McHenry Wants Regulators To Form Innovative Offices

The incoming head of the House Financial Services Committee, Patrick McHenry, wants regulators to modernize and streamline how innovators communicate with regulators and allow offices of innovation the ability to build regulatory sandboxes.

The House Financial Services Committee’s top Republican and soon-to-be head, Patrick McHenry of North Carolina, has reintroduced his Financial Services Innovation Act for the third time. The reintroduction indicates that he intends to move the legislation further when he takes the chairmanship of the committee in the upcoming Congress.

The law requires the establishment of Financial Services Innovation Offices by the federal financial authorities, which would design protocols to shorten the time and expense involved in making financial innovations available to the public and facilitate increased access to financial innovations.

This includes enabling businesses to submit applications for alternative compliance plans and to waive or amend rules in order to provide services that would otherwise be in violation of such rules. Before terminating the deal earlier this year, the Consumer Financial Protection Bureau gave fintech lender Upstart two no-action letters so that it could test out its algorithmic underwriting process.

FinHub at the Securities and Exchange Commission, LabCFTC at the Commodity Futures Trading Commission, and the Office of Competition and Innovation at the Consumer Financial Protection Bureau are just a few regulators that currently have specialist innovation offices.

The federal financial authorities would also have to make public a list of current laws that they would consider relaxing for financial services companies utilizing cutting-edge technology.

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