Regulators need to start using AI to adapt rules quickly to a rapidly changing financial system, a Republican Congressman who is often mentioned as the next possible head of the House Financial Services Committee said today.
To meet the fintech challenge, Rep. Patrick McHenry (R-NC) also called for regulators to begin employing Big Data to develop strategies.
“The basic way consumers are interacting with the banking system is fundamentally changing,” said the Congressman.
McHenry revealed he will be introducing a bill soon to bring financial regulation into the fintech era.
While time is running out for his bill to clear the House and Senate this year, next year could be a possibility as McHenry is seen as possible replacement for House Financial Services Chair Jeb Hensarling.
Hensarling, a Texas Republican, is not running for re-election.
McHenry said he will decide if he will put his hat in the ring for the chairmanship after the midterm elections in November, waiting to see if Republicans retain a majority in the House of Representatives.
McHenry’s comments came during a U.S. Chamber of Commerce fintech forum.
House Financial Services Committee member, Arkansas Republican French Hill told the attendees each financial regulator should have a fintech czar to help create regulations, alter exams to take into account changing technologies and to incorporate fintech internally at the agency.
Hill said he is against Federal Reserve creating a cryptocurrency.
“It doesn’t sound like a good idea. It’s off tone,” the Congressman said.
He urged Congressional committees to hold hearings on a wide range of sectors from energy to financial services to explore how industry looks to be transformed by blockchain in normal business operations.
At the session the Chamber’s Center for Capital Markets Competitiveness and the Chamber’s tech policy arm, C_TEC issued a fintech regulatory wish-list.
They said the overseers should streamline fintech regulations and minimize overlap so any financial service provider that serves a national, multi-state market has one set of rules to abide by, instead of the complex state rules and multiple federal agencies.
“This confusion creates uncertainty in the marketplace, which breeds hesitation about innovating, stifles future projects, or worse—forces companies to abandon projects altogether,” the Chamber report warned.
Streamlining should also apply to the SEC and the Commodity Futures Trading Commission, the Chamber units urged.
“(The SEC and CFTC should) create streamlined processes to assess the tokens and be prepared to issue relief so regulatory hurdles do not become a barrier to entry,” the white paper stressed.
Broadly, Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman claimed the current Byzantine set of fintech regulations or none at all is hurting the global competitiveness of American industry.
Ted Knutson is one of the most experienced financial regulatory reporters in Washington. For years, he has covered the SEC, CFTC, the bank regulators and the key Congressional committees.
