WASHINGTON — While the future of many financial initiatives is uncertain under President-elect Trump, regulatory efforts to help expand fintech appear to have a clear bipartisan mandate.
"It's like the only issue I can think of that hasn't already been bogged down in argument," said Jo Ann Barefoot, a consultant on fintech matters.
Republicans in both chambers are already pushing bills to adapt the regulatory structure to help new fintech firms gain ground.
Rep. Patrick McHenry, R-N.C., introduced a bill in September that would create an innovation office in a number of government agencies dedicated to fintech, as well as a system for companies to apply for protection from regulatory enforcement actions as they develop new products.
Some Democrats may ultimately support the bill because fintech might be a way to reach underbanked and unbanked consumers.
"The fintech innovation has huge potential to benefit consumers and small businesses and also is full of business opportunity for the industry," Barefoot said.
The pending Trump administration is also unlikely to derail efforts by the Office of the Comptroller of the Currency to address fintech, including the possibility of releasing a charter dedicated to fintech firms. The agency is due to make a decision on that by year-end, at which point a proposal would likely be issued.
"The OCC is going to put its paper out and begin seeking input," Barefoot said. "I don't necessarily see the election as changing that."
Comptroller of the Currency Thomas Curry would even conceivably have time next year to issue a final rule before his term ends in April, though it would be tight. Most observers said it's more likely the issue will be pending when Curry leaves — but there's no reason to assume a Trump-appointed comptroller will be less supportive of the idea.
"They can't come up with a final rule until well into next year," said Christopher Cole, the executive vice president and senior regulatory counsel at the Independent Community Bankers of America, which opposes the idea of a laxer regime for fintech companies. "It's going to be up to the 2017 OCC to issue a charter."
Indeed, the charter may become more robust under Republican oversight. When it comes to federal preemption — which allows federally chartered institutions to avoid many state rules governing consumer protection — a Trump administration could eschew a states'-rights posture in favor of greater regulatory consistency for large companies, observers said.
"In the area of banking law, pro-business conservatives tend to also want to give the federal government preemptive power in order to give the business landscape easier to operate in," said Pratin Vallabhaneni, an associate at Arnold & Porter who advises fintech firms on regulatory matters.
There could also be a silver lining for payments companies and other financial institutions that have been targeted by the Justice Department in Operation Choke Point, a program aimed at cutting these industries' ties with the banking system.
When Trump appoints a new attorney general, whatever remains of the program will most likely be discontinued.
"We are hopeful that the incoming administration will have a different approach toward punishing bad actors," said Scott Talbott, the senior vice president of government affairs at the Electronics Transactions Association. "Punishing the individuals responsible for committing bad acts rather than payments companies."
