In this report, we analyze today’s House FinServ Financial Institutions and Consumer Credit Subcommittee hearing on fintech at which Republicans laid the groundwork for future efforts to push federal preemption of state fintech laws.  Although it remains to be seen if statutory change is possible – Democrats and key states will strongly oppose it – GOP work to advance preemption should give the OCC political “cover” to use its existing and strong preemption powers (see Client Reports in the PREEMPT series) to create at least significant aspects of a federal fintech framework if not also a clear framework for activities outside the OCC’s jurisdiction.  Members of both parties expressed significant discontent with the current regulatory framework, and Subcommittee Chairman Luetkemeyer (R-MO) said regulation here must balance access to capital and responsible innovation, noting that he plans a series of hearings to explore these issues.  He and Reps. Barr (R-KY), Rothfus (R-PA), and Pittenger (R-NC) also expressed interest in regulatory sandboxes, an option still under consideration also at the OCC.  Reps. Barr and Hollingsworth (R-IN) also pushed for legislation to overturn several court decisions – Madden v. Midland being primary among them – that have undone the “valid when made” doctrine.

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