Yesterday, the first ever Marketplace Lending Policy Summit took place in Washington DC. Even though this was not a LendIt event I fully supported it because I believed in the importance of an event of this nature. We need to raise our profile in Washington and engage with lawmakers, not just one company at a time, but as an industry. I was happy to be there and participate as a speaker.
We heard from several high profile speakers at the MPL Summit. Congressman Patrick McHenry (R-NC) talked about the importance of Fintech and shared a personal story about his father’s small business and the challenge he had obtaining sufficient funding. He talked about his legislative approach and some of the steps he is taking in Congress to try to help the industry. Senator Jeff Merkley (D-OR) also talked about small business funding and the effort it took to get the JOBS Act passed. He believes it is crucial for Congress to help create an environment where small businesses can thrive.
The highlight of the day, at least for me, was the presentation by the Comptroller of the Currency Thomas Curry. He talked about his time overseeing banks and other financial institutions throughout his decades long career. Today, the OCC overseas 1,400 national banks and federal savings associations. He shared his concern that the industry has not been through a full credit cycle yet and that it will be important to find stable funding sources that hold up during a downturn.
He shared the framework that the OCC has created that he believes will serve consumers and small business more fairly. They are still working on this framework but it should be ready for release some time in the fall. He listed eight components to this framework:
1. Encourage responsible innovation.
2. Foster culture within the OCC that is receptive to new ideas.
3. Ensure that framework capitalizes on the deep expertise within the OCC.
4. Innovation must not abuse customers, instead must expand access for consumers.
5. Effective risk management and good corporate governance.
6. Encourage banks of all sizes to embrace innovation.
7. Help look ahead with ongoing dialogue from all stakeholders.
8. Collaborate with other regulators.
The key part of this framework is the idea of a new special Fintech charter. The OCC would be the regulatory agency responsible for this charter but it would be have to be very different from banking charters. It would need to be broad, encompassing all areas of Fintech, not just lending, and would need to plan for both success and failure of member companies. At this stage it is just an idea and many at the MPL Summit were skeptical of its possibility of success. Other agencies are also looking at our space so it is unclear whether the OCC will be the agency that regulates the industry but clearly they are positioning themselves to do so.
There were several interesting afternoon panels and I moderated the last session of the day. We featured a large panel that included the new Executive Director of the Marketplace Lending Association, Nat Hoopes. He has been on the job less than a week but he showed a keen grasp of the issues and indicated that the MLA is certainly open to adding new members soon and would even consider those platforms that are not pure marketplaces. He stated that it is important that the industry speaks with one voice in Washington, something that I have been advocating for some time.
It was an excellent day yesterday and kudos to Cross River Bank and Boston University for putting on such a good event. I hope this is the first of many such events in Washington.
