CFPB’s Cordray: Fintech Firms Shouldn’t Be Allowed Regulatory Arbitrage

In a hearing last week before the Senate Banking Committee, Richard Cordray of the Consumer Financial Protection Bureau (“CFPB”) answered questions about the regulatory standards that fintech companies should be held to, given that they are not deposit institutions. As reported in American Banker, Cordray stated that at the CFPB, “[w]e believe it would not be appropriate for new fintech startups to be getting an advantage in the marketplace because they are arbitraging the regulatory system, they are not complying, they're not taking seriously what the banks and regulated institutions have to do."

At the hearing, Director Cordray said that regulators are focused on keeping up with changes in the marketplace. He stated: “We're trying to stay on top of this because if we fall behind it, this could dramatically affect markets over time." The article also reported that the CFPB is "on the verge" of issuing a proposal on payday loans, “which many expect will be released by the end of June.”

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