Latest news with #Dodd-FrankWallStreetReformandConsumerProtectionAct
Yahoo
16-07-2025
- Business
- Yahoo
Fintechs blast JPMorgan over data fees
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Financial technology companies assailed a move by JPMorgan Chase to begin assessing fees for access to customer financial data. The move likely foreshadows stricter control over consumer data by large banks if a federal court rejects a Consumer Financial Protection Bureau rule that was aimed at opening up access to data. JPMorgan, the largest U.S. bank, has been sending notices the past two weeks to data aggregators notifying them of new fees for data access. A new breed of fintechs are eager to use that data to compete with banks to provide financial services. The fees, which would be imposed as soon as September, come as banks and fintechs litigate in federal court over the future of the CFPB open banking rule. U.S. banks have sued to block the rule issued during the Biden administration before it takes effect next year. 'It's hard to look at this decision by Chase as anything other than a cynical attempt to take advantage of regulatory uncertainty and an about-face by the CFPB,' Steve Boms, executive director of the Financial Data and Technology Association North America, said Monday in an interview. 'I think they're banking on the court throwing the rule out.' Under the Trump administration, the CFPB has adopted the banks' position that the rule is unlawful and should be vacated by a federal judge overseeing bank groups' lawsuit in Kentucky. Nonetheless, fintechs disagree. Americans deserve the 'freedom' to control their financial data, the chief executive of the Financial Technology Association, Penny Lee, said Monday in an emailed comment. 'Charging for financial data access undermines that freedom and threatens to jeopardize millions of Americans' access to the financial services of their choice,' Lee said. 'This action is designed to crush competition, hold back American innovation, and lock consumers into bank-only products.' The Bank Policy Institute, which counts JPMorgan as a member, sued the bureau last year, arguing that the CFPB had exceeded its statutory authority in crafting the open banking rule, which stems from Section 1033 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. U.S. District Judge Danny Reeves in Lexington, Kentucky, ruled in May that the FTA can intervene to defend the rule. The banks also argue that the rule does not adequately specify liability protections for data fraud when they share information with third parties, nor does it allow, they contend, for appropriate compensation to banks for data security and other investments they've made. The open banking rule specifically precludes banks from charging for access to customer data. 'We've invested significant resources creating a valuable and secure system that protects customer data,' a Chase spokesperson, Emma Eatman, said Monday in an email. 'We've had productive conversations and are working with the entire ecosystem to ensure we're all making the necessary investments in the infrastructure that keeps our customers safe.' Bloomberg News first reported JPMorgan's planned fee schedule on Friday. The access fees are tiered and tied to the amount of JPMorgan data a fintech connects to, Bloomberg reported, citing a person familiar with the fee structure. User access for JPMorgan Chase data for payments is more expensive than non-payments, according to the report. The American Fintech Council called JPMorgan's fees 'a shameless attempt to further entrench the position of incumbents.' 'At a time when consumers are demanding more flexibility, transparency, and control over their financial lives, placing a tollbooth on data access will harm the very families a safe financial system is meant to serve,' AFC Chief Executive Phil Goldfeder said Sunday in a statement. No other banks have followed JPMorgan's lead on such fees, so far, according to Goldfeder and the FTA. A BPI spokesperson said Monday that 'we don't talk with our members about those decisions.' San Francisco-based Plaid, which says it connects about 8,000 financial apps with approximately 12,000 financial institutions in the U.S., Canada and Europe, would be among the large fintechs affected by fees. A Plaid spokesperson referred queries to the FTA and FDATA-North America. Other large fintechs that access financial data include Venmo, the payment app owned by PayPal Holdings; Block, the parent of CashApp, Square and Afterpay; Lehi, Utah-based data aggregator MX Technologies; and Dave, a Los Angeles fintech company which focuses on financial services tools. JPMorgan's imposition of fees is 'defensive' and 'a testament to the growing value and importance of fintechs in the broader payments ecosystem and the threat they pose to traditional banks,' Mizuho Securities analyst Dan Dolev wrote Friday in a client note. The CFPB enacted the open banking rule in October 2024, with the first implementations, at the largest banks, with provisions for it to take effect in July 2026. JPMorgan has incurred costs to set up technical connections and other infrastructure for open banking and should be remunerated, CEO Jamie Dimon said Tuesday on a quarterly earnings call with analysts. 'It costs a lot of money to set up the APIs and stuff like that to run the system,' he said. 'We just think it should be done and done right. And that's the main part.' Dimon also alluded to the open banking conflict in his April letter to shareholders, saying that third parties 'want full access to banks' customer data so they can exploit it for their own purposes and profits' and that banks should be paid for such information. Dimon wrote that JPMorgan has 'no problem with data sharing but only if it is done properly.' Part of that proper sharing involves companies seeking consumer data to 'pay for accessing the banking system and payment rails,' Dimon wrote. Boms said the proposed fees — which he called 'prohibitive' — reflect 'a philosophical worldview at the very top of the bank that says, 'These are our customers, and we're not going to allow them to use services that compete directly with us.'' Caitlin Mullen contributed to this article. Clarification: This article has been updated to clarify the BPI's statement on its members' business decisions. Recommended Reading Open banking to survive Trump, fintechs say
Yahoo
10-07-2025
- Business
- Yahoo
Court denies open banking briefs
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. A federal judge has denied motions from five organizations that had sought to file amicus briefs in the legal battle between banks and financial technology companies over the Consumer Financial Protection Bureau's open banking rule. The Financial Data and Technology Association of North America, along with four other groups, asked District Judge Danny Reeves for permission Monday to file its brief supporting the Financial Technology Association's June 29 motion for summary judgment backing the rule. Three nonprofits — Consumer Reports, the Financial Health Network and SaverLife — had also requested permission to file briefs supporting the FTA's position. Reeves, who sits in Lexington, Kentucky, said Tuesday that additional information from FDATA isn't necessary and wouldn't help him 'in resolving doubtful legal issues in the case.' Reeves also denied a brief from Public Citizen, a public advocacy organization, saying that the FTA had covered its same arguments. The rule stems from Section 1033 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, and was enacted after years of deliberations. The Bank Policy Institute, which represents most of the big U.S. banks, and the Kentucky Bankers Association brought the lawsuit against the CFPB last October, along with Kentucky-based Forcht Bank, immediately after the rule was finalized the same month. In May, Reeves allowed the FTA, which represents fintech players such as Block, Intuit and Stripe, to intervene in the case to defend its members' interests. The bureau, which shifted its position on the rule after the installation of new leaders by the Trump administration, filed a brief urging Reeves to void the rule. In their joint filing last week, Consumer Reports, FHN and SaverLife said they 'approach the issues in this case through a somewhat different lens than any of the parties' because all three 'seek to advance financial inclusion and consumers' financial well-being.' FDATA represents about 30 fintechs such as the processor Fiserv and software firm Plaid, according to its website. The association's brief, which it posted online, argues that the CFPB's final rule from October 2024, under the prior Biden administration, hewed closely to the language Congress adopted in the 2010 law. 'We stand firm in our view that when Congress enacted Section 1033, it clearly intended for consumers to have the right to securely share their financial data with third parties of their choice — and that perspective remains central to deploying open banking in the United States,' FDATA Executive Director Steve Boms said Tuesday by email, replying to a request for comment on the judge's decision. Like the FTA's argument, FDATA said that lawmakers were clear in their language in Section 1033 about letting consumers empower their own authorized representatives to gain access to financial information. Open banking supporters say Congress sought to inject competition into the financial services industry via the law, allowing fintech startups to compete with banks and credit unions. 'The pinched view of Section 1033 pressed by the Plaintiffs and the CFPB cannot be reconciled with the statute or any sound view of statutory purpose,' FDATA said in its brief. 'Why would Congress have enacted a mandate, with the CFPB empowered to issue rules, that achieved nothing beyond the sort of individual-consumer access to account information that was already universally available at the time of enactment?' The Trump administration has dramatically reduced the CFPB's mission and staffing under Acting Director Russell Vought, who is also the director of the Office of Management and Budget. In its proposed brief, Public Citizen said the bureau's effort to win summary judgment against itself 'appears to be a procedural innovation unprecedented in the annals of federal law.' 'Amicus has been unable to find any other instance of such a motion, and the agency's litigation posture raises serious concerns about its compliance with the fundamental requirements of the Administrative Procedure Act,' the nonprofit organization said in its brief, which was filed Monday in the court docket. The agency is 'attempting to repeal the rule without undertaking the steps required by the APA,' according to Public Citizen, 'and to insulate its decision to do so from subsequent judicial review.' That legal effort represents 'procedural gamesmanship' and should be sufficient reason for Reeves to deny the bureau's motion for summary judgment, according to the brief. Recommended Reading Open banking to survive Trump, fintechs say
Yahoo
01-07-2025
- Business
- Yahoo
Fintechs ask court to uphold open banking
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Banking groups suing to block an open banking rule are trying to restrict competition, the Financial Technology Association said Sunday in a motion that asks a federal judge to grant summary judgment supporting the 2024 rule. Meanwhile, the Consumer Financial Protection Bureau is merely using that lawsuit, in which it agrees with the bank industry plaintiffs, 'to overturn the prior Administration's actions,' the association contended. The banking groups' 'true concern is that allowing consumers to unlock and leverage their banking data opens opportunities for other financial-services providers to compete with banks,' the FTA said in its motion, which also requests that U.S. District Judge Danny Reeves rule against the plaintiffs' motion for summary judgment and in favor of the FTA's position. The CFPB is 'improperly short-circuiting notice-and-comment requirements' by asking the court to find the open banking rule unlawful, according to the FTA's brief. The bureau's 'newfound objections to the rule are pure policy arguments that are its own responsibility to rectify, to the extent lawful, as part of the ordinary rulemaking process,' the FTA said in its motion. The Bank Policy Institute, which represents most of the big U.S. banks, and the Kentucky Bankers Association brought the lawsuit against the CFPB last October, along with Kentucky-based Forcht Bank, immediately after the rule was finalized the same month. The rule stems from Section 1033 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, and was enacted after years of deliberations. The open banking rule gives consumers a right to share their detailed financial data with third parties under the notion that a consumer's ability to easily swap accounts among banks, credit unions or fintechs will allow increased consumer choice and spur greater competition for financial services. 'This rule is grounded in longstanding legal authority and reflects a bipartisan commitment to modernizing how Americans manage their financial lives,' Penny Lee, the FTA's chief executive, said in a Sunday press release. 'We urge the Court to uphold the rule and reaffirm Americans' rights to securely share their financial data.' In a May 14 ruling, Reeves allowed the FTA, which represents fintech players such as Block, Intuit and Stripe, to intervene in the case to defend its members' interests. The bureau filed a brief soon after urging Reeves to void the rule, which 'unlawfully seeks to regulate open banking by mandating the sharing of data with 'authorized third parties,'' the CFPB asserted. The Trump administration has dramatically reduced the CFPB's mission and staffing under Acting Director Russell Vought. However, the bureau has not moved to rescind the rule, so far, as it manages the litigation targeting the rule. The agency also agreed with the plaintiffs that the rule unlawfully prohibits financial institutions from imposing fees for sharing the data and wrongly sets compliance deadlines without a consensus on how standards will be developed, the CFPB said in its May 29 court filing. The FTA took issue with those assertions too. 'The CFPB correctly concluded that without a ban on access fees, banks could well leverage the power to impose such fees to obstruct the open-banking scheme,' the fintechs said in their Sunday motion. The association's argument rests partially on the Supreme Court's landmark 2024 Loper Bright ruling, which found that U.S. district courts owe no deference to executive branch agency's statute interpretations. 'The CFPB's newly expressed statutory-interpretation arguments are entitled to no deference … because the CFPB's position does not 'reflect careful consideration'; has never been expressed by the CFPB before now; is inconsistent with the agency's prior views; is an 'about-face'; and has never been articulated in rulemaking or enforcement,' the FTA wrote in its filing. The CFPB did not immediately respond Monday to an email seeking comment. Fintechs' efforts to connect with consumers and offer free access to banking information 'have struggled in light of banks' obvious incentives to restrict competition,' the FTA wrote. 'Vacating the Rule — and adopting the atextual constraints on the CFPB's authority Plaintiffs endorse — would place consumers' right to control their financial data at risk, while ceding market control to incumbent banks.' The CFPB position represents a departure on the open banking rule under the second Trump administration. The bureau first began work in earnest on the rule during Trump's first term, which continued during the Biden administration. The banks' compliance deadlines under the open banking rule are layered from 2026 through 2030, with the largest banks required to begin operating within the open banking parameters next year, absent a court injunction halting the rule, or the CFPB vacating or reworking it. The plaintiffs and CFPB have 30 days to file replies, with the FTA allowed to file a response in late August before Reeves issues his decision, according to the FTA. Correction: This story has been updated to correct the name of the Consumer Financial Protection Bureau in the subtitle. Recommended Reading Open banking to survive Trump, fintechs say Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-06-2025
- Business
- Yahoo
Open banking to survive Trump, fintechs say
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. An open banking trend allowing banks and payments players to more easily share consumer data is likely to advance, regardless of vacillating U.S. regulatory policy, industry lawyers and executives say. The Consumer Financial Protection Bureau had decided to let open banking regulations take effect next year, but those 2026 compliance dates were thrown into question last year when bank groups sued the government to block the CFPB's open banking rule. Then, President Donald Trump's return to the White House ushered in an era of dramatic deregulation in the executive branch. Earlier this month, the CFPB asked a federal judge to rule for the bank plaintiffs against what the agency's new leaders consider an 'unlawful' rule. Despite the multi-pronged effort to kill the bureau rule, there are reasons to believe that the spirit of open banking – if not the actual letter of a law, prescribed by regulators – is likely to carry on, regulatory lawyers and fintech consultants say. 'There are a lot of unknowns, and they will unfold before us, but the bottom line is that this has long been planned as kind of the next step in banking technology,' Stewart Watterson, a strategic adviser with consulting firm Datos Insights, said during a Datos April webinar titled 'Regulatory Chaos and the Future of Open Banking.' 'It's going to move forward with or without mandates, because those things are obviously in question,' said Watterson, a former executive with PNC Bank and JPMorgan Chase. 'It will be messy and it'll be fraught with risk and different types of risks.' The open banking rule gives consumers a right to share their detailed financial data with third parties under the notion that a consumer's ability to easily swap accounts among banks, credit unions or fintechs will spur greater competition for financial services. Former CFPB Director Rohit Chopra described the rule as a way to lower consumers' costs. In their lawsuit, the bank groups say the rule exceeds the bureau's statutory authority, and that it does not allow them to recoup their costs or to properly specify liability for fraud or other misconduct amid the data sharing. The rule stems from Section 1033 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, and was enacted in October after five years of deliberations. The initial rule was issued during the Biden administration under Chopra, but the Trump administration is dramatically reducing the CFPB's mission and staffing under Acting Director Russell Vought. The bureau has not moved to rescind the rule, so far, as it manages the litigation targeting the rule. Large banks, Watterson added, 'have been investing and working on this for anywhere between five and 10 years' and understand the commercial potential of consumer data sharing in the new marketplace. 'The CFPB deciding to withdraw the rule – the personal financial data rights rule – is not going to stop open banking in the United States,' said industry consultant Peter Tapling. 'The largest financial institutions have been going down that path for years, and that will continue.' The open banking rule codifies a consumer right of financial data sharing into law, said Penny Lee, president and chief executive of the Financial Technology Association, a fintech lobbying group. Without the CFPB's regulatory framework, fintechs fear that 'banks would engage in some anti-competitive behavior, meaning throttling back the information' they provide or 'slowing down the connectivity, or only allowing consumers to be able to permission through one of their apps, or one of their controlled capabilities,' Lee said in a recent interview. Banks' compliance deadlines under the rule are layered from mid-2026 through 2030, with the largest banks required to begin operating within the open banking parameters next year. Financial institutions with less than $850 million in assets are exempt from the rule. A senior JPMorgan Chase executive told Payments Dive last month that the world's largest bank will continue to invest in open banking, despite the uncertainty around the rule. 'Whether it is in terms of the digital experience on JPMorgan or, for that matter, in other parts of the JPMC franchise overall, open banking as a concept is something that we have an investment in, and will continue to invest in,' Chief Technology Officer Sri Shivananda said. Nonetheless, the lack of a common standard for open banking is likely to hinder smaller, community financial institutions, and increase the competitive gulf between large and small players, said Tapling, who is based in Chicago. A federal judge in Kentucky overseeing the bank groups' lawsuit against the CFPB ruled May 14 that the FTA could intervene to defend the lawsuit. That decision adds a motivated, well-resourced party to the litigation at a time when the CFPB is dismantling much of its regulatory infrastructure and back-peddling on cases it brought previously. Despite the legal and regulatory battles, open banking and 'customer-authorized data sharing' has been growing steadily for the past decade, said Adam Maarec, an attorney with McGlinchey Stafford LLP, who advises banks and fintechs, and was a legal executive at several large banks. 'With open banking reaching critical mass, banks and fintechs need to figure out their business and risk management strategies now, no matter what happens with the final rules as they exist today,' Maarec said in an April interview. The bureau has virtually no discretion to avoid an open banking regulatory framework, given the clear language Congress wrote into the law, attorneys said in recent interviews. A full revocation of the rule, without an alternative, 'seems incredibly unlikely' because of Dodd-Frank, said Lauren Quigley, a senior counsel with Dykema in Chicago, who works with banks, fintechs and other financial institutions. 'There arguably has to be something and secondly, prior to the current morass that is around open banking, there was broad bipartisan support, both during the first Trump administration, throughout the Biden administration and even now,' Quigley said in an interview this month. Said Maarec: 'I doubt the 1033 rules will go away entirely.' The timing of work on any new rule, however, could be prolonged, given the five years the bureau took to formulate the open banking measure and the 90% CFPB staff reduction Vought has pursued. Despite an interest in open banking, 'the status quo is favorable to banks in a lot of ways,' Maarec said. 'Different banks view this in different ways, depending on their position in the market across various products,' he said. 'Some banks have a lot to lose and some have a lot to gain. It depends on their product mix and tech strategy.' Quigley said banks fall into three general categories in terms of their approach to open banking: those that have identified 'beneficial use cases' and are forging ahead, regardless of the rule's status. those that are largely ambivalent and don't see a 'use case' for it, she said, and are pursuing technology investments and partnerships only because of the requirement. smaller financial institutions that have a longer compliance deadline, years away, that 'are just biding their time at this point,' she said. 'A larger bank just simply has more resources to throw at a complicated implementation structure, whereas community based financial institutions need to rely more on vendors,' said Brandy Bruyere, a partner with the law firm Honigman, who advises financial institutions. One of the rule's main effects is an effort to end the practice known as 'screen scraping,' in which a consumer shares account information with a new financial services provider to log in, letting it gather data on behalf of the customer. That practice is rife with inefficiencies, errors and fraud, according to industry experts, with banks and others making gradual progress in recent years to build more secure data-sharing interfaces, known as application programming interfaces, or APIs. Many banks have created APIs 'that share data within their own comfort levels,' Maarec said. 'I think the banking industry would prefer the status quo where they can still sort of exercise their own large degree of control.' The campaign to end screen scraping would be hindered or stalled if the CFPB walks away from an open banking rule, panelists said May 19 at a media briefing convened by the Financial Data & Technology Association. Regardless of the CFPB or litigation, consumer trends, technology and market competition will likely determine open banking's long-term fate in the U.S. 'I don't think we've ever seen an advancement in financial technology, products or services that has ultimately been rolled back,' Quigley said. The industry is 'knocking on the door, we're there, and I don't know that we come back from the precipice, regardless of if the rule goes away.' Lynne Marek contributed to this article. Recommended Reading FTA CEO says open banking central to fintechs' work
Yahoo
03-06-2025
- Business
- Yahoo
CFPB seeks to end open banking case
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. The Consumer Financial Protection Bureau followed through Friday on a plan to let its open banking rule die. The federal agency filed a motion for summary judgment in U.S. District Court for Eastern Kentucky in a case brought by bank groups last year challenging the rule. In its Friday filing, the CFPB conceded the rule was unlawful. The rule 'unlawfully seeks to regulate open banking by mandating the sharing of data with 'authorized third parties,'' the CFPB's 27-page filing asserted. The rule also unlawfully prohibits financial institutions providing the data from instituting fees for sharing the data and unlawfully sets deadlines for compliance without a consensus on how standards will be developed, the filing said. The CFPB's position is an about-face by the Trump administration on the open banking rule crafted by the agency's former director, Rohit Chopra, during the Biden administration. The agency had put the rule in place last October to give consumers more control over sharing their financial data, such as bank account information, with other financial service providers. The move toward open banking was an attempt to let consumers opt to send their financial data to other financial institutions or any one of a number of young fintechs offering new digital financial services. Open banking has already gained traction in Europe and advocates have pushed for it in the U.S. for years, leaning on Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Bank Policy Institute, which represents most of the big U.S. banks, and the Kentucky Bankers Association brought the lawsuit against the CFPB last October, along with Kentucky-based Forcht Bank, immediately after the rule was finalized the same month. A week before the agency's latest filing last month, the bureau's chief legal officer, Mark Paoletta, signaled the CFPB's plans in a court filing. 'After reviewing the Rule and considering the issues that this case presents, Bureau leadership has determined that the Rule is unlawful and should be set aside,' the agency wrote in a May 23 filing. The federal agency's filing echoed arguments made by plaintiffs in a longer, 50-page filing Friday also seeking summary judgment and outlining arguments against the rule. That court filing argued that the agency exceeded its authority in establishing the rule; that the framework for the mandated data-sharing was 'arbitrary and capricious'; and that the rule was unlawful for a number of reasons, including that banks wouldn't be allowed to charge fees for application programming interfaces they would provide to facilitate the data-sharing. The Financial Technology Association, which supports the rule, was last month granted leeway by U.S. District Judge Danny C. Reeves to intervene in the case and defend the CFPB open banking rule. The trade group, which represents companies that would benefit from the third-party data-sharing, said in a statement Friday that it will continue to fight to protect the rule. 'Americans must have a right to securely control and share their financial data to access the apps and services of their choice,' FTA CEO Penny Lee said in the statement. 'FTA will continue to defend this right and work to uphold Americans' financial freedoms. The FTA's members include digital payments pioneer PayPal, neobank Chime and financial technology provider Block. The association contended in its statement that big banks are trying to limit competition and short-change consumers' control of their data. It also noted that the rule was initially put forward during the first Trump administration with 'broad bipartisan support.' The Financial Data and Technology Association's North America arm also protested the bureau's court arguments against the rule. That association, which represents the fintech Plaid, processing giant Fiserv and other fintechs, said in a Friday statement that it 'strongly' rejects the CFPB claim that Dodd-Frank doesn't allow for the sharing of consumers' data with third-parties. Recommended Reading CFPB to yank 'unlawful' open banking rule Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
