Digital Transactions Authoritative, insightful and timely information for payments professionals
As of mid-October, Joe Biden is heavily favored to win the presidential election and the Democrats are likely to take control of both houses of Congress.
If the current trajectory plays out (let’s pause for a moment and recognize that anything could happen), the payments world will find itself in a very different operating environment in 2021.
With Biden as president, the first major move to affect the payments industry will be a change in personnel at the regulators. The Supreme Court’s decision in Seila Law LLC v. Consumer Financial Protection Bureau makes it possible for the president to remove the CFPB director at will. So the current director probably will be replaced quickly by someone who is more in line with what Sen. Elizabeth Warren had in mind when she created the agency—a regulator who will aggressively go after the industry for any and all infractions.
People rumored to be possible candidates for the position include Congresswoman Katie Porter of California, who was taught by Sen. Warren in law school; Rohit Chopra, a commissioner at the Federal Trade Commission; and Chris Brummer, Agnes N. Williams research professor and faculty director of Georgetown’s Institute of International Economic Law.
Of course, a new director would bring in new staff, which could change the tone of the bureau and its interactions with the industry.
Elizabeth Warren has been suggested as a possible treasury secretary in a Biden Administration. But if the Democrats take control of the Senate by a narrow margin, they won’t want to leave an empty Warren seat for Charlie Baker, the Republican governor of Massachusetts, to fill even on a temporary basis.
If the Democrats take both houses of Congress, we can expect big tech firms to face more scrutiny over their size and operations. The House Judiciary Committee’s Antitrust Subcommittee released a report in early October taking big tech companies to task and calling for increased antitrust enforcement. Consider this in context of the introduction of the “Keep Big Tech Out Of Finance Act” introduced in the House last year.
A sufficiently aggressive Congress could force changes in the structure of big tech companies. Given that many conservatives feel that these companies have been unfair to those on the right, there may even be bipartisan support for bills that would break them up. Could this lead to a future where people could load Apple Pay onto Android devices? It’s too soon to tell, but that would no longer be out of the realm of possibility if Congress forced such a break up.
The judicial system may be one countervailing force in all of this, given that the Trump administration has appointed more than 200 federal judges and multiple Supreme Court justices. The first case that could lead to big changes is one I have written about before, PayPal versus the CFPB.
While the case has attracted little notice, it is worth reiterating it could change the way payments are regulated. Courts are more likely to decide that a rule should be thrown out than they are to grant a narrow exception for one company. This means that if PayPal wins, the CFPB’s prepaid rule may be thrown out entirely.
That could cause a great deal of regulatory uncertainty, both now and for future rules. In addition, if PayPal’s arguments on the constitutionality of disclosures are accepted, that could lead to ripple effects throughout the industry.
Companies should begin planning now for a stricter environment and prepare to make the case to regulators that more is not always better when it comes to regulations.
—Ben Jackson, bjackson@ipa.org
