Fed Taking New Look At FinTechs

The Federal Reserve’s new vice chairman for supervision said the agency will take a closer look at the potential disruptions posed by FinTech firms.

“History has shown us that it’s not just a question of where has the risk that we knew moved, but what new risks are developing?” said Randal Quarles. “I think that in the regulated area … we ought to be looking at the implications of the growth of FinTech … I think we ought to be looking at cyber[security], obviously.”

According to American Banker, Quarles’ comments – which were made during a question-and-answer panel at the Clearing House Association’s annual conference in New York – come a few weeks after the president of the Federal Reserve Bank of St. Louis, James Bullard, warned that banking regulators in the U.S. need to pick up the pace in their efforts to confront the risks created by FinTech companies to the banking sector.

“We need to speed up our consideration of the FinTech issues and think harder about what is the regulatory environment that is going to be appropriate,” Bullard said. “I think we have been complacent so far. That is the battleground for the next 10 years. It is not the same as the battleground for the previous 10 years.”

In the meantime, Quarles also talked about the Fed examining approaches to its regulatory and supervisory activities, including stress tests, capital ratios and living wills.

“As I have come into the job, I have perceived quite an openness in the deep state at the Fed to taking a fresh look … at regulations,” Quarles said. “The regulation part will proceed fairly straightforwardly. There’s a lot of work there to be done, and it won’t be entirely to everyone’s satisfaction, but I think that proceeds fairly straightforwardly.”