If Senator Elizabeth Warren (D-MA) is trying to slam regulations on something - anything - whatever it is that she's trying to clamp down on is probably good for the American people.
Case in point: Financial technology, or "fintech." This is the technology many, probably most, people use every day - online banking, online loan payments, and so on. Senator Warren and another notorious Democrat virtue-signaler, Chris Van Hollen (D-MD) are trying to crack down on it.
In a letter sent Wednesday, Sens. Elizabeth Warren, D-MA, and Chris Van Hollen, D-MD, highlighted that the partnerships between banks, BaaS providers like Stripe, Finastra, Synapse, and Marqueta and fintechs like Venmo, Cash App, Yotta, and Chime pose a threat to consumer safety and soundness.
They asked the heads of the Federal Reserve, Office of the Comptroller of the Currency, and the FDIC to exercise their power under the Bank Service Company Act and the Federal Deposit Insurance Act to directly monitor the organizations and bring enforcement action against the companies if they violate the established rules.
“The rapid growth of these partnerships risks harming consumers while posing a broader threat to the stability of our banking system and the economy,” the senators wrote. “The risks are clear.”
Now, to be fair, not all is fuzzy and golden in the fintech world.
The call for strict oversight follows the collapse of fintech Synapse, which acted as a middleware provider between BaaS providers and fintechs. Synapse filed for bankruptcy in late April and signed a $9.7 million deal allowing money movement platform TabaPay to acquire its assets. But the deal fell through less than three weeks later, with TabaPay citing Synapse’s failure to meet closing conditions as the reason for the deal’s termination.
Synapse’s failure hurt over 100,000 consumers with $265 million in deposits – “a salient example of the harms posed by lack of oversight of BaaS providers and fintech companies,” the senators pointed out.
Sure, that's a matter of concern. But this is one company. It seems a flimsy excuse to slam a bunch of federal restrictions on a technology that isn't exactly new, having started in the late '60s with the first automated teller machines, or ATMs.
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Here's the thing: The American people, according to one recent survey, make great use of fintech and are in favor of it. Some highlights from that survey:
This is a complex issue. But my knee-jerk response to any call for increased regulation and oversight coming from Elizabeth Warren and Chris Van Hollen is skepticism, at the very least. Anything they oppose is probably a good thing. Senator Warren, in particular, has been wrong on every major financial policy issue since, well, forever. Last spring, she drew the eloquent condemnations of "Shark Tank's" Kevin O'Leary over her opposition to the GENUIUS Act:
Shark Tank investor and Canadian businessman Kevin O’Leary is firing back at Senator Elizabeth Warren over her opposition to the GENIUS Act – a bipartisan bill designed to regulate stablecoins in the United States.
O’Leary didn’t hold back, calling Warren’s stance “dangerous” and “un-American,” accusing her of blocking financial innovation by turning the bill into a political weapon against Donald Trump.
As crypto regulation becomes a bigger part of U.S. policy, O’Leary argues that Warren is distracting from the GENIUS Act’s core purpose. He says the bill is about modernizing the American financial system through properly regulated stablecoins – not about Trump or meme coins.
Elizabeth Warren has been wrong on every major and minor issue of financial policy and financial technology since she was first unwisely elected to office. If she's in favor of any bill or regulation, you can safely assume that whatever she's opposing would be a good thing for the American people. I suspect the same applies here.
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