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I'm a baby. The baby. The hey, hey, hey. I'm the let's begin. The way.
Discussion on fintech innovation, legislation, and financial ecosystem transformation at Semafor's Banking on the Future Forum.
Key Takeaways
- Bipartisan efforts are underway to pass the Clarity Act to provide legislative certainty for fintech investment.
- Collaboration between House and Senate is crucial for effective financial and housing legislation.
- Technological innovation, including AI and digital payments, is reshaping the financial ecosystem.
- Executive actions like President Trump's fintech order help focus legislative and regulatory attention.
- Dialogue between public and private sectors is essential to navigate financial technology’s future.
Summary
- The forum addresses profound changes in finance including digital payments, AI, and banking infrastructure modernization.
- Semafor hosts dialogues with lawmakers, regulators, and fintech innovators to explore future financial technology impacts.
- Representative Brian Style discusses bipartisan support for the Clarity Act and its potential to unlock capital investment.
- The forum highlights the collaborative legislative process between the House and Senate on fintech and housing bills.
- Discussion includes the importance of shuttle diplomacy over traditional conferences in passing financial legislation.
- Representative Style praises Chairman Hill’s role in improving housing legislation for broader support.
- The conversation touches on President Trump's executive order promoting fintech access and its implications.
- There is emphasis on leveraging technology advancements like distributed ledger for payment system efficiencies.
- The event is supported by the Financial Technology Association, emphasizing innovation in the financial ecosystem.
- Semafor’s commitment to transparent, fact-based journalism is highlighted as a foundation for the forum’s discussions.
Full Transcript — Download SRT & Markdown
Speaker A
Hey baby. I'm the hey, hey, hey. Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey.
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Hey the baby. The clin the ladies and gentlemen, please be seated. Our program is about to begin.
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Hey, hey, hey. Hello. I'm the I'm the man. The clip clip. Clip the the baby.
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The ladies and gentlemen, please be seated. Our program is about to begin. Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey.
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Hey, hey, hey. The hey cl please welcome Seaphor's Andrew Friedman. Good morning everyone. For those of you that are in town this week, you picked the hottest week of 2026. So, welcome.
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It's a little colder in here. I'm Andrew Friedman, general manager and head of public affairs and corporate partnerships at SE4. And we're absolutely delighted to have you all here today. We're living through a moment of profound transformation across
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the financial ecosystem with digital payments, AI, evolving regulation, and the modernization of banking infrastructure. The way people in business interact with money is being overhauled, creating new opportunities, new questions, and new responsibilities for public and private sectors alike.
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That's exactly why dialogues like the ones we are hosting today are so timely and essential right now. SEMOR launched in 2022 with a commitment to transparent global fact-based journalism. And since then, we've grown to over 1 million subscribers by helping audiences
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understand the forces shaping business, policy, and society. Today's discussion truly sits squarely at the intersection of all that. This morning, we're going to hear from an outstanding group of lawmakers, regulators, and fintech innovators, exploring what the next
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chapter of financial technology means for consumers, businesses, and policymakers alike. But before we begin, we want to extend an incredibly sincere thank you to our partners at the Financial Technology Association for making today's conversation possible and for their continued leadership in
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advancing innovation across the financial ecosystem. With that, let's jump in. Thanks again for being here.
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Please welcome Representative Brian Style of Wisconsin and Nicholas Woo of Seapore. All right, sir. Thank you so much for being here. Congressman Style of Wisconsin is a member of the House Financial Services Committee and the chair of the
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House Administration Committee. So, excited to talk today. Thanks for having me in. Yeah. So, you know, I wanted to start off a bit by talking about legislation that we're seeing moving over on the Senate side. They're moving on the
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Clarity Act that might eventually make its way over to the House. Is that something you support the House taking up?
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Yeah, I'm actually really bullish. We remain in dialogue with our colleagues in the Senate as they're moving forward on the House Pass Clarity Act. The passage coming out of the subcommittee, out of the committee markup, was
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positive, had Democratic support. That gives me the optimism that it has the bipartisan support that's going to be needed to get 60 votes on the Senate floor. There seems to be a commitment to bring this to the Senate
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floor in the coming weeks. I'd love to see it before the 4th of July. I know there's also talk before August recess. The sooner the better. And then I believe that the final
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product is going to be something that I and my colleagues can support in the House. Again, there's a lot of conversations going back and forth between us, our colleagues in the Senate as they negotiate the final
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portions of this bill. But I think it is so absolutely essential that we get this piece of legislation done. I think there's a lot of capital sitting on the sidelines, both human capital and financial capital waiting to be
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deployed. And if we get clarity through and get that legislative certainty, I think you'll see significant investment in this space.
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It's pretty rare though that it seems like there's a Senate bill coming over to the House side that you guys are okay with, you know, which brings me to my next question. I want to talk about the housing bill that it's coming up in
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the House probably today. Yeah. Right. I mean, how are the House and the Senate going to come to any kind of agreement on this legislation?
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Great question. So, I think the legislation that we're going to have an opportunity to vote on today is a solid compromise bill. I think everybody walks away with something on this. I don't think everybody walks away with a
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100% of what they want. I think Chairman Hill has done a spectacular job taking a Senate product, taking a good House product, taking a Senate product and tweaking the Senate product, I think, for substantive improvements
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which tees us up for a better final product. I think as these conversations have gone on, we've seen more and more statements from our friends in the Senate that they're open to seeing their product amended and
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tweaked with the House adjustments. And I think what you'll see is an overwhelming support of that legislation later today. And I think the Senate will then take that up and pass all the way across the line. The
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bicameral nature, I mean, you guys know this as well as anybody, is sometimes works well and sometimes doesn't work well. But I think in the area of housing, I think Chairman Hill has done a really good job by being such
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a thoughtful policy mind, subcommittee chair, flood as well, navigating this and taking that Senate product and making some substantive tweaks that are needed to make sure that this is a product we can get all the way across
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the line. What do you think made this bill different than the other ones where the Senate has passed something and then tried to jam the House?
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Yeah, the narrative in the town is that the Senate can roll the House. I don't think that actually shows up in the data as much as some folks in the media want to
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describe. I think our leadership moving through clarity shows that the Senate is obviously making adjustments to the product but I think we really got the ball rolling in that regard. If we look at the digital
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asset space, further insight, genius, I carried the bill stable in the House. The final product that passed is in large part a combination of those two bills. If you look at kind of round one of the tax to the final product, a lot
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of that is collaboration that's occurring, kind of in what I view as shuttle diplomacy between the House and the Senate. And so although sometimes the Senate moves first and the House moves second, in this case
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there's a little bit of a ping-pong in the housing bill. And I think you actually see that. I'm kind of old school. I would love to see like a traditional conference between the House and the Senate, but that's just
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not done anymore. And so a lot of this is much more of shuttle diplomacy.
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And so at the end I think we are delivering really good substantive bills that address a lot of the policy concerns and then it creates a lot of talk about exactly who has the control of the power but at the end of the day
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the people that are interested in the policy are usually at the table having those conversations. That makes sense.
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I want to ask a bit about some more recent news. President Trump signed an executive order yesterday encouraging fintech access. Do you think it's now time then to advance legislation like the PACE Act?
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I think all of us are looking at the advancement in technology. The president's executive order kind of puts a nice focus on this and saying what can we do to improve the efficiency inside our broader payment space. And if
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we look back, you know, go back I don't know 20, 30 years and you think of the digitization side, right? And so we leave paper we enter the d...
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technology distributed ledger um there are even greater efficiencies that can be had I think there's significant opportunity to leverage into the technology and make sure uh that we are um leaning in on this on the technological side because I think
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there's a huge opportunity on red reducing the friction inside the system, reducing cost. I think that'll provide not only additional opportunities um for consumers, but I think it has a real opportunity to bring down cost. I think it's something we want to study that we
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want to get right. Uh there's a role in our system uh for banks and credit unions to play. Uh we want to make sure that we have this system operating efficiently and effectively so that there's opportunities for folks to go
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get home loans, etc. or loans in general. uh but also that we have a a uh the most efficient system and we're not simply allowing uh guardrails to be put in place because there was an incumbent there before.
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Right. Um I want to ask something more within your House administration committee domain. Um you know a few weeks ago we talked about the potential for a prediction market ban uh for members and staff in the House. Where
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has that landed? Well, I I think we are um close at getting legislative text so we can get all the way across the line. This probably couples um the member stock trading bill uh that I think we will
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ultimately see voted on and passed uh and the president has called for. He called for it by name in the state of the union, the stop insider trading bill. Uh that's that's my legislative text. There's a huge opportunity here to
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remove even the appearance of impropriety. So obviously illegal behavior is illegal or should be punished. Period. Full stop. But inside insider trading, the biggest challenge inside that inside but the biggest challenge of prosecuting insider trading cases is getting the evidence to prove
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that somebody engaged in insider trading. So the the way that you address this in my opinion is remove even the appearance of that impropriy by banning it outright. And so I worked uh previously I worked um at a publicly
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traded company. Seuite executives are subject uh to a whole host of rules and regulations beyond the general public to prevent even the ability to inside trade on their stock. There's a whole rules and regulations that sit at the SEC.
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What we did in the stop insider trading bill is kind of took that and said, how would we apply that in a congressional environment? What would a 10B51 plan look like knowing that you can't just lock out one given stock? And the
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solution in my opinion is to say, look, if you're a member of Congress, if you're an elected representative, you can't purchase individual stocks. You can't trade. And we remove the economic incentive uh for anybody to engage in any form of insider trading by by
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pre-announcing a given sale and put real teeth behind it. The prediction market, I think, plays in the same way. I don't think I think everybody agrees uh that elected representatives maybe more broadly than that but elected representatives shouldn't be engaged uh
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in predictions on federal elections or on items that have significant public policy implications whether or not that's na in particular national security is the first one that comes to mind and has been in the news because an individual engaged in that way uh by in
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all evidence it appears illegally um we have an opportunity I think to combine those topics uh in pass this. I think it's one real substantive step we can take at starting to regain Americans trust in the institution and how it
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operates. Um we've been I've been at the forefront of this uh committee house administration. So it's kind of a blending of my two sides between financial services and the work that I've done on stop and elicit stopping elicit financing uh combined with the
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work on house administration and kind of the rules uh in which we're all governed by.
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Yeah. I mean just to put a finer point on it, do you think that the stop insider trading bill would cover prediction markets? So there's not a need for a separate bill.
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I mean, yes. Um, exactly how this all plays out, we will see. I do think that we can bring forward uh an amendment by the time we go to the rules committee.
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We've been working on text in this space. The prediction markets are so new and novel that a a full wholesale ban um might not be the right legislative text.
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So what do I mean by that? So if an ind and and this applies member to to members or spouses independent children and so if you have a dependent child who's 19 years old, they're still a dependent or they're 18 years old,
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they're still a dependent, they go to college and they pay place a$1,000 prediction on the Super Bowl. Um is that something that the member should be ethically barred from facing a whole host of ethical challenges? You could have an opinion on that. could say yes,
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no, but it probably has nothing to do with the member's job placing a prediction on on that versus going to DraftKings and placing a bet on the Super Bowl. Society says you can do it, go right ahead. Um, we want to make sure
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that we get this text right and in the the ability in some of these prediction markets to utilize this in really thoughtful and creative ways. um we don't want to stifle that innovation development. But I think there's some
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obvious areas uh predictions of federal elections, things that specifically are engaged in federal policy and it's an easy coupling into the stop insider trading bill and so we're finessing the text on that uh and hopefully be in a
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position to roll that text out uh in the near future. Do you have a target time for when you want to try to get the bill to the floor?
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Um yesterday um the president the president called for this uh at the State of the Union. Uh we have broad uh bipartisan support in the House.
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Leadership has committed to bringing this to a vote on the House floor. Um and I'm of the view that when we get our opportunity to bring this to the House floor, and I think that will be uh in
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the coming weeks or months, um we will see an overwhelming uh vote in support of it. Uh because the president has has requested it. We've got great support in the United States Senate. Senator Rickettts has introduced uh companion
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text in the Senate. We're building support uh in the uh in the other chamber and I think we have a real opportunity then to see this passed and signed into law.
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Um you know to zoom out a little bit what role do you see for Congress then in regulating prediction markets as a whole you know even beyond uh members own conduct?
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Yeah it's a great it's a great question. It's such it's both old legislative text but it's also a novel use uh for this product. Um, one of the a little bit of the way that I look at this is I think
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there's some similarities to very very early crypto meaning going back call it 10 years or so and part of this is some of these are operating offshore. So poly market today you know you don't have in theory you don't have access to it but
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obviously individuals are grabbing a VPN and going offshore in the same way uh that a lot of crypto companies were locating themselves offshore. So this idea of the what I what I call the the the the the fallacy there's two
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fallacies. The fallacy I'll do I'll do the right. The fallacy on the right is the libertarian view of there should be no rules and regulations and the market will work out. What we've seen is that we get regulators that are operating
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under old rules and regulations poorly applied to current technology. that the fallacy on the left is what I call the nanny state fallacy which is aha if I provide rules and regulations and stifle this is kind of what I view as the Gary
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Gensler approach if you stifle it aha it will actually end and cease to exist the fallacy of that is it simply moves offshore so these technologies there's a market demand for this if it's going to be onshore or offshore I'd rather see it
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here under thoughtful structured rules and regulations uh than being a real challenge in particular particular on the the consumer side uh for something that's completely unregulated offshore.
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Um there's areas of this that I think are going to be really beneficial on dis price discovery, risk discovery, and I think you're seeing a lot of financial services companies very interested in how they can leverage this technology. I
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think there's also a role to make sure that consumers are protected uh in the space. And then further uh as we noted that public policy uh officials aren't financially benefiting uh themselves uh or others that they might be providing
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information to. I see that's really interesting. Um you know before uh before I was talking with some folks that I think are sitting in the audience here about um one of your pieces of legislation um on earned wage access. I
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was curious what are you what are the prospects for that legislation in the House this session?
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I feel good about it. I think we continue to build support on earned wage access and if we went up to 50,000 ft, a lot of this was in discussions about payday lending and other things. I think that's actually the wrong way to think
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about it. Why is there a market demand for this? There has been a disconnect between people's work and receiving pay since large ERP systems came in. If you and I were working at the end of the 1800s and we carried a 50 pound sack of
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potatoes around all day long, you not only expected, but you did get paid at the end of the day. And if you didn't, you were going to have effectively a fight with the the the owner of that company on the spot to receive your pay.
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In came large ERP systems. People started getting paid bi-weekly, once a month. Um, and you got this massive delay between pay, but between work and reward. That's not true in every industry. If you're a a bartender or a
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waiter or a waitress, you may walk home at the end of the night. I started I actually worked at Applebee's and the best part was you could leave your Applebees on a good Friday night with the cash in your wallet. And so you were
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more than excited to take the late shift and you fought to try to stay later if the money was good. In an environment today, if you work at a say take a big box retailer, whether or not that's a
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Target or a Walmart or a Home Depot without earned wage access in large ERP systems, you could go to an employee and say, "Hey, it's it's coming up in December. It's Christmas is is near.
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Would you like to take an overtime shift and make time and a half?" And that person may maybe may need those funds.
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They're not going to get paid out for two, four weeks. This this is an opportunity if done correctly on the urgeway access side where an individual can come and maybe your maybe your car breaks down. You need you need an extra
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250 bucks where you can say, "I'd love to work the weekend shift at at Target or or at the Amazon and just be paid at the end of the day because I need that money right now." That reconnection
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between work and reward, I think, is a really core principle in American capitalism. And we've created a disconnect by kind of legacy technology that just hasn't kept up. And I think the earned wage access piece breaks through that and says if you work today,
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you can get paid today because there might be a reason you want to receive those funds. And I think connecting that is an absolutely essential piece where currently we have a failure of technology. Um and so I'm bullish on
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this. Uh we've got bipartisan support for it. There needs to be rules and regulations in the space. We don't want people getting ripped off. We don't want people paying massive fees associated with this. But you can do this right. Uh
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the technology is there and I think it will transform how a lot of people uh work in this space.
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Um one thing that I noticed this week was that the president has called for attaching the SAVE act to either the housing legislation or to the uh the FISA renewal. Is that something you support doing?
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I fully support the SAVE act. I mean that came through our committee on house administration. uh all the election integrity products uh move through our committee on the house side. Um and so whether or not it's photo ID or
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citizenship verification, I think they're absolutely essential pieces. The the the the play call of what legislation you attach to what to get passed. Ultimately, that's going to be a higher pay grade. Um you know, the the leader, the speaker, the president are
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always having those conversations. I'm of the broad view that, you know, if you can get the whole loaf, take the whole loaf. But if you can get half the loaf, take half the loaf. And so what I'm focusing on is let's get as much policy
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done as we possibly can and let's leverage pieces of policy to get as much through as we possibly can. But I I'm not of the of the view that we benefit by doing absolutely nothing uh to claim that we were trying to get something
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else across the line. And so I actually think a lot of these things are really common sense. I think photo identification, we could go down a whole rabbit hole here on all my election integrity work, but photo identification
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I think is just mind-blowingly common sense. I think the American people support it because it is common sense. I think it's needed. Um now whether or not how you tie that in and how you get that across, this is all a game of how you
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get uh 60 or 50 votes in the Senate and we're all being challenged by Senate rules right now uh that are requiring 60 votes and so there's going to be play calls as to what gets attached to what.
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Uh that's a higher pay grade, but I am I'm I'm supportive of the legislation. I see. So, I would be remiss without asking about some of the news from last night. Uh, your colleague, Congressman Massie, lost his primary to someone who
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was endorsed by President Trump. Does this mean to you that there's less room for disscent from the president in the current Republican party?
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I I don't know that that's the the exact comment. I think I think in the case of Congressman Massie, I think he took some positions uh that Republican and conservative voters didn't support. In addition to that, right, he he opposed a
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series of policies of the president. I think his lack of support for in my opinion our ally Israel uh which is an important part of my broad um national security views. Um he disagrees with that. Obviously he can disagree with
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that but I think that there's a lot of voters across the country that disagree with his position on that. Uh the president leaning in I think puts a larger target on that. Um and I think that that shows the the strength of the
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president's support amongst the base. But I think the pre the base um supports the president because I think he's moving forward on really important common sense legislation. Um and I think you you see that support play out in a
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number of areas. I think you also see Andy Bar uh one of our members on the financial services committee who's done a great job had the endorsement of President Trump also won overwhelmingly.
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And so the president's incredibly popular uh because I think we're moving forward really strong and good legislation. Um and I think you're going to continue to see that uh through the remainder of this cycle.
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Makes sense. So, we've just got a little bit of time left, so just one last question for you. Wave a magic wand. You can get the Senate to agree to anything.
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What is one piece of legislation you would send over there? I I think the election integrity would be the biggest thing that we could get done. Uh if the Senate is going to actually make meaningful and substantive change.
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Got it. All right, sir. That's about just all the time we have. Um, thank you so much.
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Thank you very much. Please welcome Chetin Duransoy of Revolute and Semaphor's Elana Shaw Chattton. Hello. Great to have you with us today.
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Great to be here. Hi. A little bit of bio about Chettton. Um, you have more than two decades of experience in tech payments and finance and you are the former US CEO of Raisin, which is a leading fintech marketplace that you
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scaled up very impressively. I wanted to start though with a a Revolute focused question here about the OC. Its leader is going to be speaking at this event a bit later and the OC has been experiencing a remarkable surge in
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bank charter applications. uh you obviously have personal experience with that and based on that experience and the back and forth. What advice would you have for new applicants especially digital ones? Yeah. So obviously every application is different but I can share
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with you guys at least what we heard from our regulators on what were the strengths of our application.
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And um just by the way Revolute is another household name in the United States yet. Uh though it is two out of 10 working adults in Europe uh is a Revolute customer. Eight out of 10 in Ireland. So we are hoping to replicate
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the same penetration in United States. But the things I we heard uh from our regulators around uh what are the strengths of our applications is um we've been operating in US for last five years. So that history helps. We know
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what this market looks like. We've been operating with the partner bank model. Uh and we are grateful to our partner banks to allowed us that allowed us to enter to the market. But as we are growing, I think one of the thing that
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our regulators told us is um we have the experience in the marketplace and now uh it's time to control our own destiny. So that's number one. Number two thing is obviously the capital um our capital is coming from again just to give another
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Revolute stats uh Revolute has been founded little over 10 years ago. Uh and yet uh uh we are not uh public yet uh but we uh announced our financials uh publicly. Last year Revolute revenue was over $6 billion and the net profit was
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over $2 billion $2.3 billion. And Revolute has committed to invest $500 million uh in the next three years uh in the form of capital, marketing and uh people. uh that obviously is a huge strength that the capital is coming from
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not from a VC but coming from our operating uh capital. The other one is uh we are already regulated by a tier one regulator P in UK. Um in fact we are in the mission of uh being the first
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truly global bank. uh as such as you look backwards and as you're going to see in the future as well pretty much every quarter we get a new banking license from another country in the world uh last quarter it was Mexico uh
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and uh that multi-regulatory environment is another strength of ours uh so I'll I'll let the audience to take away from what it can be applicable to each one of them but these are the things that we heard from our regulators Hm. Um, moving
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on to AI for a minute. Revolute has integrated it in certain areas and seen great success, but obviously there's an ongoing policy debate on multiple fronts about how strategically and effectively that can be done. Tell me a little more
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about how you chose where to apply AI and areas of concern you might have about it.
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Yeah, so AI is a huge enabler for Revolute. Like when you think about uh right now uh Revolute operates in 39 different countries and we are in the process of being a regulated entity in all of them plus more. If you start
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reading the regulations for every single country that you want to operate in and launch a bank in every quarter in at least one of them that's a beyond humans can do. Uh so our LLM models uh and we
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use our own instances of LLM models uh for specific purposes. Um one of the strength of Revolute is we have a single text st and a single app that uh serves the whole world. That's unheard of uh because you got to create a new version
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for every different uh country. And in order to be able to do that, you need to be able to read the regulations of every country and understand what are the common things and what are the incremental pieces in each country so
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that you can parameterize the software accordingly and AI plays a huge role there. Another application that we use is uh compliance. Uh when you think about being the first truly global bank, the number one thing for us is the fin
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crime. Uh because we don't want to be uh transferring money from one uh criminal to another. Uh in fact, we're 12,000 people. Half of those people are working in the fin division. And what we started to do now is agentic AIS uh for
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compliance reviews uh both for KYCL as well as the transaction monitoring and it is we are proven that it is statistically significantly better than human uh reviews of the uh transactions.
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Um and and what we are doing is because we are growing so fast, we are now complementing uh our uh our human reviewers look into much more complex cases as opposed to the regular cases are being reviewed by AI. This is in
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addition to obviously every single individual uh is using AI has to use AI uh because of the productivity gain that we gain uh within Revolt.
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How about customer service though? There's obviously some uh public relations aspect to fully automating customer service. How have you found that?
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So our customer service is also uh turn like using full AI uh LM models. Uh I think it's a great way to good old days of you have to ask the question in the right way to get the right answer. Those
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days are over in the revolute. Whenever you ask a question you get an L&M based answer based on actual account information data. So that's another area that we are applying as well. Obviously hallucination is a big problem that
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needs to be controlled incredibly well and uh we train accordingly our LM models uh especially in the customer servicing area very strictly. Uh but uh it is uh just like any other technology there are advantages but you need to
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understand the limitations as well. Interesting. Uh well you mentioned fraud as one area you're working on in the space. There's also legislation out there uh called the scam act on the hill that would put some more onus on social
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media companies to start policing you know deceptive ads that might be affecting the fintech sector. Do you see that as a good starting point to change the system or do you want a completely new legislative framework?
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That's a great starting point. Uh so I mean we talked about all the good sides of AI, there are bad sides of AI. Just like our compliance agents, agentic AI is doing a great job. Fraudsters are going to have their own agentic chaos.
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We're going to see a massive increase in fraud activity in the coming months, years. We are already seeing that. And right now when you look at how everything works, the whole onus is on the financial institutions to uh capture
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the fraud and cover for the fraud which is not fair mostly because I mean there are publicly released uh or leaked information that a uh material portion of the revenue of some of the social media companies is coming from
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fraudulent uh posts and that is uh right now incentives are not aligned. So why would a social media company try to eliminate fraud if they're going to lose 15% of their revenue by just that elimination? And I'm not saying nobody is doing anything
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evil per se, but the incentives are not alike. I think scam act is a huge uh leap forward to distribute the responsibility and liability to all the entities involved. That way, number one is there's going to be less reason for
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social media companies to control that revenue. Uh, number two is if they are liable, they're going to be far more diligent into who is applying, who is not applying. Social engineering became so much easier in the last 15 years with
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internet. Um, now it just is gone to a next level with agentic AIS because you don't even need humans to um replicate another human to get into someone's mind. You can let LLM models do that and create personas depending on
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who the person wants to interact with. That's very intense. But but back back to the scam act for a second, pardon me.
Speaker A
Um given how much revenue social media companies get from this process though, you've got to imagine there's going to be a big lobbying battle over this, what are your thoughts on whether this is actually achievable?
Speaker A
So given the makeup of we already know there's a huge lobbying going on with social media companies. Uh like I'm not going to repeat the names because they are not verified. Uh but I heard some really large number of
Speaker A
dollars are being spent on lobbying. Uh again to your point 15% of a revenue of a social media company is a very large sum of money.
Speaker A
Yes. And spending the right amount of money in lobbying certainly pays off for that uh lost revenue.
Speaker A
Moving on to a bit of current events actually uh just yesterday the Trump administration unveiled an executive order on fintech and you know it was hailed by the industry obviously but there's also legislation that a lot of folks are saying is kind of required to
Speaker A
make good on some of these aims in terms of accessing the Fed's rails. Do you think a bill is necessary or is this EO kind of enough for the industry to get started? So, I read the executive order
Speaker A
3:00 a.m. in the morning uh in the first couple sentences and I had a debate in my mind, should I go back to sleep or read the rest of it? I choose to go back to sleep, so I'm not going to be able to
Speaker A
comment on it. But what we appreciate in the whole industry is there is so much openness into innovation. Uh and that certainly is a very welcome change that we are observing.
Speaker A
Interesting. Um, you also mentioned uh that you're not yet public. Uh, and I wanted to ask about some reports about a $200 billion potentially maximum valuation. Understanding you can't get into private information here. Is it safe to say that what we're reading is
Speaker A
accurate and you are moving towards an IPO with a valuation as high as possible?
Speaker A
So I I think publicly available information is Revolute valuation as of November 2025 is 75 billion.
Speaker A
Obviously we are growing fast. uh the founder and the group CEO Nick has uh publicly stated that 2028 is the earliest IPO date. uh and I think the key thing for us is we are in the business of uh like if you're a
Speaker A
financial institution the trust of public is the most important thing to that institution and for that we want to be regulated that's number one way to gain that trust from public and number two thing is being public so it
Speaker A
definitely is in our future um I neither can comment nor uh uh like validate the accuracy of the new valuations. Uh but 75 billion where it was and uh and obviously we continue to grow and 75 billion is obviously nothing to
Speaker A
to sniff at. But when it comes to the US market itself, obviously you described how much of a foothold you have in Europe. Is there anything else in the policy space that you're looking for from US policy makers are hoping for is
Speaker A
more accurate? Yeah, I I think the whole fraud scam act is a huge starting point. and uh we are looking forward to that openness to innovation that we started to see from the current administration is a big welcome change as well. Uh we've been
Speaker A
incredibly impressed with our uh application process. Uh our regulators are still incredibly fair. Uh they are asking the right questions. So it's not like the regulation has come down. But what he has increased is the openness to innovation. I think that's a change that
Speaker A
we observe that we would love to see that it continues and it's going to manifest itself in very different shapes or forms. Uh but that that that's a big shift that we have seen that we very much welcome.
Speaker A
How about public attitudes and public attention? I mean Americans are very attached to the notion of a traditional bank despite you know how much the fintech industry has grown. Do you see public education as critical for this market? I think the um like at the end
Speaker A
innovation if somebody is providing a better solution out there I'm a firm believer that it is going to be found.
Speaker A
One of the success criteria of Revolute has been that uh it actually doesn't spend as much marketing uh in Europe as many of the other established institution are uh it's partly because it is simply a better product and uh if
Speaker A
you look at the foundation or the investment thesis of revolute how it originally came out uh there's a lot of crossber movement happening in Europe uh with multiple currencies and you don't even realize that even in US if you are
Speaker A
going to Europe, Mexico, Canada, when you use your card or any other form of exchanging money, actual cost to consumers is anywhere between 4 to 6%.
Speaker A
You're never going to see that uh because it is hidden in some places. Revolute has reduced that cost to 30 to 50 pips. So there's a 10x reduction in foreign exchange currency and consumers see that and then when they see it our
Speaker A
cost to acquire is vastly lower than other uh institutions around the world. Um and uh and that's one of the benefit that we have I think once we launch our bank like our uh sole uh energy right now is a get the regulation regulatory
Speaker A
approval bunch the bank when we do both of them we're going to be scaling up our offerings in United States as well and I'm a firm believer that a good product sells itself uh doesn't mean marketing is unimportant but a good product sells
Speaker A
itself and consumers are going to see both through word of mouth as well as through uh by just testing it on their own and just to reiterate for our audience in case they don't know what what is your timetable on the application well
Speaker A
expected as far as approvals so if you look at the history of how everything is going uh we expect to uh go through the process obviously I don't have a crystal ball I'm not the one who is going to be giving the approval uh
Speaker A
but OC has a stated KPI of uh uh giving the preliminary approvals inund than 20 days. Uh and they have proven that with some of the applications that went in earlier than us. Obviously, US regulatory environment is relatively
Speaker A
complex with three different regulators needs to give their license. OCC first, FDIC second, then OC again, finally Federal Reserve. Uh but with all three of them, we have great relationship. So I don't know exactly how when it is
Speaker A
going to happen. uh but what we are seeing is uh there is a very speedy approach from regulators uh to get this done again in a very fair way but also in a very accelerated way as well which
Speaker A
we appreciate. Well, we'll look for it. Thank you so much for your time chatting.
Speaker A
Thank you. Appreciate it. Please welcome Joe Hack of Zip and Andrew Freriedman of Summer.
Speaker A
Joe, welcome to DC. Very warm week here in DC. Um, you've spent 20 years in the lending space working to build the kind of financial flexibility you watched people go without growing up in Flint, Michigan, where stretching a paycheck
Speaker A
was really just a fact of life. That experience, from what I've learned, has shaped everything about how you think about consumer finance. Now, you're running the US business for one of the biggest buy now pay later players in the
Speaker A
world. Really glad to have you here. So, let's dive in. Um, Zip, it's a buy now pay later provider. Many in the audience have probably used buying now pay later but might not know exactly what it is or
Speaker A
how it's different from a credit card. Could you unpack that a bit for us?
Speaker A
Yeah, thank you and thank you for having me. Uh you certainly brought the warm weather for suits. So, thank you for that. Uh um I think what's really important to understand about buy now pay later is more the use cases of how
Speaker A
the customers think about it. On one hand, you have more prime and super prime customers that look at this as an alternative to credit cards. they get a get a uh a credit limit and they really try to use this as a installment loan.
Speaker A
The way it works and an installment loan typical construct is a paying for product. You pay uh upfront and then over a bi-weekly time period you you pay off that loan. What's really wonderful about the product is it's a finite
Speaker A
structure. You're not you don't have any danger of rolling the debt. There's not an APR that's going to compound on you. It's it's just a clean structure to finance something and and work it off your personal balance sheet.
Speaker A
The alternative path and really where Zip lives is we're really focused on underestimated Americans. And underestimated Americans, the way we see it is the the traditional financial system really isn't serving a paycheck-to paycheck customer all that well. They live very very tight. Any
Speaker A
disruption in their financial lives, call it a flat tire, creates ripples throughout. And really where Zip fits in is in that mismatch of income and expenses. You have lumpiness and income, your lumpiness and expenses. They don't always sync up. And if you think about
Speaker A
the way I would say a credit privileged person manages the 30-day float on a credit card, that's much in the way these BNPL products are being used for that underestimated American. They're using it for that unexpected expense.
Speaker A
They're using it to just bridge the cash flow needs on a week-over-week basis. And really, I consider it much more of a cash flow smoothing product for these customers. And and I think it it's really we see that in the numbers. We
Speaker A
see that in in our customer stories as well. So, let's touch on that a bit. It definitely plays out differently on depending on who's actually using by now payer. Uh by now payer customers are often people, as you mentioned, without
Speaker A
a credit card, prefer not to use one. that ties into your own personal background growing up in in Flint, Michigan. Can you tell us who your average customer is and again maybe touch a little bit more on why exactly
Speaker A
they're using Z products? Yeah, look, I I grew up in a very bluecollar town. I had a great upbringing. My dad worked at GM on the line for 30 years and made a good income, but it was paycheck to paycheck.
Speaker A
If anything came up, like the mental gymnastics, the financial gymnastics you had to go through were were substantial.
Speaker A
And if you didn't have the capability in that moment, the ripples this would create, all a sudden you have late fees on your utility bills. Now your FICO score is going to start to get damaged.
Speaker A
Um, it just starts to spiral. And and really where I view the financial system is it's not really built for people that live very tight. And you know, we can all make assumptions about why people are living tight, but I think the
Speaker A
financial system is inherently structured to just start off with judgment. I'm judging you on how you spent your money. I'm pulling your FICO score and judging you on how the heck you got a bad FICO score. And it's
Speaker A
really losing sight of all the nuance that's in an individual's lives. And I I I really think meeting the customer first with trust, which is one of the things we do very uniquely in this industry is we start with a very low
Speaker A
limit. We watch the behavior. We watch to make sure the affordability is there. Our average loan size is only $147.
Speaker A
And when you think about that as a in a pay and for construct, you know, it they're really only financing over a six- week period. It's a very short duration asset that really helps bridge those moments and and really helps avoid
Speaker A
those unnecessary late fees, those unnecessary overdraft fees. And and it the other thing that I think is really critical about this is the transparency which the product is structured. We charge a fee that is very it's it's flat. It's not riskbased price.
Speaker A
Everybody pays the same fee. And why that's important is if you talk to the customers, they're scared of credit cards. They've turned themselves upside down at some point on a credit card. And and I think like it's a bigger problem
Speaker A
for us as an industry. This idea of financial literacy to me is the industry telling the customer they should get smarter. I think we should get simpler.
Speaker A
We should get easier to use. And I think BNPL is one of those products that's really taken steps forward on that front.
Speaker A
Thanks for that. It's real people. It's real stories about how they're using this. Yet the public narrative around buy now pay later. It doesn't always reflect that. There's a lot of judgment out there about buy now pay later. Can
Speaker A
you set the record straight for some of the common misconceptions for us today? Yeah, there there's a lot of myths out there and I'll maybe cover a couple of them is one I think it starts with judgment. If you use buy now play pay
Speaker A
later for groceries, you must be in a state of stress. I would challenge how many people in this room use their MX card to put their groceries on it. It's the same 30-day float. We're judging the fact that this customer doesn't have
Speaker A
access to that tool. And that tool is really, really valuable in managing your day-to-day. So, it's not a state of stress. It's you're getting one small piece of that consumer's puzzle and we're judging on it. And and when I look
Speaker A
at the affordability for these customers, to me, it's it's how do you meet them in their moment? And and in particular, I think we all like to think about a financial journey and financial well-being as this linear line we're all
Speaker A
on and it's just incremental. Like it's lumpy. Um people go up, people go down.
Speaker A
And I think we're meeting the customer, meeting them where they're at is really, really critical to understanding how to present products to these customers. So misconceptions to the public is one thing, but Washington also has a lot of
Speaker A
questions around this. Let's talk about the regulatory piece for a second. There's been a lot of regulatory tension on buy now pay later over the past few years from CFPB to state level rulemaking efforts like we're seeing in
Speaker A
New York right now. What is how has ZIP been navigating that environment? Yeah, it's an agile environment. Um I I think it really does start with this misconception. Um I mentioned the irresponsibility 98% um payback on this asset within this
Speaker A
customer base. And when you think about that like that's not operating irresponsible. You think about the $147 as an installment loan that can't roll.
Speaker A
They can't defer it. They can't pay a minimum payment. It's a much more structured product than I think it's given credit for. So when you think about the regulatory environment, I think where the challenge becomes is it's a new product and we want to treat
Speaker A
it like a credit card. We want to treat it like an installment loan. It's it is partially um you know a credit vehicle for customers, but it's very much regulated under an installment loan. And I and I think we have to cut through as
Speaker A
an industry the use cases, how the customers are using it, how it's making them successful. It without just overly burdening it because it's new and and we don't understand it. And I think when you when you look at the growth
Speaker A
trajectory of this product, you'll hear it from the customers. They appreciate the simplicity. It's 6% of ecom here in the US. It's over 15% of ecom in Australia. It's it's in the 20s when you look at Europe. like this is a product
Speaker A
that is simpler, easy to understand for the consumer and and frankly it's a better vehicle for bridging some of these day-to-day gaps responsibly.
Speaker A
Absolutely. Well, I always like to end it on an optimistic note here. So, let's close out by looking to the future. If you think about the next 12 to 18 months, where is Zip placing its biggest bets in the US and what excites you the
Speaker A
most about the next chapter for Zip? you know, the closer we get to our customer, the more you see just the stress of kind of that day-to-day cash flow. And when you really dig into like how they're managing it, there there's this element
Speaker A
of, you know, how much time do you really have to to think about your your finances? Um, you know, I wake up and think about it all day because it's my job. It's not everybody's job. And when you play out that scenario, though, the
Speaker A
lumpiness in income is is a real thing for consumers, you know, they're paying fees on late fees and other things because they're they're unable to match that. So, when we look at the future and and I think this gets to something
Speaker A
Congressman Style had said around the EWA product, it's really about providing access in that moment, trying to find those that cash flow smoothing capability. I think earned wage access and cash advance programs that are digitally native have started to bridge
Speaker A
that same problem for consumers injecting that short-term liquidity. Think of it as working capital for these consumers to really be successful in their day-to-day lives. The payback behavior, the data is there to support that this isn't irresponsible. This
Speaker A
isn't people buying Pelatons and you know big screen TVs. This is people just bridging their day-to-day. So that's that's one element. I I think there's additional ability just in the way EWA like is solving kind of the lumpiness of
Speaker A
of income. You know, there's lumpiness in expenses, too. So, you think of utility bills and other things that crop up and even rent. Rent's a big lump sum for a consumer day one. Where I get excited is the capabilities that we're
Speaker A
we're developing from a technological standpoint. AI is is increasing velocity. AI is increasing capability.
Speaker A
our ability to meet the customer where they're at and smooth any and all expenses in their day-to-day to make their cost of living cheaper is is really where I think it's exciting.
Speaker A
Amazing. Well, Jeb, thanks so much for joining us here today and for the insights. Cheers. Thank you.
Speaker A
Thanks so much. Please welcome Representative French Hill of Arkansas and Semaphor's Eleanor Mueller. Good morning and thank you so much chairman for taking the time to join us.
Speaker A
Uh this is a congressman who needs no introduction. He is the chairman of the House Financial Services Committee. One of the few former bankers to chair the House Financial Services Committee. And you have a big day today. The House is
Speaker A
slated to vote on bipartisan housing legislation. Basically, the House raised concerns over a Senate passed proposal and then produced texts that now has the support of the White House. What has that process over the last week been like for
Speaker A
you? Well, it's more like over the last six months. Yeah, this was a priority that Senator Scott and I both had starting the 118th Congress. of the previous Congress. We both were committed to if we became chairs in the 119th Congress, we were both
Speaker A
committed to a bipartisan biccameal housing bill that would reduce the barriers to producing more housing, reduce the regulatory costs, increase capital access from the banking industry uh to housing. uh reduce some of the longstanding bureaucratic building code issues and things that you know were
Speaker A
just raising the cost for housing per square foot in both blue cities and red cities, big cities and small cities.
Speaker A
That was the theme and Senator Scott called it the road to housing act. And so we introduced that in 118th Congress. So in the 119th Congress, uh my preference in the first part of the year was to get uh the
Speaker A
Congressional Review Act measures passed and do our work on digital assets. So while we were working on getting uh the Clarity Act through the House and the Invest Act, some of our priorities in the House, Senator Scott was getting the
Speaker A
Genius Act through the Senate and then he turned to housing. So, he had a bit of a head start on us on getting his housing product out of the Senate.
Speaker A
We had scheduled to do it in October. And so, we got tangled up in the Schumer shutdown of October and had to postpone our hearings and our markup on our housing effort till uh November, unfortunately. So, that was our our
Speaker A
schedule was thrown off by uh I think we were getting some white noise on your mic.
Speaker A
Wow. Okay. So many mics it up, so little time. Um, so we um uh were a little behind that effort. So starting in the fall, the Senate wanted to move their bill, but we hadn't moved ours. And so when we got into the first
Speaker A
quarter of this year, we turned the year, we were able to get back in sync.
Speaker A
So, the House moved all the bills that we've been working on, many of which were contained in that road to housing effort in the 118th Congress. Senator Scott was able to move his bill, which also contained a lot of that overlap
Speaker A
from the 118th Congress as well. But in the Senate bill, uh there were some uh provisions in it and some drafting in it that I didn't have the support for in the House. I mean, I just didn't have
Speaker A
the votes. I couldn't pass the bill with a majority of the majority. And in the House, uh, most smart speakers will put bills on the floor that they have a majority of the majority party for. It's a good
Speaker A
way to lose support in your conference if you don't do that. And we had, as Elellanar has covered uh, significantly, we had almost 70 members not on House Financial Services say they couldn't vote for the Senate bill as drafted. We
Speaker A
had the Main Street Caucus, the Republican Study Caucus, and the House Freedom Caucus, all Republican uh member organizations, tell us that they couldn't support the Senate bill as drafted. So, we tried to uh see if we could find a path to to change the bill
Speaker A
in a in a biccameal basis. Uh and we we basically concluded that maybe the best way to go about it was to see if ranking member Waters, the senior Democrat on the House committee, would support the direction that we were going in. And so
Speaker A
that's where we ended up. So, we have taken the Senate bill as passed by the Senate that had 89 senators vote for it and we have, I would say, relatively modestly amended it to try to correct some of those challenges that I faced in
Speaker A
the House where I just didn't have some Democratic and some Republican support. We have a very narrow majority in the House and it takes that kind of collaboration to uh get important bills like this to the finish line. So, I hope
Speaker A
today that we'll have a good bipartisan vote in the House on these amendments and that that can give the Senate some confidence that once again we've narrowed the differences and perhaps they can take this bill up and and pass
Speaker A
it. And if not, we've narrowed the differences. And I know it shocks America, but that's called legislating, you know, and it's a biccameal process and a bipartisan process. It's a lot of fun if you want to participate in it,
Speaker A
but you you can't be in a hurry. So, I mean, you touched on this briefly.
Speaker A
What exactly do you expect to happen in the Senate once it presumably passes today?
Speaker A
Yeah, I have I don't I don't know. I mean, I I would um we tried to very nail uh narrowly tailor the things to address the House concerns, which are not new.
Speaker A
These the reason I gave you the little history lesson is these are all the same issues that go back to last fall in the differences between the two bills dating to last fall with the only difference being significantly President
Speaker A
Trump's state of the union speech where he argued that large institutional investors should not be bidding against moms and dads for cash, you know, in an existing home sale. that that was something that he'd read about, seen about, he'd heard about from people
Speaker A
around the country. And so he wanted to limit a large institutional investor essentially bidding for cash against a mom or a dad trying to buy a house. And you can certainly understand that position politically, but you've got to
Speaker A
write that correctly and in a balanced way so that you hit the president's goal, but you don't uh disenfranchise a lot of capital that flows into real estate development in build to rent or senior housing or a lot of other
Speaker A
specialty forms of of housing that are dependent on uh institutional finance, even if that's not quote unquote a private equity firm, you know, owning that house, bidding against that person, it can be swept up into that. And Paul
Speaker A
Clement, the former uh solicitor general for the United States, wrote a persuasive piece that the Senate text also required a seven-year mandated sale and that that could be considered a taking and could potentially be litigated as unconstitutional.
Speaker A
So, we wanted to address that part of the Senate bill, fine-tune it, make sure it met the president's test, but narrowed the scope of that text in the Senate, and remove that seven-year mandated sale for new construction because of the argument that Mr. Clement
Speaker A
made and and a lot of entrepreneurs. Wall Street Journal had a significant uh survey that's well over 10 billion dollars of financing for new construction housing had had been halted as a result of the Senate vote.
Speaker A
It's obviously an an uncomfortable situation, right? The Senate Banking Chair advanced something that you as the House Financial Services Chair was believed was not the appropriate solution to a problem. And so, how where does your relationship with Chairman
Speaker A
Scott stand coming out of this experience? it. My my relationship with Senator Scott's been great from day one when we both got elected from our respective bodies to be chairs. We're good friends. We get along well. Uh and
Speaker A
so the relationship is good and we have done so much already. People tend to focus on you know the here and now and not the big picture. The big picture is in 2025 we got some of the worst uh
Speaker A
rules promagated by the Biden administration. We were able to reverse those using the Congressional Review Act. We solved a major consumer finance frustration in trigger leads that Mr.
Speaker A
Hagerty and uh and Mr. Rose on my committee in the House. We got that bill signed into law by President Trump. Uh we got through budget reconciliation a cap in the mandated unaccountable funding from the fed to the CFPB. We
Speaker A
were successful getting that in budget reconciliation. And there is no small step in having genius uh also written by my pal from Vanderbilt days. Genius Bill Hagerty's bill passed and signed into law by President Trump. And last July, we got
Speaker A
the Clarity Act out of the House with 78 Democratic votes. That set the stage for the vote that Senator Scott took just last week in committee to advance clarity uh for Senate consideration with a bipartisan vote. John Boseman having
Speaker A
already passed it in the Senate a committee. So, there's been a lot that we're doing and the senator and I want to land the plane on a housing package that the president can sign into law.
Speaker A
And then we want to turn and we want to get the terrorism risk insurance uh authority reauthorized. We want to get uh the XM bank reauthorized.
Speaker A
We want to continue to work on our community banking agenda and very importantly our capital formation agenda.
Speaker A
Yeah. Which in the House we call the Invest Act. Yeah. Well, that's a great transition to the next thing I wanted to ask you about, which was the Clarity Act.
Speaker A
Obviously, the Senate Banking Committee recently at last advanced its House Financial Services Committee advanced last year. What do you think of the Senate's bill?
Speaker A
I think they worked really hard. They've got a decent product. Uh we're collaborating with them on comparing text and comparing definitions. We're also doing that with what John Boseman, my senior senator from Arkansas, got passed as chair of the House A
Speaker A
Committee. So, I think we're we're headed in the right direction to uh a final package on the market structure for digital assets that President Trump can sign into law, but it's not over till it's over. And I'm sure there are a
Speaker A
lot of meetings and a lot of work in the Senate uh before Senator Boseman and Senator Scott feel like they're able to bring that to the Senate floor. But we're working hand and glove to try to be as helpful to that process uh as we
Speaker A
can. What changes would you need to see between now and then to ensure House passage as is?
Speaker A
I think we just need to see uh start that meeting process. We're comparing text and having those conversations. So I think it's too premature to say, "Oh, this paragraph needs to look different." I don't think we're at that stage uh yet
Speaker A
because the Senate already produced a bill that was substantially similar to the House bill and the House has been involved in that. It's it's like the debate last year on stable the stable coin legislation. The Senate bill was
Speaker A
substantially similar to the House bill. We'd worked together collaboratively on it for months. And so there there are differences and we'd like to see those differences um amended, you know, but we're going to continue to work on that.
Speaker A
Um it's an FTA event. I'd be remiss to not ask you about the fintech executive order that the president signed last night. There's related legislation in your committee, Congresswoman Young Kim, that would expand fintech firms access to the Fed's payment rails. Do you see a
Speaker A
path for that this Congress? I think we're certainly going to do our due diligence and hearings on this. You also have to recognize the Federal Reserve has their own request for information on this uh process as well that Governor Chris Waller is leading
Speaker A
for them so that there's some continuity of approach on um u payment licensing through the Fed. uh that has a common theme to it as opposed to all 12 regional banks thinking they can do something different that's not a single
Speaker A
policy. Um so I think we're going to begin a set of hearings on that topic uh on on um the need for perhaps a nationwide payment, you know, licensing regime rather than being reliant only on statebystate money services licensing.
Speaker A
But it'll be a good discussion, but I think it's one where you've got a bill consensus. You can't just snap your fingers and say, "I want it this way, and that's the way it's going to be." Uh, and I think people need to evaluate
Speaker A
that on a holistic point of view in the federal government. So obviously the OC will have a point of view because of their trust charter capability and the Fed uh really does want I think sincerely to get a common policy for the
Speaker A
Fed uh that Governor Waller is attempting to to navigate. So I think all that comes together at a good time and I look forward to the discussion.
Speaker A
Uh we're al you also said lots meant that the committee might be exploring whether or not there's a path for it on prediction markets which is something that congressman style talked about when he was on stage earlier. Do you see the
Speaker A
committee taking up anything related to prediction markets this Congress? Well I've always been in an education component. I don't I don't make I think members of Congress need to know what the law is today. And then I think it's
Speaker A
uh important that Chairman Atkins and uh Chairman Celig also uh put forward the enforcement of that law in their own rulemakings that are relevant to whether something's a securitybased swap or a nonsecuritybased swap. That involves obviously both a committee oversight and
Speaker A
House Financial Services Committee oversight. But where I've started this year is just on member education. I don't think people know. A lot of people didn't even know that there's a federal law governing this from DoddFrank and post08 financial crisis. So it's a little hard
Speaker A
to legislate and get out front on policym when you have members that don't have that basic understanding of current law, current rule making, current responsibilities at SEC and CFTC.
Speaker A
and and that's where I've proposed we start. Secondly, on the bigger issue of sports uh in prediction markets, you're going to see that heavily litigated in the states uh by the states in federal court no doubt or in state court for
Speaker A
that matter. So that's a added complication. But uh I've told my members I think Chairman Atkins and Chairman Celich have the primary responsibility of demonstrating that they're able to oversee these markets in the right way in compliance with the law. So that's
Speaker A
the the starting that's my starting position as opposed to jumping to a conclusion about what we should or should not do in the Congress.
Speaker A
I've got about 50 more questions for you, but I must but unfortunately our time is up. Thank you all so much for tuning in and thank you again.
Speaker A
Thank you all very much. Please welcome Representative Maxine Waters of California and Semaphor's Nicholas Woo.
Speaker A
All right, we have Congresswoman Maxine Waters, who is the ranking member of the Financial Services Committee with us today. Looking forward to our conversation.
Speaker A
Yes. So, I wanted to start off by asking a bit about what's happening on the Senate side. The Clarity Act on cryptocurrency is looks like it's moving through over there and could come to the house. Is that something you support the House
Speaker A
taking up? Well, first of all, let me just say that uh we need to understand uh that the discussion, the controversy all about crypto and who has jurisdiction is extraordinarily important to understand what has happened on the Senate side. Would it be
Speaker A
uh the SEC or the CFTC? And we are seeing now in the Senate bill uh that the CFTC will have tremendous jurisdiction over VidCon and some of the other uh entities. So having said that, what is your question?
Speaker A
Well, I mean the Senate will pass this likely. I mean do do you think this is something the House should take up?
Speaker A
Well, um, as you know, we passed the bill, uh, and you understand what was, uh, in that legislation and still the big issue was jurisdiction. And so, the Senate has, uh, done very well in deciding jurisdiction between the SEC
Speaker A
uh, and CFTC and whether it's a security or commodity. Now, um the House uh will have to take a look at what the Senate has done. There are going to be hundreds of amendments to that bill uh before we
Speaker A
know exactly what is coming from the Senate and then we'll see what happens. I see. So, I wanted to uh look a little bit at next year. I mean, if Democrats take the House this fall, oversight seems like it will be a particularly
Speaker A
large focus for a Democratic majority. What do you see as a top Democratic House Financial Services target of oversight?
Speaker A
Well, um, as we're here talking about crypto, uh, we have to be very concerned about crypto and what it ends up being.
Speaker A
uh already uh we've gotten the indication from the Senate about jurisdiction as I alluded to and now it's a matter of what those amendments will do uh relative to jurisdiction which I think is extraordinarily important. Uh but of course um we have
Speaker A
members who are basically supportive of the SEC of the CFTC. I am concerned about corruption and the president and whether or not there should be ownership of crypto by the president, by Melania, uh by the Sun, uh by the brothers, uh
Speaker A
and whether or not um even members of Congress should own crypto and certainly um the cabinet members should be included. included in that. I think it's very very important uh to deal with that issue. Uh members of Congress and the
Speaker A
House will be wrestling with that and we're going to make sure it's part of the continued discussion.
Speaker A
How do you see your committee's level of engagement with the Trump administration, particularly the Consumer Financial Protection Bureau, especially if you're looking to conduct oversight next year? Well, as you know, um I have indicated uh more than once or twice that I'm very
Speaker A
concerned about the president of the United States of America. And I'm concerned about um his cabinet uh who has been chosen, whether or not they're competent and whether or not uh they feel a sense of independence uh from
Speaker A
being told what to do by the president of the United States of America. I'm worried uh that the president can sue the justice department and taxpayers pay him a terrible awful sum of money because he feel that he has been harmed.
Speaker A
I'm concerned about inflation. I'm concerned about terrorists. I'm concerned about the war in Iran. I'm concerned about affordability in this country that's being led uh by the president and his decisions. So, crypto is central uh to what we've got to deal
Speaker A
with and what we've got to confront and understand how not to uh create additional problems of not protecting investors.
Speaker A
If your committee does look into those corruption issues next year, are you convinced that the administration will comply with uh subpoenas and oversight requests from your committee?
Speaker A
Am I sure that the administration would comply uh what our needs are? You know better than to ask that question. Of course not. Of course not. This president uh not only has used executive orders uh but disregarded the
Speaker A
constitution. Can you imagine if the president of the United States can start a war without even coming to the congress that is mandated by the constitution? What makes you think he would care about anything? Uh but what he wants to do u and that's how I feel
Speaker A
about it. Do you think that private sector targets might be a more uh um apt target for the committee if if the administration then I'm sorry, repeat that.
Speaker A
Do you believe that private sector companies might comply more with subpoenas and be a more ripe area for oversight if the administration does not comply? the private markets have um uh decided for the most part that the SEC
Speaker A
is not the right jurisdiction for them and that they have not had their questions answered and their concerns addressed. And a lot of that had to do with them believing uh that crypto is more commodity uh than security. And so
Speaker A
that might be settled in this bill, the clarity bill uh somewhat. I don't know, but we'll see what happens.
Speaker A
I see. Um to pivot a little bit to news of the day, the House is going to take up its housing bill um probably this afternoon. Uh do you support it?
Speaker A
Well, uh I think the housing bill is one of the more positive things that have happened in recent years. I know that Chairman Hill is here today. Chairman Hill and I have worked very closely. We have been in negotiations for hours, for
Speaker A
days, for months uh about the housing bill. And I do believe that what we have learned over the time that we have been involved with the question of housing will help us um in this bill that we have organized to be able uh to know
Speaker A
what else can be done to get rid of homelessness and create housing opportunities. So this is a bill that will get rid of some of the impediments that have been encountered for so long.
Speaker A
For example, um I discovered in Los Angeles uh that uh our metro had uh vast ownership of land uh that had been vacant for years. Nothing was being done with it. And I discovered that they could make it available uh without
Speaker A
having market value. And so now I want to look at the whole country and what agencies have vacant land that they control that we can help mark down the costs of acquiring that land for the development of affordable housing.
Speaker A
That's just one example. On the banking side, which you will hear from Mr. Hill a lot about, um, we're looking at all kinds of things. I'm looking at encouraging the banks, for example, with a pilot program that would help them to
Speaker A
do more uh to fund uh smaller amounts for mortgages. Uh I know that um the money is made on the big mortgages, on the you know, millionaire homes, etc., etc. But there are people who can afford $2,000,000 homes and $3,000 homes. I
Speaker A
want them to be able to get those mortgages from our banks. So that's in the bill and Mr. Hill is going to talk a more a lot about what's in the bill.
Speaker A
He's an old banker and so he knows a lot about that. But we have learned an awful lot that we have put into this bill that would eliminate the impediments uh to developing affordable housing and making sure that we get people off the street
Speaker A
every night. What do you see as a top priority for a Democratic Congress on housing in terms of what might go through your committee next year? I plan on having a trillion dollar bill, a trillion dollar bill to be able to
Speaker A
deal with everything from um the creation and development of more affordable housing with the assistance that is needed to do that. Um including what I just alluded to about how we can bring down the land costs. Uh I am
Speaker A
looking at helping our younger generation with down payments that they can afford which are about 20%. They can afford mortgages um uh based on you know what they're purchasing but getting that 20% is very difficult. I believe we
Speaker A
should be helpful with that. I believe that with public housing uh we should increase the amount of money uh that we're utilizing in order to do the repairs and the renovation that is needed. I was up uh you know in the
Speaker A
Bronx very recently and what I saw was startling u and what the needs are are great and so we're looking at all of that and I am insisting uh that we get the kind of support certainly from the
Speaker A
Democratic aisle that would support a trillion dollar bill uh to deal with these kinds of issues that will help us to increase more housing for families uh affordable homes and rental also. Thank you.
Speaker A
That's trillion with a T. That's quite an ambitious piece of legislation. Is that one of the first things you want to see a Democratic House take up?
Speaker A
Absolutely. I have uh housing as one of my primary focuses uh is doing something uh that will help to deal with the problems that we're confronted with that are absolutely shameful in this country of so much and so many. I think we can
Speaker A
do a lot better and housing is very important. So, you know, but we can walk and chew gum at the same time. And so, certainly, I'm looking at housing, uh, but I'm also looking at all of the agencies in our jurisdiction, uh,
Speaker A
because we've got to make sure that deregulation does not strip the protection from consumers that are needed. And we always have to pay attention to the constant push to deregulate.
Speaker A
Congressman Style and I were talking up on stage a few minutes ago about prediction markets, a big conversation right now over whether or not members of Congress should be able to take part and and congressional staff for that matter.
Speaker A
Do you think um that should be banned? I absolutely think it should be banned.
Speaker A
Uh we need to have some um guardrails on prediction markets. I think that uh too much can take place without rules, without uh regulations, without transparency and yes, I think it should be bad.
Speaker A
Well, what rule would you see for a democratic Congress in regulating prediction markets? What sort of guardrails would you like to see in place?
Speaker A
Well, we should be looking at uh what I referred to broadly as guard rails. Uh there has to be some rules to the game.
Speaker A
uh we cannot have it continue in the way that it is doing. Don't forget our main job in that committee is protection of consumers in every way that we possibly can. We have to look out for what's happening at the SEC. I mean that is our
Speaker A
cop on the block and we got to make sure it gets the funding to do what is needed in order to uh be um successful and on and on and on. So deregulation is something that we have to be concerned
Speaker A
about constantly and that's high on the agenda. Do you support also banning stock trading by members of Congress?
Speaker A
Absolutely. Uh I think that we should be very very careful about the information that is available to us uh so that we're not in a position to use that information even by mistakes and by having others handle our accounts uh in
Speaker A
ways that will enrich us. So I'm very very careful about that. Lastly, I wanted to ask a bit about, you know, a much broader conversation that's happening in the Democratic party now over uh, you know, future leadership and
Speaker A
what um, folks want to see there. You know, you've had quite a legacy on the financial services committee. Who do you see as carrying the mantle for you in the future?
Speaker A
Let me be very clear about this argument and discussion that has developed about age and about opportunities for young people. I do believe that everybody should have the opportunity with qualifications to try and be a member of Congress uh to
Speaker A
try and be in positions uh for any of our regulatory agencies. I believe in the vote. Now, having said that, I don't think we should talk about whether or not um we should give up the mantle. I think it should be about supporting the
Speaker A
idea that everybody should have an opportunity. Young people uh should run for these officers and if they are competent, if they're capable, if they raise the money, if they do all of those things and they win, then they should
Speaker A
have the seat. For those of us who have been there, I want us to be absolutely looked at, to be criticized, to be examined to see whether or not we have done uh what was expected of us and
Speaker A
whether or not uh we have truly represented the people that have put us in these office. If we are not doing that, then we shouldn't be there and we will probably not win our seats. But if we have then I'm one. We'll just stay
Speaker A
there. I'll be there. I'm not moving. Got it. Well, Congresswoman, that's all the time we have. Thank you so much for the conversation.
Speaker A
Oh, this is plenty time. Thank you. All right. Please welcome Sarah Levy of Betterment and Seapor's Elana Shaw.
Speaker A
Sarah, thank you so much for joining us today. Thank you. Um, a brief note on you. You are the CEO of Betterman obviously, but before that you were the COO of Viacom Media Networks where you oversaw global strategy, finance and operations for
Speaker A
I did from kids television to wealth management. A very natural transition, right? Um, speaking of natural transitions, executive order from the Trump administration, uh, it established Trump IRA. It established a way for workers who don't have retirement savings plans at work to access options,
Speaker A
but it's still pretty limited in scale, right? It's essentially kind of just a website and it would require legislation to go further. Do you want to see legislation to expand access to that packet of workers and what should that
Speaker A
look like? Sure. So, um, stepping back for a second, um, Betterment is an investing, savings, and wealth platform. Um, and we're very focused on retirement. I never knew that in my life I would be as passionate about retirement and setting
Speaker A
people up for a successful um you know financial future as I am. And I think this particular executive order um is for sure a step in the right direction.
Speaker A
I mean what we've been doing uh at Betterment for 15 years is expanding access to lowcost high quality financial products. And I think you know access is really the key word here. And so really what this this EO is a little bit more
Speaker A
of like a marketing um addition to products that already exist. But the reality of access is that it has to be available and then you have to know what's available. And so where where I think you know this this EO is heading
Speaker A
in the right direction is basically telling people here is an opportunity to come to this website and find lowcost highquality investment uh opportunities for you in retirement. I think the challenge and again this is we need to sort of go further than just an EO um is
Speaker A
that we applaud the idea that there are caps on fees in these products because that's really important particularly for savers you know who at low balances right but I think what isn't addressed in the EO is the question of platform fees or
Speaker A
how do you service these accounts right servicing um smaller financial accounts is costly And I think in the fintech industry, we've done a great job of bringing those costs down as low as humanly possible. Um, but there still
Speaker A
are costs to servicing. And so I think that some clarity around kind of how the fee structure can work will be important to actually making this an effective policy. It's not, to be honest, a meaningful change. There have been a lot
Speaker A
of policies that have been similar in the past, many of which have had very low adoption. And so hence the reason why it's great that there's now sort of a marketing push behind it. But the next key will be you know who's available to
Speaker A
offer these um these IAS and how do they help kind of market the program. Do you see a role for the private sector and like have you already had conversations with stakeholders about that kind of saying like look we want to work with
Speaker A
you partner with you maybe we'll provide some dollars to help marketing to increase access if well the reality is these are IAS that are largely available anyway. So, so this is more about kind of an overlay on products that exist. Um, so I don't
Speaker A
think there's really the private sector is already, you know, very engaged in offering IAS and bringing costs down on those IAS. Um, it's really this in combination with a series of other, you know, some of the Trump accounts for,
Speaker A
you know, early early access for infants. Like that's sort of that's the newer piece of the um of the puzzle, I would say. Makes sense. And good segue to Trump accounts, okay, which are also being being implemented pretty quickly.
Speaker A
And right now, stop me again if I have this wrong. There is just one trustee and one custodian. But as a big believer in expanded access, how would you want to see that changed over time as hopefully more people catch on?
Speaker A
Yeah. So again, I think again applaud the administration for getting people started early. The power of compounding is magic. and for for you know folks who didn't previously have access to um you know to the financial markets to get
Speaker A
them sort of in there and get access and be following is a fantastic start. So I think that's step one and yes I mean more directly to your point there is currently a bottleneck in that there's only a single provider where you can get
Speaker A
access to these accounts. I think in terms of moving quickly and getting started that was sort of the practical way to do it. Um but yes I would say that what we need is we need a sort of
Speaker A
trustee system whereby anyone who meets the requirements should be a place that where you can open these accounts but I think as importantly actually is not just the opening of the accounts but it's the portability of the accounts and
Speaker A
so first you have access and then you have friction and so the key is you know if you're getting these accounts when you're born right you over a long life you're going to move to multiple employers you're going to move you're
Speaker A
probably going to move financial institutions whether whether that's a fintech or an established incumbent. Um, and I think the idea just like other financial products that these need to be portable is going to be a really important second step of the
Speaker A
legislation. And I think, you know, the worry if I, you know, I want to stay positive because I think we're heading in the right direction. But I think the worry would be in the 401k and the retirement space. Now there's a
Speaker A
tremendous amount of friction. Much more friction than there is in the taxable um investing arena in terms of the portability of accounts and there's paper and there's sending checks and there's room for fraud. There's time out of the market. Like these are sort of
Speaker A
concerns that circle the 401k space and that have the potential to be sort of equally problematic with these new accounts. and so let's fix them both.
Speaker A
Do you think legislation will be required for that? Is it possible to have a follow-up order?
Speaker A
I I think so. I mean, I think I think the key Well, if we're going to stick with Trump accounts for a second, the portability will for sure require legislation. And I think ultimately opening up access so that people can get
Speaker A
started and parents can get their kids started at the financial institution of their choice feels like the way again access is about access. Like to state the obvious, it's about access. So we want people to be able to go wherever
Speaker A
they want to gain access to these products and as long as you meet the requirements that seems reasonable. So that that seems like you know very clearly something that will require um you know regulatory. I think on the sort
Speaker A
of friction side yes because for years people have gotten 401ks kind of trapped at institutions and they either lose them or they're out of when you transfer them from one institution to another they can be out of the market for as
Speaker A
much as 60 days. And the real actual financial loss to consumers in that transition is palpable. The there's a stat that that I heard that I thought was really powerful. A $100,000 rollover can be out of the market for 60 days.
Speaker A
That can cost someone $76,000 over a lifetime. Not to mention, you know, checks can get stolen. There's fraud and checks. So, so I think where do you need regulation? you need this all to be d like it's time to be digital
Speaker A
and it's time to have regulation around like how long can the money how quickly should this need to happen and if it's digital you should be able to move an account you should be able to move it quickly you should not have to be out of
Speaker A
the market for very long um and all of this could be handled regulatory that's really striking as somebody who personally has had to roll over a 401k most of the people on our audience probably had I had no idea it was that
Speaker A
great of a loss well you get on a on the phone you know you have to talk to three different people I mean you know and they make it hard right and it's that's just not productive for the end investor whose
Speaker A
money it is. And and in the taxable investing space, we have AATS, we have like ways that money moves digitally, and there's no reason why. It's safer, it's faster, it's cheaper. I mean, there's there's really no reason for it.
Speaker A
Well, we all listen to the great lawmakers talk here, though, and not that many of them brought up retirement legislation. They're talking about a housing bill in the future. They're talking about crypto. They're talking about fintech, but like there's not
Speaker A
really buzz around a specific retirement bill. Do Do you want to see some? So I mean always and yes. Um, so you know, the the the beauty of retirement is it's totally bipartisan. And so it is actually something that could get done.
Speaker A
And I think in 2022, the Secure Act um was tremendous because the Secure Act basically provided carrots for companies in the 401k space to have to offer um to to get sorry paid tax credits to start 401ks. So imagine you are a big company.
Speaker A
50% of Americans work for big companies. 50% of Americans work for small companies. Small companies um have historically not had retirement solutions for their employees. Secure 20 basically said here are tax credits small companies so that you it can
Speaker A
basically be free for you to introduce retirement um benefits to your employees. At the same time, states had a stick, which is states introduced mandates that said smaller and smaller companies are required to have 401k plans. So that's beautiful. So we're
Speaker A
expanding access. We're getting retirement in more hands. But you still have an enormous freelance economy. You have people who work from home. You have caregivers. Like this is who we now need to take care of. And that's where I
Speaker A
think the the IRA program kind of starts to get there. The savers match starts to get there. So, I think there's like a lot of there's a lot in the works.
Speaker A
Um, but yes, today it hasn't maybe been the interesting. Um, well, moving to a different topic for a moment, but really not that different. Market volatility, you know, everybody picks up the Wall Street Journal and reads somehore and
Speaker A
sees it. It also has an effect on savings. Looking out there at what's going on, do you have concern that like the more people pay attention to the ups and swings in oil prices and overall investment markets, they go, "Oo, I I
Speaker A
can't save as much." They pull back. Yeah. So, well, more than more than a concern, I think what we're seeing, particularly in the lower income thresholds, we're seeing people actually pull hardship withdrawals out of retirement savings. And look, there's a
Speaker A
lot of pressure on consumers right now. The price of gas is, you know, out of control. Um, tariffs have caused a lot of angst. There's fear of, you know, what's AI going to do in terms of job dislocation. So all of this has kind of
Speaker A
created at the low end of the economic spectrum an incredible amount of worry and even in the middle, you know, in in the middle of America. So I think um what we're seeing very palpably right now is sort of two things. One is we're
Speaker A
seeing a rotation out of cash and into investing. That's a positive development, right? And that's kind of as rates have come down a little bit, that's kind of a natural behavior. And now of course we don't know, you know,
Speaker A
where rates are going to go. So maybe we we'll see what happens there. And then the second is this withdrawals from from retirement savings. And if you think about it, like even people in 401ks, if you have an if you have access to 401ks,
Speaker A
folks with below $50,000 salaries are much less likely to participate. And that is it's just true because you don't you're not thinking about 30 40 years from now. You're thinking about how am I going to put food on the table and, you
Speaker A
know, get get my kids fed. So how how are heart withdrawals currently treated in events like this? I mean, do you want to see changes to that now that they're on the rise so people aren't punished essentially for needing to take
Speaker A
it? No, I don't think I I mean, I I I think that it's reasonable that there are penalties to withdraw um earlier because I I do think um and and maybe there's something temporary that that could help through, you know, sort of economic
Speaker A
hardship. But I think in general, um we do want to encourage people that if you can find the extra dollars to save for the future, we want you to be able to leave that money in those accounts to
Speaker A
benefit from the power of compounding. Moving back to Trump accounts and portability and optionality for a minute. Obviously, there's a huge opportunity in the fintech space there.
Speaker A
Do do you see kind of digital products as the forefront for retirement savings from legislators and policymakers perspective? Let me kind of expand access in writing or do you see it more like us and traditional folks, we should
Speaker A
all have the same optionality versus a leg up? I mean, I think we should all have the same optionality. I think again choice is always good and competition is always good. Why? because it it it gets, you know, it has more people marketing the
Speaker A
products and it forces us all to compete on price, which is ultimately what you want, which is better for the for the end consumer.
Speaker A
Um, you know, I think if there's something that we're worried about, um, I would actually sort of an adjacent topic would be um, open banking and the idea of consumer access to their data.
Speaker A
And I think actually that is the um probably if I were to have a big concern right now that would be my biggest concern is let's ensure that consumers have access to their own data and that they have access to that data for free.
Speaker A
And I think talk about competition and leveling the playing field and keeping costs low. Like my worry is if fees get imposed on um on customers if they want access just to their own data, we'll have to pass that along to the it will
Speaker A
stifle competition. It will stifle innovation and it will, you know, push more costs onto consumers at a time when more cost to consumers is not what we're looking for.
Speaker A
Fascinating. So, talk about fees to access your own data, which I don't think most consumers and customers are aware of. Like just your personal data on your investment patterns with your Yeah. So, imagine right now you sign into your app and you want to look at
Speaker A
your balance. Nobody charges you for that, right? But you have third parties connecting balances from incumbent financial institutions to fintex and the incumbent institutions are saying it's costly for me to allow that um that transfer of data. The reality is the
Speaker A
investment has already been made. It's not costly. the investment has been made in safe APIs for that information to travel and there's a little bit of a sort of anti-competitive uh idea a foot that oh let's charge you
Speaker A
know new folks fintexs to get access to that data and the reality is the banks don't own that data that's the data of the consumer and so the consumer should have access to their own data for free and they should be able to use the
Speaker A
products they want to encourage competition well that makes a lot of sense do you feel like regulators have that on their radar for sure it's on the radar um it was It was uh regulation and rulemaking that was 10 years in the making that kind of
Speaker A
hit a hit a pause a year ago and we're hoping that that we get back on it soon.
Speaker A
Very fascinating. Uh and quick lightning round. Is there any sort of wish list policy priority for retirement savings that we haven't talked about that you want to just flag?
Speaker A
I think the biggest single um improvement we could make is in this area of friction, reducing friction, right? would be how do we automate the transition of funds from one institution to another and digitize that so that it
Speaker A
can be lowcost safe and fast and that's good for customers that's good for choice that's good for cost um so that would probably be the place I would focus well fascinating that is unfortunately all the time we have but Sarah thank you
Speaker A
so much for being with us great thanks for listening Please welcome Senator Tina Smith of Minnesota and Semfors Burgess Everett playing want red.
Speaker A
Good morning everyone. I'm Burgess Everett, a congressional bureau chief for Summit for and this is Senator Tina Smith from Minnesota. Um, she'll be leaving the Senate at the end of the year, but I'd say you're kind of going
Speaker A
out with a bang. Would you would you agree with that? I'm kind of what?
Speaker A
Going out with a bang. Um, I hope so. I hope so. I promised that I was going to be um I don't know.
Speaker A
I don't really love the metaphor of running through the tape because it seems everyone says it seems very sweaty and like not very dignified, but right, I'm working as hard as I can until the end. That's for sure.
Speaker A
So, um, let's let's talk real quick about what's going on in the Senate this week. You guys have a reconciliation bill that you were fighting very hard.
Speaker A
The president has established an anti-weaponization fund of $1.8 billion. Is that something a Democrat's going to make Republicans vote on this?
Speaker A
Well, I mean, I have yet to talk to a single person who thinks that this is a good idea. What is it? $1.776 billion dollars to basically bail people out. And then of course the worst was that today the president yesterday
Speaker A
afternoon the president said um oh by the way we're also going to include in here complete immunity for any tax violations that my family or I might have ever done. Uh and even the Republicans are saying this is just a
Speaker A
bad look. So come to reconciliation you know the party the minority party doesn't have a lot of power in reconciliation. Um but what we can do is um is you know call for votes. So, I mean, it's hard for me to imagine that
Speaker A
we wouldn't ask have a vote asking uh to, you know, strip this out and to not do this. And we'll see. We'll see how people votes. It's interesting, isn't it, Burgess? You follow both caucuses so closely. Um, and there was definitely a
Speaker A
lot of ripples in the water yesterday. Was that a good day to be a Democrat?
Speaker A
There there probably haven't been too many when Trump has been president, but I mean, Senator Cornin is President Trump endorsed against Senator Cornin. your war powers resolution advanced for the first time.
Speaker A
That's right. And another Republican senator lost his primary over the weekend. So, we're seeing a little bit more divergence in their party. Has it been a good week for Democrats?
Speaker A
It's funny because on the one hand, I mean, I I have huge respect for Bill Cassidy, who lost his primary after the president endorsed his opponent. And um I sent Bill a message and just said I think you know it's it's the Senate's
Speaker A
loss uh to um not have your integrity and your your principles um in in the Senate. So on the one hand I hate to see that happen. A body that should be about like actually accomplishing things and not just about sort of uh loyalty to one
Speaker A
man. And I think many of us on the Democratic side have been hoping and praying and waiting for our colleagues on the Republican side to um I mean, you know, show some spine and to stand up for themselves. And so if that's going
Speaker A
to start to happen, I mean, that's a good thing for the Senate and it's a good thing for our democracy. I think you think there is a direct correlation between him losing his primary and two days later voting for this Iran war
Speaker A
powers resolution. People ask me all the time now that I am not running for reelection whether it's like Tina Unbound. You know, would you do the things that you're doing because you don't have to worry about an election
Speaker A
and you know, you always like to think that you would continue to do the thing that you think is right. I would say that's true, but it you're less stressed about it. Yeah.
Speaker A
And I think I bet that Bill just felt a lot less stressed, a little less weight on his shoulders.
Speaker A
You don't have to worry about what the retaliation is going to be. Well, let's get into Tina Unbound a little bit. Um you you you are not a big fan of the clarity act that's come out of the is what what do you see as the
Speaker A
biggest problems with that bill right now? Well so I see this bill is first of all let me just say you know my view of it is that people in this country should be allowed to invest in whatever the heck
Speaker A
they want to invest in. Um but if we're going to pass rules of the road to establish some basic consumer protections and to give some legitimacy through our regulations that we should make sure that we're actually really doing that. So, my concerns with the
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Clarity Act as it passed out of Senate Banking was that it failed on that in a couple of different ways. Um, the first and most obvious is that it did not include any um anything related to prohibitions on
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conflict of interest for elected officials and particularly uh the Trump family um and you know the president himself. And I mean, we know that what's happening here, I mean, they've made what is it like a billion four um by some reports um in money off
Speaker A
of crypto while at the same time they're establishing the regulatory framework for that industry. And that's just a blatant conflict of interest. And even the Democrats who voted the bill out of committee, um my colleague, uh Senator Ggo, for example, and Senator Alserbrook
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said, "Nobody should interpret this yes vote today as a yes vote on the floor until we can resolve um when we resolve these ethics issues." And I am grateful for my colleagues on both sides that have been trying to get to some
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agreement on this, but um but I mean it for sure isn't there yet. And I've got other concerns as well. I mean this bill was opposed by law enforcement. um it created um a big um opportunity for some
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of these crypto platforms to charge something that quacks like interest. I mean to provide a benefit that looks like interest um and yield um although they're calling it something different and that's a real concern for undermining the stability of community
Speaker A
banks for example. So I think there's some issues to be worked out. Is it weird for for Democrats to be on the same side as some of these banks that maybe five, six, seven years ago would have been far more pro-Republican.
Speaker A
Well, you know, it's um I'm always been a big supporter of community banks in particular. I worry a lot about the massive concentration in our financial sector, like I worry about that in other sectors of our economy. More
Speaker A
concentration um just takes a puts a lot of power in the hands of fewer and fewer institutions and and people. Um but community banks are the lifeblood of small towns and rural communities. And when you are, you know, when you're
Speaker A
passing a regulation that could easily result in flight of deposits from those community banks to um a crypto platform without any of the same consumer uh protections that you would have um in a in a bank. I think that's a that's a big
Speaker A
worry and I think it's a bipartisan worry. I brought this up in his amendment um or I attempted to um on Thursday uh and um the chair ruled it out of order which was um very unfortunate. Um, Tina Unbound would say
Speaker A
it was something more than that, but well, and also the ethics amendment didn't come up in committee because Senator Kennedy told me it had been ruled out of order as well, but he also said he's open to working with you all
Speaker A
on the floor about it. Well, so you know, they're arguing on the one hand that it is out of order, that it's really an issue for the judiciary committee. Okay, fine. But then let's hear you all say that you
Speaker A
would support an ethics provision in the bill. And, you know, I really didn't hear that. So, it makes us wonder. But you have leverage as Democrats here.
Speaker A
They need at least seven of your votes on the floor. Yes, that's right. Does this does this bill pass the Senate without the addition of that ethics provision or do you think Senate Democrats would block it?
Speaker A
I mean, you know, I can't I I I can't imagine and I hope not. Um and uh I mean, there's also this other issue which, you know, we can talk about. Um, I mean like this is it's not like America is out
Speaker A
there calling out for a market structure bill on crypto. There are so many things that we're not getting done in the Senate right now. And so, um, just in terms of our process and our procedure, how are we going to find the time to do
Speaker A
this and to move this forward? I mean, clearly it's a big priority for some folks, but um it's not the priority of most Americans, but there is a lot of money behind this um especially in politics, which has
Speaker A
been a new development, I think, over the past maybe two-ish election cycles. We're seeing these groups pour in lots of money in these races, some some for Democrats. I would say a little bit more for Republicans if you looked at the
Speaker A
numbers, especially in a race like Ohio in 2024 when the banking chairman Sherid Brown lost, right? What do you think the effect has been on these crypto money in politics?
Speaker A
Well, it's it's it's very very interesting. First of all, this is huge money and there's so much power in Washington because of the huge money that is pouring in both to Democrats and to Republicans. And I think that it is
Speaker A
intimidating to some of our some some members of Congress. I think well over a hundred million dollars in the 2024 cycle, $40 million spent against um Sherid Brown. Um and in 2026 right now the crypto um you know the the big packs
Speaker A
a fair shake and others it's like over $240 million is reported the money that is cash on hand. Yeah, it's kind of like sitting on the sidelines almost like waiting for this bill to come on the floor. I feel like to some
Speaker A
some has Yeah, some has been spent, a lot hasn't, but it's interesting. So, yes, that is a big issue and there's also a lot of data that shows that Americans do not like this. Um there was a very interesting uh research that was
Speaker A
done last October asking about um uh crypto money and politics and like 75% of independents and 54% of Republicans said they don't like this. They think that it's that they they strongly disapprove or disapprove of this money and politics. And so it is sitting out
Speaker A
there. And of course, what's interesting is when the crypto industry is um diving into campaigns, they're rarely doing it with a message about how crypto is good.
Speaker A
They're doing it with a, you know, me message about this candidate is, you know, for working people. positive Bernie Mareno ads were running in Ohio for or like like in California the member of the house who um the the the ads that
Speaker A
were funded by crypto were about in vitro supporting in vitro fertilization. So, I think that tells you something too that it's not just explicitly about crypto, right?
Speaker A
If you were not Tina Unbound, if you were running for re-election, do you think you would be facing attacks from the crypto?
Speaker A
Well, I noticed um uh that my I have an F rating from stand with crypto. So, I can imagine that I would not be um I would I would have a target on my back. But here's what's interesting is that um because of
Speaker A
this sort of ground swell of opposition to this money and the crypto money coming into politics, people don't like it. And it's actually, I think, potentially a liability in some races. I mean, I'm not naive and $40 million
Speaker A
getting poured into a big Senate race is is like a big big deal. Yeah. Uh but I mean in the Illinois primary for example um there was pretty significant spending against Juliana Stratton and she won anyway. And um in the Minnesota Senate
Speaker A
race um the candidate that has the support of crypto is is does not have the momentum in the Senate primary. So I think it's one of those things that cuts both ways.
Speaker A
Um I'll disclose I do not own crypto. Do do you own crypto? I do not. You do not.
Speaker A
Is that is that because you're just against it or because you're a lette like me and and you're have boring investments?
Speaker A
Well, I see crypto as first of all, I don't own any stocks and I don't you know don't don't own things that have any intersection with um with the job that I have here in the Senate. Um, I
Speaker A
see crypto is again like if people want to invest in crypto that's, you know, I'm not opposed to it by any means, but I see crypto as something that doesn't have any inherent value and also is highly speculative. Um, and in fact, I
Speaker A
think most Americans feel that way. It feels like it's like probably not worth the risk. There's a political poll that I think showed that. So, um, yeah, I think that is the that's sort of the big challenge when you have, you know,
Speaker A
people always say I'm like opposed to crypto and that is actually not the case. I see crypto as a tool and it can be used for good things. It can be used for bad things. We just need to make
Speaker A
sure that there are there's there are regul there guard rails around it so that people kind of know what they're buying and they understand what the risks are. And just like we have in the the securities market for example, we
Speaker A
have one of the strongest, healthiest, most respected financial um sectors in the world because we have those strong uh guard rails and um and protections in place uh to make sure that there's not self-deeing for example. Um we should
Speaker A
just apply those same things to this sector as well. It sounds to me like there's a version in a world where you could support a crypto market structure bill, but absolutely it sounds like you got some skepticism that that bill is
Speaker A
going to come out of the Senate. I mean, absolutely. I think it needs to um that's that's exactly right. I don't think there's anybody who would disagree with the premise that we need a market structure bill uh to put some
Speaker A
foundations around this burgeoning um and growing industry sector. I certainly agree with that. Uh the question is what does it look like?
Speaker A
Um if shared Brown wins his seat back, do you think he'll be the banking chairman or ranking member or where where does that stand? Because well that is just not in my job description.
Speaker A
No. Well, no. You're Tina Unbound. You can you can just shoot from the hip right here is is I mean has there been talk of that or is that kind of like something that people don't talk about because it's unresolved?
Speaker A
I mean I think I I I don't know whether it's been resolved or not. What I would tell you is that that the rules of the caucus would say that when Senator Brown comes back that his um when he wins I
Speaker A
Ohio that his seniority would go back to the you know the beginning. Yeah. Um and which so by that standard he would not be uh the banking chair but whether there have been other agreements or discussions I just have no idea.
Speaker A
Right. Because there's often exceptions to rules in Congress as you know. That's right. I remember when Walter Manddale was running to come back to the Senate after Paul Wellstone's crash, which is so horrible, many years ago.
Speaker A
And um and Fritz had an agreement that when he if he when he won when he when he won that he could um regain his seniority.
Speaker A
Yeah. But as far as I can tell, there is no such agreement. As far as I know, there's no agreement.
Speaker A
Yeah. What is the latest on the House passing a revised housing bill that came out of the Senate? Does that tick you off as someone that that supported that the Senate's housing bill or do you think there's a place to get there?
Speaker A
I mean, I think the Senate bill is incredibly strong. It passed with like 91 votes um negotiated. I mean, how many things have you seen that have been negotiated by um Tim Scott and Elizabeth Warren and the Donald Trump White House
Speaker A
and they came up with an agreement? And so, I have of course always felt that we should pass the Senate bill and I understand why the House has a different view of that. Now, there was a like the
Speaker A
latest version that came out uh late yesterday afternoon, right? And we're still trying to assess what is in that version. Um I gather that there are still provisions around um um banning private equity buying up homes, which I
Speaker A
would strongly support. Uh but I just need to look at the details and I just hope we can come together because this is a bipartisan need. This is the thing that Americans are talking about. I can't afford to find a place to live. My
Speaker A
rent is too high. Um, there are no homes in my in the little town where I live that that are even available to purchase. We have to get after that and this bill is a really important step in
Speaker A
the right direction. So, we should just um we need to get it done. Bottom line, do you think there will be a housing bill on President Trump's desk this year?
Speaker A
I hope so. I hope so. Okay. Thank you so much, Senator Smith. That's all the time. Thank you, everyone. Appreciate it.
Speaker A
Thank you. Please welcome Harsh SA of Wise and Penny Lee of the Financial Technology Association.
Speaker A
Great to see everybody. Um, first I have to start with the congratulations. You had exciting news last week. Uh, dual listed in both London now in the US.
Speaker A
Tell us a little bit about your moment in the sun yet at on Wall Street.
Speaker A
Yeah, it was fun. Um, I guess you get very few chances to do something like ringing the bell at the NASDAQ. So, that was that was great. It's a big moment for us. Um, but we've been listed and
Speaker A
been public for um about 5 years. We were listed previously in London and now we're listed in uh in the NASDAQ. Um and so it was you know the way we think about it is like it's another day in a
Speaker A
long journey to continue to build the company. And what is wise? Tell a little bit about wise and why that is important to be dualisted in both areas.
Speaker A
So I love to do this um cold. How many people know about wise? Just curious poll. Okay, 30 35%. Um so wise is a global technology company. uh we are in the payment space uh particularly in the crossber payment space and we are
Speaker A
actually now one of the biggest uh money movers for when you want to send money abroad um or want to lead a global financial life if you're managing money in different currencies like somebody like me is international I you know I've
Speaker A
lived abroad um I've lived in the UK I lived in India I live in the US so you end up managing a whole bunch of bank accounts wise can do that for you in one place um we moved last year $243 billion
Speaker A
across cross sporters um and uh we have uh as of the public numbers uh 19 million active customers globally but the reason for the move to NASDAQ also was um the US is a massive growth market for us even in the last 12 months we've
Speaker A
seen a 27% increase in just US customers sending money abroad and this is a market continues to grow um so we continue to invest a lot um and then the other place where we are seeing a lot of
Speaker A
traction is specifically smallmedium businesses so as New businesses now spin up, they tend to be international from day one. You are paying suppliers abroad. You're getting paid from different parts of the world and the wise account really helps you manage
Speaker A
that very well. And with that, you know, with this uh global flow of funds now um and doesn't matter if you're starting a company here in the United States, you're likely to get supplies overseas. You have a this
Speaker A
global economy and that goes to speak to this whole notion of payment modernization. Yes. Yesterday we saw the White House put out an executive order asking to find ways for the different agencies whether or not there's impediments and if so what is the remedy
Speaker A
of that? You've been tireless in this work as well. Tell us a little bit about what an EO from the president does and also some of the legislation that Congress is maybe contemplating like the PACE act.
Speaker A
Yeah, so first of all it was welcome news and a surprise uh but we definitely welcome it. Um I think if you look at what's happening in the US um America's innovating in a lot of places um especially AI but if you look at
Speaker A
payments I think the US has been very behind and this is true for the last 10 to 15 years across the globe there's been a modernization of payment rails where payment rails have become instant and super cheap but also the other
Speaker A
modernizing modernization that has happened is that non-banks have been able to access payment rails. So if you're a payments company, not a bank, because a bank would create um have credit products and lend like payments companies don't do that. There is a way
Speaker A
to get that access. Um in the US, it's still not true. There's no payment charter per se. So getting that access is super important for companies like us because then we can bring down the costs of continuing to serve our customers and
Speaker A
also the modernization helps to having instant payments across the world. Um if you look at the G7 countries right now um six of them have enabled access for non-banks and have instant payment rails. The US is the only country now
Speaker A
that is not does doesn't have this. So I'm very happy to see uh the executive order from the president. I think it is time and I think I'm glad to see this conversation is moving. I tell Penny, I've spent the last eight years of my
Speaker A
life trying to figure how to move this. Uh spending a lot of time here too, working with the different offices. So, it's glad I'm glad to see this is happening. Um and we also supported with the PACE act. Um the legislation is a
Speaker A
starting point and we see how that evolves. But um you know, basically it's time that there's more competition in payments. I'll give you one more thing.
Speaker A
Um so we are one of the we were the first to non-bank to get access in the UK for example which um uh got we got direct access to the payment rails there and after that so there were 18
Speaker A
providers or banks who had access around 2017 post that because the bank of England and the payment system uh operators uh called FPS they opened the access there's now 33 providers there and that has led to much lower costs for
Speaker A
the UK citizens when we got direct access we dropped prices by 20% immediately and that's the kind of um uh you know impact you can have when there's more competition access and one of the um issues that is also
Speaker A
topical here in Washington is the use of AI and curious as you know as wise looks at it from both an operational and from actually a product improvement how are you all using AI and what is the impact
Speaker A
especially to a workforce yeah so I mean I I think everybody's already seeing the impact of AI probably in your own daily lives. Um it's going to be it's a transformation technology and we're seeing the value of that uh
Speaker A
even in how we run our business. So one of the examples I'll give you is already we launched something called a wise assistant which enables people to um you know when they have a question they can come in uh on the app and interact to
Speaker A
get questions solved and almost 50% of our responses are now being handled by LLMs and what we have so you can easily throw LLMs at a problem and have responses right but most of them can be garbage what you want is the tuning such
Speaker A
that the quality of the responses are really good too. So that's why we've been careful in how we roll this out.
Speaker A
But now we are seeing the technology evolving in the training data that we've got. Um of these 50% most of the all the resolution is better than what a human would do. That is starting to change and we started see this seeing this in the
Speaker A
last 6 months. Um same thing around like when we um we are a global technology stack we like the key thing I think u previously was mentioned too the newer companies in the space we've built everything from the ground up to have a
Speaker A
global technology stack versus when you usually work with a bank like I'll give you an example if you were to move countries from here to let's say Australia for work you may be banking with the same bank but you will use a
Speaker A
different technology stack you will get different username passwords different cards issued like that's not how most of our companies work but this allows us to then because we have one stack we are able to look at all the data and use AI
Speaker A
on training um to make sure we can handle financial crime operations better and make sure we are fighting um scams and fraud much better because the data helps us make better machine learning models.
Speaker A
And speaking of the the fraud issue, you know, it it's often said faster payments means faster fraud. And would love for you to to speak to that, especially now we're in a day of AI and they're like it's just being fueled even more so by
Speaker A
this, you know, new AI tools that are being made. You strongly dispute this. would love your thoughts on faster payment equals faster fraud.
Speaker A
So I dispute it because I have data and I have lived this life for the last nine years building the technology and integrating into faster payment systems.
Speaker A
So Wise is now integrated into eight instant um faster payment systems around the world. We recently did Brazil and Japan. So we're the only company that has this wider network. Um and we don't see increase in fraud. I think the
Speaker A
question that people um like the thing that people conflate is you have the technology rails and the payment system that exists which can move money fast and cheap. Then you have to put processes and controls on top. So for
Speaker A
example biometric login on your if you use your iPhone it's much more secure than if you were doing username and password. So if you upgrade to biometric login less chance of somebody else being able to spoof you. the controls and the
Speaker A
requirements from a regulatory perspective have to be stronger on the applications versus like conflating that faster payments is equal to more fraud and faster fraud.
Speaker A
And one of the issues that we also have here is this open question as to who owns consumer data. Um, and you work on a global scale. Open banking, open finance is things that occur, you know, already almost automatic in in other
Speaker A
parts of the the of the world. what is limiting United States here on that notion of an open banking or open finance.
Speaker A
So again I can give you the perspective like what because we integrated across um so many countries right so we serve wise serves 80 uh 70 countries we have 80 global licenses and in a lot of places open bank is is like table stakes
Speaker A
now especially in Europe and initially it was a slow start but we have seen the portability of data leading to consumers having better choices and ease of being able to switch products right so I think regulation in this case we have to be
Speaker A
clear that me as a consumer owns my data. It's not the institution, right? My spending habits, my information on how I use my cards, how my uh how much gross I spend on groceries, all of that information is mine, not the
Speaker A
institutions. So, I should be able to port it and I should be able to make the choice when I want to split uh where I, you know, put my money or move providers easily. I think we're conflating this
Speaker A
again to say the ownership of the data is in the institutions. Actually, if you think about it, the way the industry should be thinking about it is build amazing products which lets you the consumer pick the best product, right?
Speaker A
Versus trying to build a mode around data. Um, which seems backwards to me. Yeah, we we do seem to be fighting uh, you know, fights from many decades ago where you're on a global scale moving forward, you know, involving all kinds
Speaker A
of technology and it feels like the rest of the world is so far ahead of us.
Speaker A
Yeah. um curious what you see in Azure outlook as to what really does excite you about this future.
Speaker A
Look, I'm actually um very happy to see some of the stuff that's happening now in the US. Finally, as I said, our last 8 years feels like it's been a grind.
Speaker A
So, there is I'm very happy to see that there is a appetite for innovation and the pace at which things are finally changing from a regulatory environment perspective. We won't get everything right in the first go, but if we don't
Speaker A
try and iterate, then we'll just be at standstill, right? Um, so I'm happy to see instant payments finally launching in the US. RTP and Fed now, their limits are still very low, like $5,000 to do instant payment like seems very low. Um,
Speaker A
but generally I'm seeing the direction of travel. I'm super excited about the PACE Act, also the EO yesterday. Um, it just seems like there's an environment where regulators and industry are finally talking and um, hopefully we'll have a much more modern payment system
Speaker A
for both domestic and crossber payments. Great. Thank you, Harsh. Thanks a lot. Please welcome controller of the currency Jonathan Gould and Semaphor's Elellanena Mueller.
Speaker A
All right, I am back. Comproller, thank you so much for taking the time to join us this morning.
Speaker A
Thank you very much for having me. Such a pleasure. So, as the controller of the currency, you oversee all of the national banks in the US as well as obviously the US presences of foreign banks. from that perch. How are you
Speaker A
thinking about yesterday's executive order that seeks to expand access to the Fed's payment systems for fintech firms?
Speaker A
Well, so I actually had the pleasure of being in the Oval Office yesterday when the president signed the uh the fintech.
Speaker A
So, it was very exciting. Was a bit surreal. It's first time I've ever had that experience uh in in my in my current job. I'm having a lot of first- time experiences, but no, so we're obviously very excited about it. the OC
Speaker A
um you know that that EO addresses a number of issues and including the payment system. Uh you know from my perspective I've been really um reassured and excited to see what I think is a fresh perspective at the
Speaker A
Federal Reserve around uh payment systems. Um and you've seen that I think uh personified by governors like Governor Waller, Vice Chair for Super Mickey Bowman. Of course, now we have a a new new chair coming in, I think,
Speaker A
imminently. He obviously too is a change agent. So, I think this is a kind of a long overdue reassessment and um I think it's terrific that under President Trump's leadership, you know, is giving us the the push to to to move in that
Speaker A
direction. Again, we at the OC, you know, view um the banking system as a bit of a walled garden, but of course, you don't want the walls to be too high or too impermeable to entrance, right?
Speaker A
Because you run the risk of that walled garden over time decaying and becoming decrepit and not serving the US economy, the markets, the customers who depend upon it. So, we need kind of fresh entrance. We need that kind of constant
Speaker A
refreshing of the system to ensure that long-term it stays relevant and serves its function which is again supporting the financial services needs of US customers and and local economies across this country.
Speaker A
So we had French Hill on this stage earlier this morning. He said he actually wanted to have hearings basically on the next steps on some of the same issues that the executive order would target. Said he wanted to bring
Speaker A
you in. Um and he you know said specifically quote you can't just snap your fingers when it comes to expanding access to payment rails. I mean, what is your response to kind of that note of caution?
Speaker A
Well, I I mean, I think that's true, but uh I mean, I would I would I would add that um under the Genius Act, course, we have now payment stable coins, which are I think a huge innovation um and could
Speaker A
have a real impact and a positive way uh on on the US payment system. and you know so so I I I see there as kind of a lot of different opportunities and increased options for again for consumers and the companies that depend
Speaker A
upon the payment systems. Uh so I I I I recognize the note of caution, but you know, from my perspective as a regulator, my job is to focus on mitigating downside risks associated with new innovations, whether it be
Speaker A
payment stable coins or or you know, increased access potentially um to the to the uh the the the Federal Reserve maintained payment trails um while preserving maximum opportunity uh both for consumers, for uh financial institutions that choose to participate
Speaker A
in these new payment systems. So that was not the only executive order that Trump signed last night presumably also while you were there. He signed an executive order targeting undocumented immigrants in the US financial system.
Speaker A
How are you thinking about that executive order and how you know did regulators arrive at the final form that we saw come out last night?
Speaker A
Well, so so banks um as you know have an obligation to know their customer. Um they need to know the identities of their customer. Um, I think the the president's executive order is a common sense set of reforms that give us the
Speaker A
tools that we need and preserve bank flexibility around how they establish the identities that is how they know their customers. Um, so it seems to me kind of a reasonable um tradeoff and you know we we as regulators have
Speaker A
expectations that that banks are not um helping facilitate whether it be financial fraud or money laundering or terrorist finance and things like that.
Speaker A
So again that know your customer obligation is a very important one. Um as as you may know the the agencies on a joint basis together with the financial crimes enforcement network um recently put out a proposal um revising the BSAML
Speaker A
program rule. And so that that uh EO actually syncs up with some of the changes that we're making that BSAML program rule including the ability of Fininsson to essentially help um uh focus uh banks BSML programs and specific issues. Meaning that going
Speaker A
forward under that uh proposed program rule uh Fininsson main treasury will be able to highlight certain areas of potential risk uh and direct the banks specifically to take a look at those things.
Speaker A
Um, so that obviously is not the only thing on your radar. The OC is also in the midst of helping implement stable coin legislation known as the Genius Act, which you are getting questions about in the green room. Can you
Speaker A
walk us through what a final rule might look like from your perspective? Well, I mean, I can't I can't I can't do that. Um, uh, but what what we have so far is we've gotten a bunch of great
Speaker A
comments from hopefully many of the people in this room and many more outside it. I mean, that was the critical first step, right? We put something out there in a proposal which I thought was intellectually defensible where we, you know, tried to do our best
Speaker A
to honor the statutory language, uh, including areas that, you know, folks have, um, raised concerns about on one side or another. We tried to put out something that we thought was defensible and that was thoughtful, but it is just
Speaker A
a proposal. And so, uh, one of the things that I've tried to do is really encourage people to give comments, and that seems to have been successful. uh or otherwise people just felt passionately about the issue which is
Speaker A
great and so we got a ton of comments on that. So we're in the process now basically of going through all the comments that we received on our NPR and then we will make changes based on the comments that we got. Um you know we are
Speaker A
mindful of the statutory uh time frames that Congress has assigned us. So, we are trying to move as expeditiously as possible while nevertheless doing a good job making sure we're addressing all the substitive comments that we did receive.
Speaker A
Um, and you know, this is this is something that's a very exciting development for the OC. We're we're grateful that Congress entrusted us with these new authorities and we want to do a good job of it. We're mindful of the
Speaker A
fact that we're setting at least an initial kind of regulatory framework um that may need to be tweaked going forward as the payment stable coin kind of market develops over time. Um and simultaneously we've also been spending a lot of time working on the supervisory
Speaker A
framework. So whatever the regatory framework looks like, how do we then supervise for it? Um, and we're trying to take advantage again of some of the um some of the opportunities that a a um an activity like payment stable coins in
Speaker A
and based on kind of the the enabling technology. We're trying to use that enabling technology like real-time blockchain analytics to actually help us do our jobs better on the supervisory side. Um, so there's a pretty large group of folks across the OC dedicated
Speaker A
and focused on that. I think again people are very excited about the opportunity to to do this and it goes back to kind of the first question on the on kind of modernizing our payment system in America which has frankly not
Speaker A
been the envy of the world. Do we have a timeline for when we might get a final report?
Speaker A
Um no I would just refer you to the statutory deadlines. Okay. Uh so as part of that work obviously we've seen um an a high number of charters for non-banks um which is something that progressives banks have been raising red
Speaker A
flags about are there any I mean how are you thinking about those criticisms and you know pushing back on them?
Speaker A
Yeah. So I mean so I mean I'll just I'll give you some statistics which I think should alarm everybody in this room. I mean before 2008 the OC alone so the OC is not the sole chartering authority.
Speaker A
You could go to the OC. You can go to one of 50 states to get a bank charter.
Speaker A
But the OC, just the OC was getting around 100 applications or more per year in the two decades leading up to the 2008 financial crisis. After 2008, we were averaging between zero and two applications per year. That the the
Speaker A
actual average over the last 18 years, I think, is four. That's only because um back in 2020 when I was last at the OC uh we did 15 applications that year.
Speaker A
That's a disgrace. Okay, that's a disgrace. And that was also that those extremely low numbers of applicants were were because we and other federal banking agencies including the FDI on deposit insurance applications was sending a very clear message that
Speaker A
applicants need not apply because you're not going to get a charter. Period. The statute hasn't changed. Our licensing manual, which states our procedures, including our time frames of how we process applications, that hasn't changed. It says 120 days. We just
Speaker A
stopped doing it. So, what we are doing at the OC is actually restoring regular working order and doing our jobs on the time frames that we've established and consistent with the statutory factors that Congress has given us. We don't
Speaker A
have a zero risk tolerance anymore. That's not what the statute says. The statute talks about a reasonable chance of success. That's how we evaluate applications. That's how we will continue to evaluate applications as long as I'm the controller. Um I'm
Speaker A
hardened to see changes to at the FDIC under, you know, Chairman Hill's leadership to reform and make, I think, more thoughtful the FDI deposit insurance application process. One of the reasons you're still you're seeing so many kind of national trust bank
Speaker A
charter applications is number one just pent-up demand after 18 years. Okay. But also the fact that you know the FDIC deposit insurance application process has been so laborious and so slow, right? Meaning the chartering authority will make a decision and then the
Speaker A
applicant is still waiting and waiting and waiting to see whether or not the FDA is going to grant deposit insurance application. That's a higher risk proposition, right? you as an applicant are spending a ton of money building up
Speaker A
all this stuff. The way the the OC process works is you get an answer, you get a preliminary conditional approval or not earlier in the process. So you've expended fewer resources and you have a a sense of hey is this going to go or
Speaker A
not. Whereas, you know, there are changes underway, I think, at the FDA, again, under Chairman Hill's um leadership to make the FDIC process a little bit more thoughtful, a little bit more faster, and so that applicants or would be applicants will have a better
Speaker A
sense of how much they'll have to invest to get an indication of, hey, is this going to be a go or a no-go?
Speaker A
Are you preparing at all for any of the banking groups to pursue litigation over these non-bank charters?
Speaker A
Look, I mean, obviously, I can't predict what what certain groups are going to do or not do. they they have to do what they think is in the best interest of their members. I'm confident that we have an excellent litigation team at the
Speaker A
at the OC and I'm confident that, you know, we have um full legal authority to do the things that we're doing. Um and so, you know, I again, we'll we'll I used to be the chief counsel at the OC.
Speaker A
Um we sometimes got sued. It disciplines us. There's nothing wrong with being on the receiving side of a lawsuit. It makes sure that our pencils are a little bit sharpened and we do our job a little bit better. U but again, you know,
Speaker A
whether or not somebody sues us or not, there's nothing I can do about that.
Speaker A
People need to make their own decisions. I I I I definitely can't advise uh folks on whether to sue us or not.
Speaker A
So last month, the OC said a federal law preempts uh state legislation in Illinois targeted at swipes.
Speaker A
Can we expect similar arguments of federal preeemption in some of these 11 other states that are also pursuing similar swipe fee legislation?
Speaker A
So, so I can't speak to Illinois. I'm recused on that issue. Um, I can speak generally to preeemption. Yeah. Uh so so so one thing I I I'm often struck by is when I think back to the to the creation
Speaker A
of the OC in 1863 and President Lincoln and Secretary Chase are, you know, trying to hold the nation together, ensure our political union um on battlefields. And of course, one of the reasons the OC was created was to uh
Speaker A
bolster um the the funding of that war effort. Uh but at the same time, you know, those those individuals also had the foresight to recognize that it's not enough to fight um on the kind of battlefields to shore up the political
Speaker A
union. You need to forge an economic union. And the way you forge an economic union is by creating and facilitating the rise of nationwide markets, whether in mortgages or other forms of credit.
Speaker A
That is one of the reasons why the OC was created is to facilitate the economic union that President Lincoln foresaw would be necessary to stitch and maintain the integrity of our nation after they had won on the battlefields.
Speaker A
So yes, um that is a reason for the existence of the OC and we will continue to defend preeemption in legal courtrooms as appropriate. But we also will recognize that preeemption, federal preeemption is not the sole prerogative or requisite of national banks. State
Speaker A
banks also per Congress in 1997 have uh preeemption powers as well. We will defend those as well. you've seen the OC live up to its word and also swoop in in for example in the 10th circuit in Colorado and defend state banks rights
Speaker A
to preeemption as well. The other thing I would note is that preeemption is not a big bank versus small bank thing. Um the reality is that given modern technologies even community banks benefit from preeemption because they are not solely limited by arbitrary
Speaker A
geographies. They can define communities however they want them to define them and they can offer their products and services remotely through the internet and so they too operate across state lines. So the entire rise of nationwide markets whether you know taken advantage
Speaker A
of by large banks or small banks, national banks or state banks is facilitated through um our agency and it will continue to play its institutional role. And you know, for those who care about preeemption in this room, I would
Speaker A
encourage you all to shore up the political support and the political consensus that has existed for decades that is responsible and necessary for legal preeemption to prevail in courts.
Speaker A
Meaning that ultimately the parameters of preeemption are all downstream from the political consensus that's necessary to maintain it. So for those of you who care about preeemption, you know, please please educate your members of Congress, your senators on why it matters. We will
Speaker A
continue to play our role, but we need you or at least those of you who care about preeemption to do so as well.
Speaker A
Are there areas beyond swipe feeds that you feel would be helpful for the OC to establish that federal preeemption, like maybe lending, privacy?
Speaker A
I mean, so so we we we depend upon the institutions we supervise to be our eyes and ears. We can't even though I think we have a superb legal team, we really can't monitor um all the states for
Speaker A
everything that's going on at the state legislative level or or even more kind of more local level. So we we kind of depend upon people to tell us, hey, have you have you been following this? We think this is an issue. This is why this
Speaker A
is an issue. What what are you going to do about it? So that's that's kind of how we we do this. We we really depend upon um our institutions and the banking bar to to help us be eyes and ears as to
Speaker A
what's going on. All right. Well, I know you got a train to catch. Thank you again for making time this morning all of you for tuning in and we'll see you next to Thank you for attending today's event
Speaker A
and a special thanks to our partner the Financial Technology Association.
Topics:fintechClarity Actfinancial legislationdigital paymentsAI in financebanking modernizationSemaforFinancial Technology Associationdistributed ledgerfinancial ecosystem
