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I (OC)C You!

I recently took a course on banking law and am convinced that big banks are evil. But that's not what's important here. What is important here is that the Office of the Comptroller of the Currency, one of the primary federal regulators of national banks, has recently published an Advance Notice of Proposed Rulemaking in anticipation of its plans to review its regulations on digital banking activities.

The ANRP essentially invites input from the public (read: banking and tech firms) on how the OCC should consider current technological advancements in the regulatory framework. Lots of technologies get a "shout out" in the notice--clouding computing, artificial intelligence, biometrics, data analytics and our beloved distributed ledger and technology. Along with the "shout outs," the notice touches on the benefits of all this new technology (new products, more efficiency, further reach) and the inherent challenges (cybersecurity risks, increased competition from non-banks, changing customer needs). Ultimately, the OCC is contemplating whether some of these new activities (borne out of new technologies) are unnecessarily burdened by the existing regulatory framework as well as how these activities "promote economic growth and opportunity and ensure that banks operate in a safe and sound manner, provide fair access to financial services, [and] treat customers fairly."

It'll be interesting to see how the regulations change, if they change at all. On the one hand, the current regulatory framework seems to allow banks plenty of flexibility to deploy new technologies--both in terms of infrastructure and products. But big banks and other systemically important financial institutions (SIFIs) (a.k.a., "too big to fail") exert enormous influence on lawmaking when it comes to the realm of finance. If there are other avenues the big banks wish to pursue that are somehow made prohibitively burdensome by the current regulations, I have little doubt that they'll get the changes they want. I also suspect that if less big banks are innovating in ways that are threatening to big banks, the laws will take care of that, too.

Do you think the big banks will get their way? (This is obviously a trick question) If you want to see the banks throw their weight around, I strongly recommend the HBO film Too Big to Fail. It's a fantastic and maddening depiction of the 2008 financial crisis and the Treasury Secretary's fight to keep the financial system afloat.

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