House Republicans think America’s financial oversight bodies need some oversight of their own.
U.S. Rep. Patrick McHenry (R-NC), chair of the House Financial Services Committee, re-introduced legislation Wednesday (April 17) that would set up Financial Services Innovation Offices (FSIO) within each financial regulator.
“Each FSIO will assess burdensome agency regulations that hinder innovation, as well as evaluate and approve alternative compliance agreements for entities wishing to offer innovative products and services,” the committee said on its website.
According to the bill, these offices would be established within the Federal Reserve, Federal Deposit Insurance Corp. (FDIC), Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), Treasury Department, Department of Housing and Urban Development, Securities and Exchange Commission (SEC), the Federal Housing Finance Agency and the National Credit Union Administration.
The bill, McHenry said, ensures all agencies are “rowing in the same direction.” In addition, the legislation would provide a “federal sandbox for innovative financial products and service,” similar to measures other states have taken.
“By working with an innovation office, entrepreneurs can gain clarity on regulations, explore alternative compliance options and ultimately bring their ideas to market faster and more efficiently,” he said during a hearing Wednesday.
McHenry introduced the Financial Services Innovation Act in 2022, saying that it would, in part, require federal regulators to promote innovation, and brought it back last year.
At the time, the measure was opposed by some consumer advocacy groups, who argued it would let financial services companies sell risky products.
Rather than creating regulatory sandboxes, the legislation would create a “Sahara desert” of consumer protections, the National Association of Consumer Advocates and other groups said in a letter to McHenry and Rep. Maxine Waters (the Financial Services Committee’s top Democrat) published last year.
“The bill does not require companies to provide information about potential consumer risks,
and it does not set forth any clear standards about what type of data and information companies are required to provide,” the letter said.
“The bill uses vague language in the demonstration requirements for a petition and encourages companies to handpick self-serving information that fits their narrative instead of any objective measures of performance, or any information about fees and required payments accompanying the potential product.”
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