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[Editor’s note: This interview was recorded on November 13 and in the fast moving transition to a new administration, some items discussed here as possible or unlikely have already come to pass.]
The new Trump Administration is going to have a dramatic impact on leadership at Federal banking regulators as well as on the new rules impacting fintech. So, I thought it would be useful to bring on an expert to tease out this impact and how fintechs can adapt to the changing of the guard.
My next guest on the Fintech One-on-One podcast is Armen Meyer, the Co-Founder of the American Fintech Council, the former head of public policy at LendingClub and a public policy expert. We cover a lot of territory on this show as Armen prognosticates on what the change of administration could mean for fintech.
In this podcast you will learn:
- Armen’s history with fintech and forming the American Fintech Council.
- What changes we are likely to see at the top of the regulatory agencies.
- Why the Federal Reserve will see a lot of noise under Trump.
- Why the CFPB will not focus their attention on Section 1033.
- What might happen with the new BNPL rules.
- The future of the credit card late fee rules.
- What might happen with EWA, overdraft rules and regulating big tech.
- The impact on BaaS bank consent orders.
- How the state regulators may react to the changes at Federal agencies.
- How the pendulum swing back and forth between Democrats and Republicans impacts banking and fintech.
- What the end of the Chevron Doctrine might mean for fintech.
- Whether we will see some kind of new limited fintech or payments charter.
- Why Armen is optimistic for the new Trump Administration.
Read a transcription of our conversation below.
FINTECH ONE-ON-ONE PODCAST NO. 511 – Armen Meyer
Peter Renton: Welcome. After more than 500 episodes, I have decided to give the Fintech One-on-One Podcast a bit of a refresh. You’ll notice new music, a new intro, better sound quality, and some more subtle differences as well. And we’ll also be launching some new features soon. Of course, you still get the same quality interviews that have made this one of the most downloaded podcasts in fintech.
Armen Meyer: The one that is probably in some ways least impacted by the change in administration is 1033. And that’s the open banking rule, of course. One, it is going to be impacted potentially by litigation, of course, in the Sixth Circuit. It was immediately sued by the large banks. So that is going to happen, might change or not. However, when we get to the other rulemaking the CFPB could say, I don’t want to defend this thing, actually and make it a lot harder for it to withstand judgment in court. But on this one, 1033, this is not where the CFPB is going to focus its deregulatory attention, in my opinion.
PR: This is the Fintech One-on-One Podcast, the show for fintech enthusiasts looking to better understand the leaders shaping fintech and banking today. My name is Peter Renton and since 2013, I’ve been conducting in-depth interviews with fintech founders and banking executives.
On the show today, we have Armen Meyer, the Co-Founder of the American Fintech Council, the former head of public policy at Lending Club, and a public policy expert. I wanted to get Armen on the show because I thought it’d be useful to get his perspective on the impact of the new Trump administration on fintech and banking. And we cover a lot of territory on the show today. We obviously talk about the changes that he expects to see in the leadership of the regulatory agencies. We talk about the CFPB in particular and what might happen to some of the rulemaking that’s going on there, like open banking, buy now, pay later, credit card late fees, and more. We talk about the bank fintech partnership model and what this might mean as it’s been under attack for some time now. We also talk about the Chevron Doctrine and what that might mean. We discuss Project 2025 and the potential fintech charter or a limited charter of some sort and much more. Now let’s get on with the show.
Welcome to the podcast, Armen.
AM: Peter, great to be here.
PR: Great to have you. I know we go back a few years. I was just reflecting. We first met, I think, at a Marketplace Lending Association, obviously the precursor to the AFC, at the 2017 event in DC, at a bar, I think it was.
AM: All good things start in bars.
PR: Right. I know you were at Lending Club for a long time, but why don’t you hit on some of the highlights of what you’ve done in your career to date?
AM: Well, yeah, when I met you that day, I was just coming out of a six-year stint at PricewaterhouseCoopers, where I’d been a managing consultant and helping clients implement this thing that we don’t talk anywhere near as much about anymore, the Dodd-Frank Act. And this other thing we don’t talk about very much anymore, the global financial crisis. I spent the last six years when I met you working with the bigger banks. And then as time went on, during those six years, I realized the fintechs were much more interesting. And then that’s what brought me to LendingClub in 2017, which is where I met you and I know we’re going to get into this, but the Trump administration then created a lot of opportunity that was different from what was happening under the Obama administration going from re-regulating the economy to now, “what is this fintech thing?” How do we deregulate it a bit and make room for this technology that’s coming in? And that’s why LendingClub was such a fun job for six years until recently, where I was able to focus primarily on, Do we buy a bank? Do we take up this crazy thing called the OCC Fintech Charter? So a lot of the work around LendingClub becoming a bank, I was really happy to be a major part of. But then also, how does fintech engage with the world, not just regulators, not just Congress, but the entire policymaking community that includes consumer groups, includes community groups, includes nonprofits? And we did then rebrand and really change that Marketplace Lending Association. And I was proud to co-found at LendingClub the American Fintech Council. I should warn, I left there about a year ago thanks to the great Phil Goldfeder who we brought in. My services were no longer needed, not that they were ever needed, but it was really fun to co-found that. I was glad he took the job as CEO and I left LendingClub and I’m now doing my own thing, advising companies on kind of my bread and butter, which is how you think about regulatory change, how you create lasting regimes in your organization, that don’t just check boxes, but satisfy stakeholders and more importantly, at long last make you profit in the long run. So that when a financial crisis comes, you’re one of the survivors, not one of the losers. And we’ve seen a couple of those, right? Our careers in just the last 12 years, right?
PR: Yes, yes, indeed. We’re going to be talking about regulatory change today. That’s going to be a major theme throughout our discussion. So let’s kick it straight off with what do you think, in the short term, are the changes we’re going to see at the regulatory agencies, like I’m talking about the first three to six months of the Trump administration?
AM: Yeah, I mean, in the first three months, and then we can do a three to six. Very easy. Here’s how it goes, right? Number one, change at the top where possible. Number two, rulemakings, because of something called the Congressional Review Act, which we’ll get into. So it’s not going to be quick. Some of the rulemakings were outstanding for the prior administration. And then you get into supervision enforcement. So starting with the heads of the agencies, which is, I would say in the first three months, the two agency heads that will not be there anymore is at the CFPB, Rohit Chopra and at the OCC Acting Controller Hsu. Why those two? Controller Hsu is in an acting capacity, and director Chopra is subject to a Supreme Court decision that said you don’t get to stay a five-year term at the CFPB. It was a 2020 decision. You, instead, are subject to presidential desires. I think, by the way, that’s a terrible thing. I’ll sidetrack because it is very important; I think it’s really bad that our regulatory architecture swings so quickly. I do like the idea of these structured boards, but I’m not in charge. So I’d like to see Director Chopra stay another year. I know it’s not popular with many, but I also wanted to see Kathy Kraninger stay when she was forced out for the same reason. Those are the first two moves but then I think we get to three to six months.
On the other end, we won’t yet have change at the Federal Reserve, I don’t think. Why? Because that is your traditional board structure where board member by board member has very long terms. There’s so much focus now on Powell, of course, but Powell has to stay. Why does he have to stay? He cannot allow the president to fire him. He’s an institutionalist. He loves his record. So if there is any talk of firing, he will stay and he will litigate. Because under the law, he’s probably on a strong footing and on precedent he’s on excellent footing. That’s not happened before. You know, and Mike Barr, who’s the Vice Chair for Supervision, very relevant to fintech, more relevant to the big banks, I think he’s likely to stay a while. He has a term as Chair. It does expire. But Randy Quarles, who had his job under Trump, stuck around for about a year under Biden. And I think that kind of continuity is good and what we all would want to see.
And I think in the middle, if I’m talking about like the four major agencies that impact fintech, we could do SEC and CFTC, but now we’re in crypto land, and that’s important, but we could talk seven years on those topics. But I think you have to look at the FDIC as where things will be very interesting and reasonable people would very much disagree what will happen. I’m landing in the camp that the Chairman, whose name is Marty Gruenberg, who’s been at the FDIC for about two decades and has been chairman before in multiple stints, will stay. Why will he stay? Because the FDIC traditionally has a term structure, and only about four years ago was that violated by what I think is an unfortunate event. The new Democrats that came on the FDIC board kind of made Trump’s appointee, McWilliams’ life, miserable. And you do have powers under FDIC rules to make it difficult for a chairperson to set agenda and drive their priorities. And that is what happened. But it wasn’t like she got fired, but she did resign because of that. Marty, however, a huge institutionalist, a creature of the FDIC, is going to have a different attitude about staying or leaving, I think, than Chair McWilliams did.
Now, what’s going to happen? I said the two people that change first are the CFPB and the OCC. Well, guess what? Both of those are on the FDIC board.
PR: Right.
AM: So pretty quickly, Marty is going to have to face four Republicans by himself, because there’s two other members who are Republican right now, Travis Hill and an independent. The independent may leave to preserve a 3-2 normal split, but nothing’s normal anymore. So Marty is going to be in this strange world where it could be one against four, two against three. And we’ll see. He’s a fighter. We’ll see what he does.
The irony of ironies is that the Democrats, the liberals, the progressives have been pushing him out for the last year due to some serious scandal at the agency. He said, “I plan to resign. I expect to resign.” He never resigned. So he chose his words carefully. So those who think he’s resigned already and all we need is a new appointment, I don’t think they’re right. And why does this matter? We’ll get into it. But, of course, the FDIC really matters to fintech.
PR: Yeah, yeah, for sure. I want to dive into the CFPB because as you said, that will happen quickly. Is that the agency you would say will be most impacted by a Trump presidency?
AM: I think the noise will be at the Fed, but the action will be at the CFPB.
PR: Right, right.
AM: See Project 2025, CFPB is listed nowhere near as frequently as a Fed. There’s also this guy named Elon Musk who rants and raves about the Fed. He will have some importance in this administration, without a doubt. So the Fed will give you a lot of noise. We can talk more about if any of that is reality, but a CFPB is hard reality.
PR: Yeah. Well, let’s maybe just touch on some of the big things that have happened in the CFPB. We just had last month, you and I were at the Philly Fed where Rohit Chopra launched the rules for open banking finally, to much fanfare in the industry. And now what’s going to happen with section 1033?
AM: The one that is probably in some ways least impacted, in my opinion, by the change in administration is 1033. And that’s the open banking rule, of course. Why do I say that? One, it is going to be impacted potentially by litigation, of course, in the Sixth Circuit. It was immediately sued by the large banks.
PR: Right.
AM: So that is going to happen, right? It might change or not. However, and we’ll get to the other rulemakings, the CFPB could say, I don’t want to defend this thing, actually, and make it much harder to withstand judgment in court. But on this one, 1033, this is not where the CFPB will focus its deregulatory attention, in my opinion, compared to many, many others. There are different types of regulation, right? This is like your classic “Republicans and Democrats can agree” regulation. This is infrastructure. This is creating pipes that make capitalism work or improve capitalism regulation. That is where you have the most consensus. The areas where the CFPB is going to get the most pushback are the other areas of regulation. Those two camps are conduct restrictions, which often are called consumer protection, where the industry can’t do things that it was doing before because of a rule change. Those are the ones that we should probably talk about, maybe go down one by one. Transparency is the other one, and that one’s kind of in the middle in terms of industry and consumers.
PR: So I presume one of those ones you’re talking about is the Buy Now Pay Later rules, right? What do you think is going to happen there?
AM: Yeah. So that’s where we got to talk about the Congressional Review Act, which I don’t think will be applied to open banking, but would be applied to Buy Now Pay Later. If it’s what’s in the window, it may not fall in the window, a Buy Now Pay Later rule. In other words, Congress under the Congressional Review Act may not be able to repeal the Buy Now Pay Later final interpretive rule because it happened too early. Why would Congress want to repeal under the Congressional Review Act? Because you don’t need 60 in the Senate, you only need 50. This was the playbook back in 2017 for repealing CFPB rules. You haven’t heard of this thing called the Ban on Arbitration Clauses since 2017 because it got repealed. So Buy Now Pay Later could fall under that. Probably not though. Under statute, that ability of Congress requires a 60-day look back. And that’s legislative days. That comes out to roughly four to six months. I think the BNPL final rule will fall out of that. So they’re not going to be able to look at it in time the CFPB knew what it was doing when it finalized that early to make it Congressional Review Act approved. But the other two things we talked about stand. It’s under lawsuit. The Financial Technology Association is suing, saying that they are misapplying the statute, the Truth in Lending Act. It’s a common power of the CFPB to use TILA to create regulation. BNPL was another example of how they did it over the last four years. And they’re saying, “No, you can’t do that.” So will the CFPB, even though Congress can’t repeal it, the CFPB could not defend? Totally possible. Or the CFPB could just say, “You know what? We don’t love this new interpretive rule idea. This should have been done according to the Administrative Procedures Act.” And they can just drop the whole thing and say, “We don’t like this interpretive rule idea. It should have been a proper notice and comment. That’s a lot of the controversy, by the way, around that BNPL, final interpretive rule, the lack of notice and comment.
PR: Right.
AM: I think BNPL probably doesn’t make it, not because of Congress.
PR: What about the credit card late fees? What do you think is going to happen there?
AM: That one is clearly outside of Congress’s purview, way too early. That’s, of course, the one that caps late fees at $8, not $32. Again, TILA, you’re noticing a pattern here; that’s how the CFPB did it. But that one is something the industry hates, obviously. No one loves big credit card companies, though. The stock market thinks this thing is definitely toast if you look at how those stocks in the credit card business went up after Trump’s victory. I would say it’s probably not going to be vigorously defended. It probably dies in court, definitely won’t get CRA’d as they say by Congress, though, and probably doesn’t get revisited. I think court is where this thing gets challenged and impacted and could go down.
PR: Interesting. What about the things that are still a work in process? Like you’ve got the overdraft rules, you’ve got Earned Wage Access, which the industry has watched closely. What do you think about some of those things?
AM: Yeah. And the third one, which is the most interesting, is of course the large tech companies in the payment space. That is such an interesting one. Let’s do the first two. Look, I don’t think it’s a coincidence that I’m not sitting here telling you all the regulations that Congress is going to repeal because the CFPB learned from last time. All of those were not finalized. Is it luck or is the CFPB really smart? I’m going to go with the latter. None of those were final. So now the CFPB has a look at what happened in the election. It’s looking at the House of Representatives. It’s looking at the Senate. And it’s going to make a call. Do we finalize these rules or not? If they get CRA’d, not only does a rule go away, but you can’t regulate it again under the CRA statute in that area. That’s why arbitration didn’t come back this time. They went to go around the rule another way, which wasn’t as direct. So I think they have to make a tough call here. What do they do? My gut is they’ll try to finalize one or two of these big three outstanding, but that they won’t do all of them because of the risk of not being addressed in the future. Or, if they don’t finalize and a new CFPB comes in, it just doesn’t move them forward.
Overdraft, we have a policy around. Earned Wage Access, I think we kind of have a policy around. But the most interesting is the rule that says, hey, we’re going to regulate the biggest tech companies involved in payments. By regulating, I mean not just that we can create rules and enforce in-court rules against you. We can actually go in, supervise, knock on your door; you have to let us in. We don’t need a court order, you have to let us in. They created that Large Participant Rule, as it’s called, saying that we should be able to look into large providers of payment services. Here’s where Elon Musk comes in again, which is going to be really interesting. Elon Musk has a payments company in his hand called X, formally called Twitter. It may not be there yet, but that is his vision. This is a guy who was very active, obviously, in PayPal. He had a neobank 20 years ago. I see him having a strong view here as to what he wants to happen. My gut is that CFPB wants to finalize this thing, get it out the door. Congress may or may not repeal, because who loves big tech these days? And, you know, Elon needs to catch up. He’s not where he needs to be. We’ve seen his playbook with OpenAI and xAI, his company. Suddenly, after he leaves OpenAI, he’s in favor of a moratorium on GenAI research. That’s going to give xAI time to catch up. That kind of rhetoric. I do believe that a participant rule could give time to catch up to other payment companies that aren’t quite there yet. So we’ll see what happens. It’s really complicated by the big tech politics, Elon Musk, and the prospect of not being able to regulate the space if the CFPB actually finalizes. So this is a lot of moving parts.
PR: Right, right. I know in the last Trump administration, the CFPB was really a hated entity, it seemed like, for a good chunk of that time, with a lot of people saying it should be legislated out of existence. I presume you think that’s not on the cards at all.
AM: Yeah, you nailed it. I think we’re beyond those days, especially because we had that court decision this year, where the CFPB was found to be constitutional, not violative of the appropriations clause, because the money goes through the Fed, and then goes to CFPB, and not directly to the CFPB was the argument. But that doesn’t mean those who don’t like the CFPB won’t keep chipping at it. And so beyond what we talked about with recent rules, there will be creative arguments using the latest that’s happened in the court system over the last four years to repeal even more rules, whether it’s because they were beyond their statutory scope, or they violated some procedure. Four years from now, we’re going to have fewer CFPB rules than when we started.
PR: That’s probably a pretty safe bet, I’m guessing. There have been a flurry of consent orders particularly in the bank fintech partnership space. Banks and fintechs have received them. What do you think is going to happen to those companies that are operating under those orders?
AM: In the beginning, I mentioned the four stages. We discussed heads of agencies; we discussed CFPB rules. There are of course, rules of other agencies we could get into. But what you’re getting into now, I think, is supervision, which is the last thing to change, really. Enforcement is next. You start feeling the impact there. But here you’re talking about, “I’m a bank, I got hit with an enforcement action quite a while ago, and I now need to comply with it.” I think these are going to remain intact. No one wants to just lift up and undo these consent orders. But it’ll be less challenging over time to satisfy the regulators that you have complied and can move forward. I think those BaaS banks, those firms that are related to the BaaS banks, will get out of their consent orders. This change makes it a little easier for them, but it’s not like tomorrow these things go away, but they’re going to have to do the work that they’ve been doing.
PR: Right. So do you think then new consent orders will slow down? What do you think is the impact of the new administration with the new leadership of agencies? What impact is that going to have on the bank fintech partnership model? Yeah.
AM: So when you get to new enforcement actions, I think those slow down. We definitely saw in the CFPB that happened. The CFPB moved from a regulatory enforcement agency to an education agency, really under Kathy Kraninger, not completely, but for the most part. And we saw damages really go down. So we’re going to see, I think, some settlements. We’re not going to see wholesale dropping of possible claims in court. We’ll see more settlements, we’ll see lower dollar amounts. To your question on if there’s a consent order about to come down, that’s kind of in between supervision and enforcement. So the supervisors are the last to change. I mean, I’ve been in some of these meetings in training sessions as a senior exec, or when I was a regulator at the Department of Financial Services, it’s called now, when I was Chief of Staff there. Everyone wishes they could control every member of their bureaucracy. You can’t. So even if the new CFPB head or the new OCC or the new FDIC head wants to drop a lot of this stuff, you have to keep agency morale. A lot of decisions are made lower on the totem pole, especially the smaller entities. So I don’t think it’s the end of all consent orders, but I do think that these companies have a second day in court to make their case. And by court, I mean to the top of the house agencies, to senior examiners. If they’re on the fringe, I think that there is a chance that there’ll be fewer than what would have been expected over the next few months at the FDIC, at the OCC. Supervision and enforcement take time, versus rules and change at the top of the house.
PR: Right. So then what about the states? You mentioned you were at the New York DFS. Obviously, California takes the lead in a lot of consumer protection-type legislation. What do you think is going to be the reaction of the states to the change of administration?
AM: Yes. And this actually rounds out your question on the bank partner model. So what one hand gives, one hand takes, right? So if there’s less enforcement and a little bit less scrutiny on the supervisory side at the federal regulators as time goes on — I want to emphasize, I don’t think the OCC and FDIC throw up their hands and say, you guys are all free to go. I really don’t. I think scrutiny stands. At the margin, over time, it diminishes. But the other hand is going to take. Those are the states. I was a member of those calls when George Bush was president about how the states needed to do more than they had before to fill regulatory gaps. Even before there was a CFPB. That attitude by states has only increased over time, not decreased. Right now, there are probably some state regulators talking to others, especially on the AG side, saying, what are we going to do to fill the void that’s going to be left by the CFPB or the OCC or the FDIC? And I do think you’re going see states step up. New York did that immensely. Now California is an interesting one, right? The AGs are going to do their thing. They’re very powerful. They have this enforcement authority called UDAAP (Unfair, Deceptive, or Abusive Acts or Practices), which the Dodd-Frank Act empowered them to use further. That means if you do something unfair or deceptive, I can bring a suit against you. Very powerful, right? It’s not a clear violation of the law. But the California regulator now has that power itself, which is kind of new to have a state regulator, not just an AG, have these powers. DFS has a limited version, which we put in when I was leading DFS, focusing more on deception. This will be a test for California. My opinion is it’s the first time we can see what they do. Will their budget go up? That will be your tell, right? Do the California legislature and Gavin Newsom suddenly increase their budget? It’s tough to play enforcement police for the country. So our first tell will be how the budget works there to know, can and will California step up and fill a void? New York traditionally does fill these voids. But the current commissioner is not Ben Lawsky, who was there when I came in and succeeded Richard Neiman, who introduced us. The current person may or may not increase enforcement. I expect in some ways she will and some ways she won’t.
PR: Okay. So I have a more general question on the impact of this pendulum that we have going. Democrats had complete control of Congress just four years ago, or less than four years ago. And now we have Republicans in complete control. We had Republicans had complete control in the first two years of the Trump administration. And so the pendulum keeps swinging back and forth. That doesn’t seem like it’s a good thing for the future of banking and fintech. What do you think?
AM: It’s a terrible thing for banking and fintech because it’s terrible for our economy, and our economy needs stability to grow. You know, one, several of us wrote an op-ed saying don’t pull up the CFPB. That was Phil and I together at the American Fintech Council. Why did we say that? Do we love the CFPB? Not necessarily. But do we know that a lot of these rules of the road have been invested in and we want to move forward? That’s reason number one, this is bad, the swings. Reason number two is these rules filled obvious regulatory gaps, which, if we don’t have filled, fly-by-nighters, those companies that don’t necessarily plan to be around for the long run will take advantage of those voids. So a lot of the rules we have in place make a lot of sense because companies A, want to invest, B, they want to know they’re not going be undermined by fly-by-nighters who will take advantage of the very customers they’re trying to help profit from and, in the right way, grow their companies. Reason number three, I would say, in a world where we’re just rolling back rules, re-implementing rules, I’m going to go back to your point, Peter, on, “what about the states or what about other agencies?” Here you have people like me who’ve worked in the industry, people saying, “We want rules of the road.” Well, we have rules of the road. So if we start repealing rules the road, what’s left? What’s left is UDAAP, which I was referring to, which is very open-ended, very subjective, and we don’t want to go back to that. We want to keep a lot of these rules in place. Not every rule. But we don’t want a world where it’s an open playing field for fly-by-nighters and enterprising regulators to UDAAP companies they don’t like. So I lament, and I’ll go back to what I said in the beginning: the five-year structures helped a lot with this. And I’d like to see the FDIC five-year structure respected. I’d like to see the CFPB five-year structure. And I hope we don’t have more degradation of this at the Fed. I think that would be a very, very bad thing.
If I could tell one more story that’s relevant here, when Trump came in the first time, we were worried in the industry. They were talking about repealing a lot of fair lending enforcement around this thing called disparate impact, which is, “Are you fair in your outputs and your results? Never mind on your inputs.” Several of us got together and appealed to Director Kraninger under Trump. And we said, “Please don’t roll that back.” And before you look at us like we have four heads, the reason is because we have a regime where we can demonstrate to regulators, we being industry, that we’re not being discriminatory. And we’ve got to improve our technology and our data. And we know you’re worried. We know AGs are worried. We know supervisors are worried as you increase tech, as you increase big data, see AI today, see genAI today, that we might be discriminatory in our outputs. So please, let’s keep the regime so we can invest in tech and data. You can sleep easy at night, and we don’t have to worry about enterprising UDAAP or some crazy new swing coming in the next election that undoes all the investment we just made to increase access to credit and lower prices.
PR: Right, right. Okay. Before I let you go, there are a couple of things I really want to get to. One of them is the Chevron Doctrine or the end of the Chevron Doctrine because the Supreme Court ruled just earlier this year. What will this mean for the financial regulators going forward?
AM: Well, thank God I went to law school, even though I barely use that degree, and I’m much more of a policy guy these days. I could take a crack at this. Chevron, for years, has said when a statute is ambiguous, why don’t we defer to the regulators rather than to the courts? In other words, Congress didn’t, depending on your perspective, fully do its job or intentionally deferred because when you pass giant bills that change the economy, you can’t get every single detail, and you don’t want Congress to get every single detail. So you have to defer to someone. The question is, who do you defer to? And there’s this raging debate. Do you defer to the experts in the agency, or do you defer to generalist judges? Now, I worked for a federal judge for a while in my 20s. We were very smart people, but we were not experts. And the amount of time and energy, with a small office, to learn major details on regulation is, I think, going to be a little overwhelming for the court. So the Chevron deference was to the regulators. There’s no longer deference. What’s the impact besides overwhelmed courts and potentially bad outcomes, or maybe not bad, less expert-driven outcomes? Well, to the extent you’re worried about the administrative state and want more control over the regulators, this is a good thing. I worry about what you’re going to get in the courts. I mean, I’ll go into that more in a second. The other problem with this, well, not really a problem, but I don’t think the impact’s going to be huge at the CFPB. There’s already been a roadmap for how to litigate CFPB rules. And that roadmap happened when there was deference. So I think Chevron deference is an interesting topic and it’s fun to talk about, but it’s actually not going to change the game all that much in terms of undermining rules. And I’m glad because, as you know, for the most part, I think the rules are what we need for a stable regime. What it might end up doing is backfiring. When the industry needed rules, we went to the FDIC, went to the OCC under Trump, and said, “Hey, there’s this crazy court case.” Lo and behold, the courts got it wrong. And they did exactly the wrong thing. And it’s not just any court. This was the second circuit of the United States of America, the most financial-oriented circuit which New York City is in. They got it so wrong that we were worried about the entire second market. We were worried about the growth of fintech. So we were so happy that the OCC had Chevron deference. We were so happy the FDIC had Chevron deference. And guess what? That case, you know what I am taking about called Madden vs Midland and was essentially undermined and overruled. So I do worry; sometimes, when you get what you ask for, you get the wrong thing, especially when the folks who are against Chevron already kind of had what they wanted.
PR: Right, right. Okay. So if you read through Project 2025, which I did a little bit this past weekend, there’s an area in there about creating new charters for financial firms that eliminate activity restrictions and reduce regulations. It seems to me like there’s a possibility, and obviously, this is not a legislative document by any stretch of the imagination, but there’s a possibility that we may see a new type of financial charter. What do you think?
AM: I think without a doubt, if you’re an OCC head coming in, you do want to figure out ways, and this is where [inaudible] flipped on his head, where the federal government, not the states, creates a charter that impacts 50 states. Without a doubt, there will be a proposal of some sort, whether it’s in lending, as we saw under Obama. Tom Curry, which led me to take a look at, whether it’s in payments, which we saw under the Trump administration, in crypto under a Trump administration, there will be some other charter proposed. The question is, can we work with the states at a federal level, in the states with the federal government, to make it work as opposed to the morass litigation that made the lending, what people often call the fintech charter, unworkable? Because you just got the charter, and guess what? You were in court the next day. So what was the point? So I think if anyone can, I do have optimism that we will find the right way of nationalizing some aspects of our regulation because we have to. We’ve got a little too, and this is a state regulator talking here, we have got a little too Balkanized. Not on every issue. It’s worthwhile on some, but on some, we have to find a way of making this country more one country and not 50. And some new charters could be helpful. I do want to be careful. I do think the states have a role to play. I want to add that I’m optimistic, not just on charters. I’m also optimistic about open banking because although it won’t get shot down, it could reopen. So we could see open banking, which in some ways could have been more innovative and better for fintech, gets looked at again by the new administration. There are two ways; one way is more power for the banks that control the data to use the data anonymously, respecting privacy to generate new products and services. I think we need that in this economy where six banks control the vast, vast, vast majority of this data. It’s not right to have that data in the hands of so few entities and to stifle innovation. So I want to see better on the open banking rule, and maybe we can get that from this administration because they’re likely to redo the rule, is my guess. I’m also optimistic that this new administration is going to look at other sources of data in open banking to bring in. We have to do better than just credit card deposits. We need to bring in data that impacts consumers in other ways and, most importantly, underwriting. So, see your data stuck at your employer, at your landlord, and in your utility company. If these kinds of data can be used more openly to help you underwrite and help the consumer make sure their credit scores aren’t being negatively impacted unfairly, I think we’d be in a much better world. So I’m optimistic there. And finally, I’m as optimistic that the Trump administration will see the benefits of generative AI and AI to improve outcomes on regulatory compliance. We’ve seen so many great companies. We know their names, and I advise one of them called FairPlay, and there are others like Zest and Stratyfy and many, many others, Spring Labs, doing on consumer complaints, that are using AI to make the small banks’ lives easier. We don’t have a trade-off between compliance and economic growth anymore. So I really hope this administration embraces some of these technologies so that we can reduce costs, have less consolidation to giant banks, have some great regional players, have some real competition, use open banking well, but then have this reg tech really drive the way forward for banking so we’re not bogged down in compliance costs. And so I have some optimism there as well.
PR: Okay, Armen, we’ll have to leave it there. I’m glad you’re optimistic. It’s easy to fall into the idea that Trump is just going to tear everything down. And you’ve given us a good balance, sort of a look at what will happen in fintech. Great to chat with you as always, Armen. Thanks for coming on the show.
AM: My pleasure. Thanks for having me.
PR: I always thought the biggest challenge when it comes to regulation for fintech was this dual banking system and the often competing goals of state and federal regulators. Now, I know I’m going to annoy a lot of state regulators when I say this, but if you were creating a banking system from scratch today in this country, you would not create such a system. But in reality, I actually think a much bigger challenge for all fintechs and banks is this pendulum that keeps swinging back and forth between left-wing and right-wing governments. For all businesses to operate efficiently, they need continuity and certainty. And you simply no longer have that when you keep these wild swings happening. Anyway, that’s it for today’s show. If you enjoy these episodes, please go and leave a review on the podcast platform of your choice. And thank you so much for listening.