the Consumer Financial Protection Bureau, addressed the crowd about recent developments regarding the agency.
Wolin, as well as Tim Pawlenty, the former governor of Minnesota and current CEO of the Financial Services Roundtable, took some time during their panel at Money20/20 to discuss the CFPB.
The agency, which has always been a punching bag for Republican members of Congress, came under fire recently when the U.S. Court of Appeals for the District of Columbia Circuit ruled that the CFPB's structure violates the U.S. Constitution.
The financial services industry praised the decision, which came almost a week after the agency published its final rule on new prepaid account protections for consumers.
But Pawlenty and Wolin believe the CFPB's status will be business as usual after the election.
Polls show that Democrat candidate Hillary Clinton with a healthy lead over her Republican counterpart Donald Trump as the country barrels toward Election Day. A Clinton win should keep the CFPB in place.
"[The CFPB] will continue and the government will appeal that decision [from the U.S. Court of Appeals for the District of Columbia Circuit]," Wolin said. "Until there is a final ruling, it will remain as it is. The bureau will continue to do its thing."
Said Pawlenty: "While there is a great intellectual argument to make changes [to the structure of the CFPB], there aren't enough votes in Congress to make that happen."
As to how the presidential election will affect the fintech sector, Pawlenty and Wolin said there is not much to go on from both candidates.
Neither Clinton or Trump has said much about fintech.
Wolin said he is not aware of Trump saying anything about the subject. The Republican nominee's official campaign website does not mention anything specific about financial regulation.
"Clinton hasn’t said a lot, but if you look at some of her policy papers, she expressed interest in fintech as it relates to extending services [to citizens]," Wolin said.
Pawlenty agreed that neither candidate "has put much meat on the bone when it comes to fintech." He believes Congress will likely steer clear of any fintech issues unless something goes wrong on the level of Wells Fargo's recent problems.
"Any action on fintech will unlikely happen in Congress," Wolin said. "There will be very little to no legislation. It's going to come from policymakers and from range of bureaus."
That brings us to Cordray's comments at Money20/20.
The agency recently extended its new prepaid rules beyond the "normal" prepaid card providers. The rule now applies to P2P providers such as Venmo and Square Cash, products that have a "wallet" feature where users can store funds separate from a linked account. All companies that fall into the CFPB's ruling will be forced to provide consumers with certain disclosures and account protections when the requirements go live Oct. 1, 2017.
Cordray said during prepared comments at Money20/20 that the current pace of innovation in the financial services industry "raises challenging issues for all of us."
"We recognize evolving tech holds great promise," he said. "[But recent rulings] should not be misread or over read.
"Our enforcement actions have addressed meat-and-potatoes issues such as misrepresentation [from companies to consumers]."
Cordray said the agency "believes" in new technology regarding mobile and the blockchain, but that the agency must do its due diligence in regards to new product developments. To address that, the CFPB seeks insight from companies old and new that are piloting new products to better understand them.
"We're not content to sit passively by," Cordray said.
Cordray also wanted to make sure companies are aware of two things when it comes to the agency. It insists every company needs to meet basic laws regarding consumer protection.
"They need to think about putting the interests of the consumers first," he said.
Cordray also said the agency will seek to "support" consumers, not just protect them as the name of the agency suggests.
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.