Rep. Hill takes aim at Biden administration’s moves on fintech

Al Drago/Bloomberg

WASHINGTON — Rep. French Hill, R-Ark., the vice chairman of the House Financial Services Committee, criticized a range of proposals by Biden administration regulators, notably those related to technology, including bank-fintech partnerships and digital assets, in a speech Tuesday.

Hill, who also serves as the chairman of the House Financial Services subcommittee on digital assets and is in the running to take the top Republican spot on the full committee next Congress, told a room full of community bankers that his and other House Republicans’ focus for the remainder of the Biden administration is pushing back on regulators’ policies, as well as introducing some legislation to “lead us in the right direction.” He spoke at a conference organized by the Independent Community Bankers of America.

In particular, Hill criticized a move by the Federal Reserve in August that outlined how the central bank would oversee “novel activities,” including technology-driven partnerships with nonbanks, and activities that include cryptocurrencies and blockchain technology.

Hill and many other Republicans interpret steps being taken by banking regulators to address fintech and crypto policy as effectively shutting out banks from those businesses. 

Hill argued that the Fed’s action in August “basically says that if you want to partner with a fintech company in any aspect of your business, somebody has to get preapproval for that.’

“I told Vice Chairman [Michael] Barr, that’s not the way we work in banking,” he added.

Hill said that regulators should instead look at these partnerships and activities at banks individually through the examination process. 

“We have records, we have risk management policies and compliance departments,” he said. “We document all that, then we’ll go over it with an exam. I thought that was a serious overreach.” 

Hill said that one of his goals in the next year is to show regulators and Congress that fintech “can benefit banks.” He’s also interested in the use of artificial intelligence in the financial sector.

“We’re bringing in the regulators, asking them how they’re using AI in their own practice and their own services to you, and how they’re looking at AI from a supervisory perspective,” he said. 

Hill also referenced an off-the-record session at the ICBA conference the previous day with Consumer Financial Protection Bureau Director Rohit Chopra. Hill, like other congressional Republicans, has repeatedly criticized Chopra’s rulemakings and enforcement actions.

“I don’t think any CFPB director has ever made a small business loan,” Hill said. “You got to hear from one of the slickest guys in town yesterday.”  

Hill promised to continue pushing back on the CFPB’s small-business lending data collection rule, which has faced litigation from the banking industry as well as an ultimately unsuccessful Congressional Review Act challenge.