July 6, 2020 at 6:35 pm ET
From his first day as appearing head of the Workplace of the Comptroller of the Forex, Brian Brooks has set the tone for the way he desires to go away a fintech-focused mark on the company.
Brooks has laid out an aggressive agenda to remake monetary know-how coverage, touching every thing from fintech bank charters to cryptocurrency. In an interview with Morning Seek the advice of on Monday, Brooks mentioned he expects to suggest a brand new rule in a key piece of fintech lending coverage known as “true lender” in as little as two weeks, and has staked a declare on the OCC’s function in bank charters for fintech firms.
A rule on the true lender doctrine would make clear when a bank is the precise lender on a loan, or when one other social gathering akin to a fintech agency is. The rule might have enormous penalties for fintech firms, which have created sophisticated partnerships with banks which have in some circumstances allowed them to keep away from states’ rate of interest limits on on-line lenders.
Brooks plans to maneuver shortly on this rule, with a proposal anticipated in two to 4 weeks, most certainly on the shorter finish of that time-frame. Federal Deposit Insurance coverage Corp. Chairman Jelena McWilliams beforehand instructed Morning Seek the advice of that her company is engaged on the rule, as properly.
“We’re in the middle of a great unbundling of the financial system,” Brooks mentioned. “I spent the last two years at Silicon Valley. I want to deliver on all this while I have the window to do it.”
Earlier than becoming a member of the OCC, Brooks served as basic authorized counsel for Coinbase Inc., and sat on the board of Avant, a web-based lender.
Brooks believes that these sorts of banking and fintech partnerships can improve entry to reasonably priced credit score to those that’ve had bother utilizing conventional monetary companies. He’s confronted backlash, nonetheless, from congressional Democrats who say that he’s undercutting shopper protections.
“More credit equals less poverty,” Brooks mentioned. “Communities of color and underserved communities, banks aren’t serving them as well as they need to be.”
Brooks can also be anticipated to push the problem of bank charters for fintech firms — one thing his predecessor, Joseph Otting, tried however was blocked by a district decide in a case that’s at present being appealed. Brooks, a lawyer with years of expertise in monetary companies, mentioned he and the OCC “look forward to having our day in court.”
It may be a difficulty the OCC can accomplish largely independently. Whereas banking regulators sometimes attempt to launch guidelines and steering collectively, Brooks mentioned bank charters are a distinct story.
“Each agency has a different role in the ecosystem, and I’m the only regulator who charters banks,” Brooks mentioned. “I don’t need anyone else’s permission. That’s my job and my job alone.”
One other massive situation that can get consideration from Brooks is cryptocurrency and stablecoins, drawing from his latest expertise at Coinbase, he mentioned. Stablecoins got here into the dialog when Fb Inc. bumped into enormous obstacles attempting to promote its proposed cryptocurrency challenge Libra to bank regulators final yr.
Brooks, who declined to remark immediately on Libra, plans to situation steering on the problem, noting that banking regulators haven’t laid out clearly what sort of collateral needs to be behind the stablecoins.
Brooks might proceed on because the appearing head of the OCC, be nominated by President Donald Trump to develop into the complete comptroller or finally get replaced — particularly if former Vice President Joe Biden wins the presidential election and takes workplace subsequent yr. It doesn’t matter what situation performs out, Brooks is targeted on pursuing “a big agenda.”
“If I can accomplish those things in nine months,” he mentioned, “I will consider myself pretty successful.”
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