Out of all of the chaos that has engulfed politics and, specifically, the nation’s capital these last few days, it bears sifting through the headlines and the tumult to see what’s to come.
A Biden administration will take root in two weeks with a majority in the House of Representatives and Senate. That makes it a lot easier to get a policy to make the leap from concept to reality, from proposal to law – at least theoretically. To be a bit more realistic, it should be noted that the Democrats now control the Senate with the slimmest of majorities, and that the current roster of senators might be deemed more moderate than has been seen in past “classes” of senators. That means would-be legislation is no slam-dunk.
If there is one near-certainty coming to pass, though, it would be that Big Tech is likely to see some real pressure on the Hill and across the legal landscape. Last month, a slew of attorneys general and the U.S. Federal Trade Commission brought an antitrust suit against Facebook. There’s a separate antitrust suit in place against Google. Hill hearings featuring tech CEOs seemed the norm last year, and we can expect to see more of the same this year and beyond.
Biden is inheriting an economy that can best be described as uneven, with unemployment still stubbornly high at about 6.7 percent, according to the November reading. Businesses are still struggling, and the roadmap to a post-pandemic recovery may hinge on more stimulus payments and direct aid to SMBs and individuals/families alike.
But, of course, administrations and new Congresses shape all manner of industries at once – and the financial services industry may see new efforts to expand access to traditional banking services, while changing (through technology) the way those services, including payments, are delivered.
The ways in which people bank are changing – and it follows, too, that the Hill would adapt to and promote those changes.
As PYMNTS has examined in past coverage, the lines are “blurring” between FinTechs, Big Tech and traditional banks. Just 7.4 percent of consumers surveyed reported that their primary bank is a digital-only bank (4.2 percent) or PayPal (3.2 percent).
We’re already seeing some movement by regulators to broaden and modernize payments through some announcements from the Office of the Comptroller of the Currency (OCC).
On a broad level, the OCC has called for proposed personal banking regulations intended to level the playing field across demographics and incomes. New initiatives would guarantee that everyone would have equal access to banking services offered by national banks, federal savings associations, and federal branches and agencies of foreign bank organizations, the statement indicated.
And as noted in this space, through an interpretive letter, the OCC said that regulated financial institutions (FIs) can participate in independent node verification networks (INVN for short – namely, a blockchain network). As a result, these FIs have been cleared to issue stablecoins for a range of activities, including payments.
These types of broad regulatory missions – and others, where, for example, the Consumer Financial Protection Bureau (CFPB) has been looking more closely at open banking – are likely to continue in 2021 and beyond. As is also germane to the CFPB, Biden has called for the creation of the Public Credit Reporting Agency, which would exist within the CFPB itself. That public credit agency, it’s been floated, would tap into “nontraditional” data sources such as utility bill payments as part of the processes of helping would-be lenders in their decisioning activities.
He has also signaled how he will approach certain matters, such as taxes, which will impact how and where enterprises – including banks, FinTechs, card networks and others – will allocate their resources. He has proposed rolling back at least some of the corporate tax cuts that were put in place during the previous administration, which would mean boosting the corporate tax rate to 28 percent from 21 percent.
In 2020, Biden and U.S. Sen. Bernie Sanders (Independent of Vermont), called for the creation of a postal banking system. As reported, that initiative would promote efforts between the U.S. Postal Service and the Federal Reserve, focusing, for example, on the creation of affordable bank accounts through the Fed. The Fed should also create a real-time payments system, “so families and individuals do not have to wait days for their checks to settle,” according to Biden’s site. That could conceivably smooth the path to the digital issuance (and receipt) of payments directly to individuals and families, among other possibilities.
We’re still roughly two weeks away from inauguration day, but the changes are inching ever closer.
Read More On Big Tech:
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- Big Tech Faces Regulation Reckoning As 2021 Dawns
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