Federal: AFC Letter to FDIC Acting Chairman Travis Hill

Mr. Travis Hill
Acting Chairman
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

Dear Mr. Hill,

On behalf of the American Fintech Council (AFC), I want to congratulate you on your ascension to Acting Chairman of the Federal Deposit Insurance Corporation (FDIC). We have enjoyed working with you during your tenure at the FDIC and we are confident that your forward-thinking and pragmatic leadership will help guide responsible innovation within the agency and amongst regulated financial institutions.

As you know, AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by fostering safe and responsible innovation in financial technology (Fintech), and encouraging sound public policy. AFC members, made up of fintech companies and innovative banks, are at the forefront of fostering competition in financial services and pioneering ways to better serve underserved consumer segments and geographies. AFC and its members strongly support the development and implementation of regulatory frameworks that encourage the responsible development of innovative financial products and services.

As Vice-Chairman of the FDIC, you embodied the principles of AFC’s advocacy by showing a steadfast commitment to adopting a transparent, open-minded approach towards innovation and developing a sound regulatory framework for innovative products and services within the banking sector. The work you have undertaken reflects a keen understanding of the needs of the modern financial services industry and will help ensure that the U.S. financial system remains robust, resilient, and critical to both the domestic and global economy.

As evidenced by your recent statements, it is clear that your commitment to fostering responsible innovation in financial services will continue during your time as Acting Chairman.  AFC fully supports the strategic agency and regulatory agenda that you put forth to modernize FDIC’s regulatory approach and encourages the swift implementation of several agency endeavors that will ensure the continued success of innovative banks and their fintech partners:

• Improve FDIC’s supervisory culture and processes: AFC strongly believes in the importance of maintaining clear and consistent “rules of the road” for innovative banks and their fintech partners, as well as an examination framework that ensures consumers remain protected while also encouraging innovation. However, the current examination culture within the FDIC is not conducive to these efforts. As evidenced by the recent slew of enforcement actions against financial institutions engaged in bank-fintech partnerships, examiners have pursued a “regulation by enforcement” regime that disincentivizes the proactive identification and remediation of compliance issues in a bank-fintech partnership. There is a unique opportunity to leverage innovative supervisory technology (suptech) tools, as well as new education materials on relevant innovation topics to improve examiners’ understanding and ability to properly evaluate and supervise the modern banking system.

Again, we concur with your keen insights into the importance of shifting the agency’s “supervisory attitude” and the continued pursuit of clear and consistent rules through the issuance of agency guidance on issues related to innovation that will effectively modernize the agency’s regulatory approach. We therefore respectfully request that you pursue swift action to remedy the current supervisory culture and process issues and improve the agency’s engagement with innovative banks and their fintech partners.

• Reorient the FDIC’s views towards innovation: AFC has consistently conveyed its concerns regarding the FDIC’s more recent posture towards innovation and the need for a modernized regulatory approach by the agency.  Overarchingly, the FDIC has shown an apprehensiveness to innovation within the banking system that we believe is harmful to fostering a robust and resilient financial services industry set on improving the financial lives of the consumers it serves. Central to our concern is the change that the FDIC took towards its FDITech Office. The FDIC’s reconfiguration of the FDITech Office from its original externally focused operation to an internally focused endeavor represents a mismatch in the agency’s understanding regarding the needs of innovative banks and their fintech partners for crucial engagement with relevant FDIC staff. AFC stands in full agreement that the FDIC must “take a more open-minded approach to innovation and technology adoption, while still promoting core safety and soundness principles.”  To that end, we reiterate our calls to reorient the FDIC’s views towards innovation and reconstitute its FDITech Office as a centralized office for industry engagement and expand its remit to align with the other prudential regulators’ efforts.

• Reaffirm FDIC’s views on preemption of state laws: AFC consistently advocates for the avoidance of a patchwork nature of regulation in the financial services industry. To that end, we pursued legal action against the State of Colorado to enjoin its recent law to opt out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). During the legal proceedings, the FDIC submitted an amicus brief that conveyed several novel interpretations, including those related to loan origination.  The views conveyed in the amicus brief ran contrary to established FDIC precedence on the issue. Not only do the views expressed in FDIC’s amicus brief constitute a fundamental reimagining of FDIC’s perspectives on loan origination, but they also present a new de facto regulation by the agency. We therefore respectfully request that you take swift action to remedy the issues presented by the FDIC’s amicus brief by reaffirming FDIC’s views on loan origination and the preemption of state law to align with long-standing agency precedent.

Again, I would like to congratulate you on your ascension as Acting Chairman of the FDIC. As you move forward in your engagements as Acting Chairman, we look forward to continuing our collaboration to promote and develop policies that encourage responsible innovation and pragmatic regulation of the modern financial services industry.

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Sincerely,


Phil Goldfeder, CEO
American Fintech Council

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[1] American Fintech Council’s(AFC) membership spans EWA providers, lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.
[2] See, Hill, Travis, "Charting a New Course: Preliminary Thoughts on FDIC Policy Issues", Federal Deposit Insurance Corporation, (Jan. 10, 2025) available at https://www.fdic.gov/news/speeches/2025/charting-new-course-preliminary-thoughts-fdic-policy-issues and FDIC, "Statemen from Acting Chairman Travis Hill", (Jan. 25, 2025) available at https://www.fdic.gov/news/press-releases/2025/statement-acting-chairman-travis-hill.
[3] See, Ian P. Moloney, on behalf of the American Fintech Council, to the Honorable Martin J. Gruenberg, Federal Deposit Insurance Corporation, Feb. 2, 2024, https://www.fintechcouncil.org/advocacy/american-fintech-council-shares-letter-to-fdic-on-thoughts-towards-innovation; and The Honorable Phil Goldfeder, on behalf of the American Fintech Council, to the Honorable Martin J. Gruenberg, Federal Deposit Insurance Corporation, Apr. 19, 2024, https://www.fintechcouncil.org/advocacy/federal-advocacy-letter-to-fdic-on-regulating-innovation.
[4] Ibid, "Charting a New Course: Preliminary Thoughts on FDIC Policy Issues".
[5] Federal Deposit Insurance Corporation’s Unopposed Motion for Leave to File An Amicus Curiae Brief In Support Of Defendants, National Association of Industrial Bankers, et al. v. Weiser, Civil Action No. 1:24-cv-812 DDD-KAS, available at https://www.mcglinchey.com/wp-content/uploads/2024/06/FDIC-Brief_Colorado-DIDMCA-Opt-Out.pdf.