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FS Vector Interview: Margaret Liu

Fintech regulation seems to be a popular topic these days. And that's why FS Vector, a consulting firm for fintechs, recently interviewed Margaret Liu, CSBS senior vice president and deputy general counsel.

In the podcast, Finance Rewired, Margaret discusses the role of state regulators in overseeing these institutions...how the Nationwide Multistate Licensing System (NMLS) helps regulators manage such a large and vast set of nonbank sectors...and CSBS' signature initiative for fintechs, Vision 2020. And she provides an update on litigation against the OCC. 

margaret liu
Margaret Liu

The podcast, Finance Rewired, can be found here

Some highlights: 

On how fintechs are regulated. "A lot of companies that are viewed as fintechs today, particularly consumer-facing ones, are nonbank financial services providers. And state regulators are the licensing and supervisory responsible authority for these entities."

On what led to the NMLS. "CSBS and its members...in the mortgage space in the early 2000s, [saw] bad actors being able to cross state lines and [regulators were] not very confident that they would be able to catch or track them." Today, per federal and state law, all mortgage originators operating in the United States must be licensed or registered through the NMLS. 

On Vision 2020. "We have a lot of individual projects all working towards the same objective: making the state nonbank regulatory world better networked and more efficient, but doing so in a way that doesn't dilute consumer protections." In 2017, the CSBS Board of Directors adopted a policy statement that state regulators move towards an integrated, 50-state system of licensing and supervision for nonbank financial services companies, including fintechs. You can read a progress report on Vision 2020 initiatives here.   

On litigation against the OCC. "When we read the law, to be a bank you have to take deposits. [And] the OCC cannot change requirements of law by regulatory fiat." CSBS and the New York Department of Financial Services have sued to block the OCC from awarding national bank charters to nonbanks (such as some fintechs), with the states' primary argument that the OCC has no such statutory authority and that the business of banking requires deposit taking.

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