New York Department of Financial Services Superintendent Maria Vullo is throwing down "the gauntlet" in support of states' regulatory primacy against the encroachment of any federal regime that could potentially undermine them in their efforts to protect consumers.
In remarks to the banking community during a presentation in Washington, Vullo took aim at the recent proposal from the Office of the Comptroller of the Currency to create a national charter for financial technology companies. Such an action could threaten consumers and encourage "too big to fail" institutions, she said in a nod to the 2008 financial crisis.
The New York state regulator opposes the OCC fintech charter, not just because of what she said were past failures, "but because we oppose the imposition of an entirely new regulatory scheme on an already fully functional and deeply rooted state regulatory landscape," Vullo said at an Exchequer Club luncheon.
States are experienced defenders of consumers, Vullo said, warning that her regulatory body would move in to "fill the void" if the new administration under President-elect Donald Trump fails to protect consumers. Such a move would include using regulatory enforcement power, she added.
She further cautioned the nation's regulatory regime from returning to "the not-so-distant past when regulatory oversight was lax."
According to Vullo, a national charter for fintech — which she called an ambiguous label — would create a few big players at the expense of smaller companies and innovation in the field. The OCC should not help the one or two best-funded fintech companies to clear the field of robust competition, but a national charter would do just that, she said.
In a Jan. 17 letter to OCC Comptroller Thomas Curry strongly opposing the fintech charter proposal, Vullo warned that former deregulatory experiments have already shown they can "infect" the national economy. Vullo also called on state regulators, legislators, and other policymakers to oppose the OCC's proposed special charter and support the state-based regulatory system. She noted that New York has been regulating nonbank financial companies for more than 50 years.