House Republicans attacked the Consumer Financial Protection Bureau (CFPB) during a hearing Wednesday over proposed rules that would regulate financial services such as digital wallets and payment apps.
The agency released a proposal to supervise nonbank financial technology in November, with CFPB Director Rohit Chopra saying the rule would “help ensure that large technology companies and other nonbank payment companies receive appropriate oversight.” , it would crack down on one avenue of regulatory arbitrage.”
But Republicans say this is the latest example of the CFPB overstepping its mandate and unnecessarily imposing regulations on private companies.
“The CFPB is looking to do something for people who are watching from home,” Rep. Byron Donald (R-Fla.) said during a House Financial Services Subcommittee hearing on Financial Technology and Digital Assets. ” he said. And inclusion.
“There is no need for regulation in outer space. Mr. Chopra has once again gone far beyond his limits,” he added.
Donald argued that the rule would limit Americans’ ability to buy and sell goods and services and result in excessive CFPB involvement in digital transactions.
Rep. French Hill (R-Ark.), chairman of the subcommittee, said the proposal is “too broad and vague” and that applications such as digital wallets are not compatible with payment applications such as PayPal, Venmo, and Cash App. He stated that it is assumed that there is compatibility.
“The CFPB is trying to cast the widest possible net and become a technology regulator,” Hill said. “In many respects, this proposal represents a significant departure from the CFPB’s previous mass participation provisions.”
Jack Solowy, a financial technology policy analyst at the Cato Institute, said payment apps require a service provider to facilitate transactions and generally allow users to access their holdings by storing the information securely on their smartphones. We have differentiated the digital wallets that can be used.
He said the new rules would “murky the landscape” for many technology companies by making it unclear what tools would be regulated. It warned that regulating digital wallets “raises serious concerns under the Administrative Procedure Act and the Consumer Financial Protection Act itself.”
Rep. Stephen F. Lynch (D-Mass.), ranking member of the subcommittee, said the lines between banking and commerce are blurring and regulation is essential to protect consumers. referred to the CFPB statement.
“The CFPB is becoming a high-tech regulator in the same way that high-tech companies are becoming banks,” Lynch said.
Christopher Odinet, a law professor at the University of Iowa, said non-bank platforms play a similar role to banks in the payments ecosystem, often acting as “powerful intermediaries” to reduce risk. He said more supervision was needed.
“The addition of additional parties to the payment process results in increased potential for fraud, data breaches, and losses associated with the bankruptcy of these powerful intermediaries,” Odinet said.
He added that CFPB oversight would allow for more consistent regulation across state lines and help prevent potential discrimination from data collection by technology companies.
Copyright 2024 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
