2024 Election: What Does it Mean for Financial Services and Tech?

Speaker A: Welcome to Tech on Reg, the podcast that explores all things at the intersection of law, technology and high regulated industry. We're talking fintech, regtech, Sextech and more, with thought leaders and entrepreneurs from around the world to share insights, trade viewpoints and get us all thinking about responsible innovation. And here is your host, Dara Takowski. Hi everyone, this is Dara Tarkowski. Welcome to another episode of Tech on Reg. Um, it's a little bit of a deja vu for me. I remember when we were sitting here, uh, recording after the 2020 presidential election. So welcome to, uh, this year's 2024 presidential election what it means for Financial Services episode. Um, I am very, very grateful, uh, to be joined today by two D.C. experts. Um, if I may say, we've got Peter, um, Freeman, who is a partner at fsvector. Uh, Peter Freeman brings over 20 years of government and private sector experience. Uh, expertise spanning financial services, international relations, intellectual property, energy and trade. Uh, Peter served as the Deputy Chief of Staff and senior advisor to Congressman Ed Royce and as Vice President at the Financial Services Roundtable. Previously, Peter was Deputy Chief of Staff to Congresswoman Deborah Price and worked on the House Financial Services Committee. Peter holds a BA from Georgetown University, Go Hoyas. And studied at the London School of Economics. Um, so we're actually blessed with two Hoyas today. Uh, and we've got with us also Izzy Klein, who is also, um, a lobbyist and expert in government relations, communication strategy, coalition development. Um, Izzy's been recognized as a top lobbyist and message maestro. Lobbyist. I believe that was a direct quote. Um, thanks Google for that. Working very closely with members of Congress, the current administration, and various federal agencies. Um, Izzy has very deep ties to the Democratic political circles and serves on the Jewish Democratic Council of America. He has spearheaded legislative and advocacy efforts for various organizations from startups to Fortune 500s. And prior to co founding the Klein Johnson Group, is he worked on Capitol Hill for Senate Majority Leader Chuck Schumer and Congressman Ed Markey. Um, once again, Izzy holds a bachelor's degree from Hoyas. So I am just absolutely surrounded, um, by Georgetown alums. And it's making me a little self conscious because, yes, I did turn down being a Hoya so that I could choose to be a wildcat, uh, at Northwestern University in Chicago. So, Peter, Izzy, please don't hold that against me.

Speaker B: My partner is a great wildcat as well, undergrad.

Speaker A: So we're good friends. We're very, very symbiotic relationship.

Speaker B: There you go.

Speaker A: Well, I, I'm really excited for Today. Um, one, because frankly, I don't think there is enough healthy conversation with truly, um, diverse opinions. Um, so I am super jazzed to have two really, really smart people who work on different sides of the aisle coming together to talk about what the selection means for an industry. Um, frankly that is fueling the US and global economy, um, and really sort of what things that we can get excited about, what things, uh, we have to be concerned about, um, in terms of financial services, uh, from both a political and regulatory perspective. So my first question for both of you is going to be what do you believe the biggest impact of the election results will be for financial services? Izzy, we can start with.

Speaker B: You look happy to. And Dara, thanks for. Thanks for having us both. Um, we appreciate it. You know, look, I think on the financial services industry broadly, um, the implications of the elections, um, will be felt one, on tax policy, um, two on mergers and acquisitions, and then three, generally on sort of regulatory enforcement. Um, I think, you know, those, Those three kind of areas will impact sort of the broad, broadest part of the industry. Um, and I think there will be, you know, particular sectors that will. That will be hit, um, and helped, um, by. By the new administration and the new Congress. But, um, I think we're still sort of seeing how all of this is going to sort out. And part of the. The open question that's. That. That's still a big one to be answered is who are the people who are going to run the government on, uh, you know, for, for. For Donald Trump? Um, and the, the financial regulators, you know, are a little ways off from. From being appointed. Suggested the people in the White House who are going to, you know, run economic policy, trade policy, et cetera. Those are all TBD still. Um, so we'll. We'll. We'll see some more.

Speaker C: We'll.

Speaker B: We'll be able to better sort of handicap, um, what areas in particular are going to be most affected after some of those names start to trickle out?

Speaker A: Any names floating around the rumor, mel, that you'd be willing to share?

Speaker B: I mean, I sort of defer to Peter on some of the names that are most likely. Um, there have been a couple names that have been thrown out there for treasury, um, for Commerce, um, ustr. Um, I think a couple of names that, that have been in the Trump Cabinet before for Commerce and for ustr. Um, think that the other financial regulators are. I haven't gotten great sources on those yet. Um, and so I defer to Peter on that one.

Speaker C: Well, I mean, I think what we've seen are loyalists, uh, folks very close to the President elect are um, being rewarded for their loyalty. So I mean, I would expect that Linda McMahon and Howard Lutnick, who are really in charge of uh, or have been in charge even before the election of uh, the preparation for the election to uh, if they want to both have a role in the new administration. And you know, Commerce and Treasury are two of those spots that make the most sense. Um, so, I mean, I think that's what we're seeing is as these Cabinet choices come through, um, to answer the kind of. The larger question, um, I agree with Izzy on that, on that tax policy for any major industry, uh, in the US Is, uh, really going to be, uh, the certainty around the extension of the tax cuts. I don't know if we'll see a lowering of corporate tax rates, but I think we'll at least see a maintenance of where things are. Um, it's the single biggest outcome, um, given the assumption that we've got all three levers, House, Senate, uh, and the White House. And we can talk a little bit about reconciliation if we want to get a little geeky here. Um, but I think also some of the work that was left undone, both by this administration and previous administrations in this space and kind of the new issue set of digital assets, I think is one in which we'll see, um, uh, at least a tremendous change in the posture of the administration on enforcement and I think, um, some movement on what we call market structure. Basically what's the role of the CFTC versus the SEC and who's regulating what. I, um, think that's one area. And then something that's been left undone since the financial crisis, which is housing finance reform, I think has a real decent shot, um, of happening, uh, potentially even through the. The reconciliation process when. When they look at, uh, they look at some of. Some of the opportunities there. So to me it's. It's the work that's been left undone. And uh, really, uh, when you have the. All three levers lined up, you at least have an opportunity to do some big things. So pretty, um, excited about uh, the possibilities.

Speaker A: So one area that you both mentioned was regulatory enforcement and sort of what that looks like a huge criticism of uh, several of the financial services regulators was this concept of enforcement, um, regulation, uh, by enforcement rather than, you know, proper procedure being conducted through the Administrative Procedures act and um, what we would call more transparent rulemaking. Um, is that the practice that you all envision an end to, or are you referring to something else?

Speaker C: I, um, mean, I think it depends on what.

Speaker A: So we're looking at each other on video right now, listeners. Right. So you guys don't get to see our faces, but I get to see everybody's faces. And I, and I do have to say I don't do this often. Izzy. Peter. Um, but for the benefit of my listeners, I got a lot of the, the eyeballs darting back and forth like. Who's going to answer this question first? Yeah, who's going to answer this one first?

Speaker C: Well, I think it's clearly that's the case with crypto regulation and the SEC enforcement and kind of the legacy of Gary Gensler. I mean I think that that is a clear cut case. One thing I think that's been overblown is that there'll be no enforcement activity, uh, under Trump 2.0. Well, that just wasn't the case under Trump 1.0. So I, you know, look, where there's consumer facing products and there's, there's harm that's being done where there's bsa, AML issues. I mean, I think we, we've got a, I just maybe not as, not as much usage, uh, uh, by uh, by the CFPB of udap. Um, you know there, there may be some cases where you would have seen action under the current administration and you won't see action because it'll be dealt with through, you know, supervision and um, and rather than really playing gotcha ball, um, as we've seen, I mean I think companies have been held up as examples in certain instances where this could have been dealt with through regular supervision and remediation. So I, yeah, I do think that regulate, like, especially when you control the House and the Senate, you don't, you can go and try to pass laws rather than using enforcement as a way to establish policy, which is what we have clearly seen both at the CFPB and at the sec and even clearer at the sec, I would say.

Speaker B: So look, I actually, I'll be honest, I sort of agree with Peter, um, on not just the outlook. Yeah, I mean not just the outlook but, but sort of the underlying issue. You know, regulation by enforcement has, has just, it's not worked. The SEC has lost in court repeatedly and at some point like you just have to sort of throw up your hands and say this is not, this is not working. We got to shift course. But I don't think they did, um, in part because these court cases take a long time to sort of get, get through the process. Um, and so if that's how you're going to conduct, you know, the agency's business, like you're really, you got a long tail and your chances of success are, you know, middling at best. I will say that the Chevron decision will impact how these agencies engage in the rulemaking that they'll need to do potentially or potentially, um, undo. Um, and that's an area where again, I think there's some real sort of, um, unknown, um, as to how some of these agencies, because they have focused so much on regulation by enforcement, how they then shift and how does that look in this new sort of Chevron, you know, post Chevron, you know, window of time? I don't know, um, what, what that'll look like. But I, you know, I think that there, there will be for sure a shift. Will there be, you know, zero enforcement? I don't think so, but there will certainly be a lot less, um, than there's been at all of the agencies, I think so.

Speaker A: So it's interesting because I was going back and sort of checking some stats and if you take the number of consent decrees sort of, sort of out of the mix and actually just looked at publicly filed enforcement actions, I'm pretty certain that under, um, during the Trump, Trump one point I was one of you referred to it, um, under Mulvaney and Kraninger, there were actually more enforcement actions filed, um, than there were, ah, under the previous administration and under the current administration. A lot of the court time being spent in the current administration is frankly defending the alleged, uh, procedure, uh, in which some of the rules, uh, came to be. Um, none of those cases have really, um, you know, with the death of Chevron, obviously we've got to deal with some forum shopping issues. Um, you know, no one, I think is going to be running to file cases challenging things in the Ninth Circuit, um, anytime soon. Um, but I think we're going to probably see the Texas courts, um, you know, having just as much activity as they did before. I'm sort of curious as to what your thoughts are on sort of like the current actions that are, that are in limbo. Um, and I know a lot of this depends on the who, who is going to be named as Director and you know, obvious they're going to review everything. Um, but there are challenges to rules that have already been promulgated and the Bureau and a lot of those cases are in their infancy right now and the Bureau is going to have to take a position. Are they going to be settling those trying to hit rewind and you know, say, okay, we'll give it a shot and do it again. Are we going to repeal those rules? Because there's a lot of things that again, have started under Director Chopra and under the Biden administration that are now going to flow in to, to the new Trump administration. And those positions would seemingly have to change. But again, I can't say I'm ever surprised by anything anymore. Peter, what do you think?

Speaker C: Yeah, I mean, I think depends on which one you're asking about. I mean, I think there's even maybe a larger participant rulemaking coming, uh, down the pipe that we'll see on digital wallets that I think will be finalized between now and January 20th and maybe, maybe even around them.

Speaker A: Well, you know, we've got 1033. We can start on 1033.

Speaker C: 1033. I think they will do it, but they'll go back to the drawing board to a certain extent on liability in particular. I mean, I think we saw how prepared the banks were to sue, like within like an hour and a half. Uh, uh, real fast. Yeah. And, uh, saw that in real time, uh, if you're out at Money20 20 for the conference, Chopra was, uh, voicing his frustration that, uh, you know, they probably hadn't, you know, he hadn't read. He hadn't read the lawsuit and they probably hadn't read the rule. So I think that's one where we will see it, um, come back and it'll be. I think it's generally been received on a bipartisan basis. I mean, uh, Chairman McHenry, chairman of the House Financial Service Committee, had positive things to say about the movement, um, the direction of open banking, open financial services. Um, but I think that liability portion and how information is shared, um, they're gonna, they're gonna go back and try to get, try to get that to a place where, um, where it works on, uh, for, for at least to a certain extent for the banks as well. So I do think that that one's one where we will see action. It's just not going to be identical to what's been put forward. Um, yeah, there's a, There's a whole host of, there's even some interpretive rule, rule makings in the EWA and VMPL space. My guess is those get shelved. Honestly. Um, which, you know, as interpretive rules is kind of. The problem is you got this kind of effect of, uh, one administration taking one, uh, stance and another taking another stance. I think there's an opportunity in that space for a new CFPB director to come in um, put in place some sort of system where folks can seek clarification. Whether that's a sandbox, whatever we want to call it, something that allows for companies to get clarification that they're on the right side, um, of the law when, uh, they're doing things that are innovative and to get that in real time. I mean, maybe not real time, but in an efficient way, way that allows for companies to continue to build products and not worry about, um, enforcement actions. Honestly, I mean, I think there's a lot of uncertainty in those two spaces. And BNPL earn wage access, there's a lot of companies with different products and different, um, you know, different fee structures. And it would be, it would be just really great if we could unlock some of that. I'm hopeful that maybe we could even see congressional action. But those are bills that would take 60 votes in the Senate and they're going to have to be bipartisan. But I think companies have to be smart and think like we've got an opportunity here to do something. If it's bipartisan, it's lasting and we don't have this yo yo effect on interpretive rulemaking. I really think companies in this space need, um, to take this an opportunity to go to the Hill and not just to the regulators and do the hard work which has already been started in some of these areas. There's a bill, um, Brian Style had a bill that nearly had Democrats on board if not for the fear of, ah, you know, ranking, uh, member waters and concern that consumer groups would come after them. Um, and so I think there are some opportunities here and that's really where it's not just like the CFPB and what happens with the rulemakings. But if you want long term lasting change, we need to go past laws and they need to be laws that at least have a dozen Democrats on them, um, in the House so that you can go pick up, um, you know, seven votes in the Senate.

Speaker A: I actually think that's even more important given Izzy, your previous comments, like Chevron's dead. Interpretive rules aren't going to mean anything and courts are going to do whatever the hell they want anyway now because they have been given the power like, congratulations, congratulations. But that's also terrible for industry not knowing, you know, depending on the mood of a jurist in any particular, you know, day, um, may dictate policy for one particular plaintiff in this one set of circumstances. And that's not, you can't operationalize, uh, that that sort of whack a mole nonsense. Um, but Izzy, do you, do you think some of, some of the stuff that Peter's talking about can get a dozen Democrats on board?

Speaker B: So I actually. So uh, your, your point on Chevron is the one that I was going to link through from Peter's comments. But look, I, I agree if you want durable policy, regulations, certainty, you've got to do it in a bipartisan way. Um, I actually do think that you know again when, when Democrats have been in the majority, they've gotten there from having a really well established moderate middle of members who are willing to, and able to cut deals. Um, and I think that's sort of where we're headed again. Um, you know there, there will be um, quite a few Democrats who, who are, are going to want to um, work with Republicans on, on various things, whether it's the financial services space or the um, or the technology space, Fintech, whatever. And so I'm a little bit optimistic. Um, but to, to the point that we all sort of have, have made those legislative efforts are going to need to be much more specific than they have been in the past. Um the, you know, the idea that you can sort of leave everything up to a friendly regulator. Um, one side or the other is sort of gone with, with Chevron. Um, and, and so I think there's going to, there will need to be more thoughtful legislating um, which in some ways is you know, the opposite from where a lot of government stuff is going. But I think the Congress can bring that back and I think it'll have to if it wants to really make an impact on, on any of these regulations.

Speaker A: It's interesting because um, the election was interesting for a variety of reasons. We're going to focus on financial services only so that we don't go down a completely different problematic rabbit hole. But the truth of the matter is is there were there vastly different policy positions uh, between what the Harris campaign, um, assuming that she was going to just continue on with Biden, Biden era policy versus um you know, what the Republican Party was, was hoping for yet you know, during the last, you know, 12 weeks of campaigning that we saw between the two, no one said the word bank, no one was really like people are talking about taxes a little bit but no one said the word bank, no one said the word fintech, no one said the word crypto. And a lot of these issues just didn't bubble up to uh, to become voter issues necessarily there at least, at least not ones that were being um, that were you know, audibly, audibly spoken Even if they were sort of lingering in the backs of a lot of voters minds. And at least, you know, on the face of it, it really looked like the Republican Party and obviously a pretty decisive victory in all three in all branches of government. Um, one on a pretty. What I would call sort of like a populist agenda. And it's interesting to me, uh, that you know, Republicans are sort of becoming like the new party of the working class people. Um, I sort of struggle for how that sort of, that populist win aligns with sort of like the traditional conservative financial services values and how that really does all work together. And I'm just sort of curious as to your thoughts. I know nobody on the show has got an answer to any of that, but it's interesting, it's an interesting dynamic.

Speaker B: I mean, Dara, it's a really good question and sort of, you know, something that we've thought about a lot, this political realignment. Um, you know, we previewed the election for, for all of our clients. Um, and the thing, one of the sort of OG's numbers that we, we had focused in on um in the lead up to the discussion around the political realignment is that in the four or five major surveys of um, of Americans, um, who do you trust more? Trump or Biden? Trump or Harris on the economy,

Speaker A: um,

Speaker B: households with incomes under $50,000 were 54, 55%. Um, uh, more trusting of Donald Trump, um, in the, you know, on economic policy than um, Ben Harris or, or Biden. It's sort of a shocking number when you think about the long history of um, of economic policy and, and where Democrats have been and where Republicans have been, um, and, and who they've sort of catered to, who they've seen to have been sort of championing. And so that was a number that, that you know, we took some real pause on, um, and one that you know, Democrats are going to need to really reckon with if they want to be back in the majority or back

Speaker C: in the White House.

Speaker A: Peter, you're, you're, you're pondering. I see your eyes pondering.

Speaker C: I thought a lot about this. I mean some of it is just pure, pure populism. Right? When we talk about like capping credit card, you know, fees, uh, at 10% which like would pretty much end credit cards as we know them. So I think some of it's just not implementable. Um, I'm really curious to see how some like what I would call economic populism, which is really what. And I think even more so than the President elect. The Vice President elect in his time in the Senate has really embodied this in talking about the interaction between um, uh, this type of woke capitalism and also economic populism. And um, I'm curious to see how it plays out. I mean I think we've seen the rhetoric. I'm curious to see how the policy plays out. And one area obviously is tariffs and trade, um, and that doesn't necessarily line up with the policy on taxes. Right. And then more of uh, a market driven tax policy, um, that leaves uh, tax dollars in the hands of uh, people to spend it how they want and not collecting necessarily as much from corporations. So it's interesting, I mean, I'm really curious to see how this second iteration of Trump, um, on the terror front plays out. I think it'll be more balanced than what has been proposed. Um, it may target China, um, more directly rather than our allies. Um, it's going to be interesting to see how it plays out. I mean I do think that there are some places where uh, it may not actually be able to be implemented in terms of policy because of what the actual implications are. Um, and if they don't, if it doesn't fit within a reconciliation structure, again, you need the 50 votes. I think what we're really going to see is what fits in there, what fits in there nicely, what fits in there in a 220, 221 U.S. house of Representatives, not just a 53, uh, Senate. Uh, and you know, you have to get 50 senators still with reconciliation, which could become an issue on issues like tariffs. Um, and so it is going to be interesting. What's the role of the Vice President in setting policy and what's the role of the Vice President's people coming in from his Senate office and into not just his office and the Vice President's office, but throughout the administration. And um, you know, he's not alone. There are folks, we have new senators coming in that are closer aligned to this kind of economic populism on the Republican side, um, than we've had in the past. The interesting thing is we have John Thune taking over for Mitch McConnell, um, in the U.S. senate. And I think that that is just a statement that as much as we are aligned with President Trump, we still get to elect our own leadership. And it's not something that they take lightly, um, that they want somebody to represent the U.S. senate, U.S. senate Republicans. So I thought that was a pretty bold statement today, um, with him winning, uh, winning, winning the election.

Speaker A: All right, I want to shift For a moment um, to talk about the FDIC bank partnerships and then the fintech industry um in general. I um, know those are topics that are very near and dear to Peter's heart, uh, and mine as well. Um but one of, I think uh the more interesting dynamics that we have here is um, we've got the occ, we've got the CFPB and then we have the fdic. Um obviously leadership at both the CFPB and OCC are 160% going to change. Um, the timing of that change will depend on uh, a number of things. Um but replacing both of those um heads of those agencies is going to shift the balance of power currently at, at the fdic um as well. Um and because right the OCC and CFPB chiefs uh hold those seats on the FDIC's governing board, um, it really does sort of clear the way um for Republicans to regain control of that board as well. Uh and then also sort of the agency's reins, um, there's been a lot of criticism of the FDIC on a lot of different topic areas. We're going to stick to the ones that actually affect the banks as opposed to the ones that affect the employment practices at the agency. But bank fintech partnerships, um, and bas, the uh, BAS model, banking as a service, um has been a huge area um of scrutiny for the fdic. Every single bank that I work with, um, it is, it has come up, um, those programs are being shut down. There's been lots of FDIC consent orders, again sort of regulation by enforcement. You've seen the proposed ah brokered deposit rule which is open for commentary right now. Um and the sentiment amongst the bankers that I talk to is that the FDIC has just had an all out war on bass. But because of the regulatory um, muddiness everything is sort of being shoved into the BSA AML bucket um because they haven't really had another way to, to do that sort of enforcement. What do you anticipate happening now with the FDIC and their positions on bas?

Speaker C: Well I mean I think, look like I think I said before, I think where there are true BSA AML concerns and there's concerns over risk and uh, general concerns over bank management, I think you're not going to see a change necessarily um from where like a Travis Hill is and a Marty Broomberg um, or Jonathan McKernan. I think there's across the board concern about good management of banks. So I don't think that's necessarily going anywhere. Um, but in terms of the all out assault on what we see as the bank partnership model. I do think that um, not only will you see more of a conversation around what good management looks like and what good risk controls look like, um, and rather than just enforcement activity actually trying to do that through supervision, um, I think there's an opportunity here. There's an opportunity. Banks are complaining about fintechs in terms of having a level playing field in terms of regulation. Well, there's an opportunity to talk about what that looks like. Should we have more clarity around regulation of service providers and um, should that be, should there be an opportunity basically get a gold standard or something that looks like that from bank regulators to say like we, we are open to supervision. Um, and then finally like you know, chartering is a whole nother conversation, which I think. Yeah, um, you know, what does, what does a national payments charter, a national fintech charter look like? Um, you know, obviously this is loaded with political implications from state versus federal. Uh, you know, we've been like on the ILC side, we've looked at you know, whether there's um, concerns over big um, tech and payments and that whole conversation too. But there is a huge opportunity here. Um, but time is short, right, like this conversation. And I think it's starting to happen at least here in D.C. amongst some in the trade association community. And um, it's an opportunity to have a positive conversation about what we want that landscape to look like rather than the one that we've been having. And I for one will say I think we would have had this conversation under a Harris administration as well. It may not have ended the same, it may not have started the same, but we would have had it in some form separated um, from where kind of Biden is. I really do view that like we weren't going to have a personnel office run out of Elizabeth Warren's uh, Senate office or um, out uh, of Cap or somewhere else. We were going to have like a serious conversation about what bank regulation and what fintech regulation, you know, should look like in the 21st century. So I don't think it necessarily wouldn't have happened. Uh, but I think right now is a tremendous opportunity to get this right because the bank fintech partnership has created a tremendous amount of innovation in a hostile environment.

Speaker A: Right.

Speaker C: So just imagine what we can do if there's an environment that provides more certainty for service providers, um, and for banks and potentially for, for you know, other um, you know, other charters moving forward. So I would say one thing, the NCUA is a little bit Of a weird one in that we will have a Republican takeover in January, um, but he will have a minority, um, uh, uh, majority like the Democrats on the board will have, uh, you know, will be able to outvote Kyle Hopman who will take over from uh, Todd Harper. So that's a little bit of a unique one, unlike the fdic.

Speaker A: Izzy, what do you think?

Speaker B: I mean, look, I think that the, the idea of having some kind of sandbox or sub license, you know, at the national level is, is something that's, you know, that Democrats have also embraced and has sort of been. Been slow walked. Um, I think new leadership at all of the financial regulatory agencies. It'll obviously happen. I just given where we are on the, on the announcement of um, uh, nominees, um, for other cabinet departments and agencies, I'm a little concerned at how quickly those individuals can be confirmed, um, and whether they'll be acting in a, in an acting capacity, um, for you know, some extended period of time because their confirmations are uh, you know, being questioned or held up or their vetting hasn't, hasn't worked out. So I think, you know, there, there will be fights sort of throughout on nominees and that's happened in every Democratic or Republican administration with an opposing Congress. I think Republicans are going to need to not just stick together for some of these nominations, um, but also potentially weather some serious um, criticisms and questions. Um, and you know, look, the Trump administration could choose really wisely and install vetted folks, but I think that's not going to happen across the board is my guess.

Speaker A: It sure could happen. It could. So uh, Peter, you. You made a comment for uh, about you know, state. When we were talking about BASS and the FDIC and the state versus Federal sort uh, of conversation. One area of concern that I know my clients have had and that it's come up in a lot of conversation is um, if there is going to be even sort of uh, not that enforcement is going away, um, but any sort of perceived, you know, eased enforcement actions or a perceived ease on supervision, is that just going to embolden sort of some of the more activist state AGs and state regulators to sort of fill that gap, which is something we've obviously seen in the past. And I think it's of even greater concern now given um, you know, at least the current, you know, opinions of the, of the current bureau is that you know, dear state AGs, you're allowed to enforce UDAP just like I can, so you should go do that. Do you see any potential state, um, issues Arising. Because this also really brings up a question for me about the whole concept of preemption. Again, um, especially Peter, when you're talking about the real way to make everything stick is to actually get laws passed. Where does preemption sort of arise there, particularly on an administration that will be pro states rights? It's, it's an interesting. And again another sort of interesting dynamic to contend with.

Speaker C: I mean to answer your kind of first question. Yeah, absolutely. I mean I think we always view attorney uh, generals as uh, seeking higher office in most cases. So yeah, uh, I think enforcement activity that uh, fills the void, especially for consumer groups and others that are going to be looking for a place to make a difference, uh, on their policy priorities, I think, um, for sure, I think we'll see increased AG activity, uh, in particular in blue states obviously, um, in terms of preemption and the perennial question on preemption, and this is one that comes up in particular as we've talked about privacy law and um, data breach notification, uh, and financial services, um, I think, and I don't want to speak for Democrats, but there are a number of Democrats that are okay with preemption as long as that standard is really, really high in terms of where we're setting, um, setting the standard, um, and allowing at least on some level, some enforcement by, by states, um, of. Of that standard. I, I think that um, I think we're going to continue to see that debate across the, you know, this 60 vote threshold we talk about in the Senate. Yet again, you know, preemption is going to be a tough thing for, for Democrats to get. So there's going to be a negotiation and privacy is one of those that Congress has been unable to get done since I think I started on the Hill in 2003. There's been bills out there that haven't been able to get across the finish line because there's differences of opinions, um, on things like private right of action and preemption. And um, those are tough issues. And I do think that industry is going to continue to look at the benefits of preemption and being able to comply with one law rather than having. Basically where we're at now is California and New York and a handful of states basically set a standard in which you're going to have to meet anyway. So um, it does I think unlock a lot of potential if you do have preemptive national standards and if those are high standards, there's a chance of making them bipartisan.

Speaker A: Izzy, do Democrats want preemption at this point?

Speaker B: It it's complicated. Um, privacy status.

Speaker A: It's always complicated. Been complicated.

Speaker B: Privacy is complicated. Right? Like, there was a, a deal between the chairman, the Republican chair of the House Energy and Commerce Committee and the Democratic chair of the Senate Commerce Committee, um, on a somewhat comprehensive privacy bill that basically had the agreement of those two individuals and very few others. The issue of preemption is one that California Democrats just totally bristle at. They, they do not want to see that. Um, and it is, you know, both a policy issue for them and a parochial issue for them. And I don't see that hurdle, you know, really being overcome. And there were massive questions on that, you know, that bipartisan privacy bill this spring. Um, there were massive questions from, from industry. Um, and, and so, and I was struck with a Republican chair, um, of the House Energy and Commerce Committee. It sort of shows how hard this is to sort of navigate. Um, and, you know, I, I actually thought a couple years ago there was going to be a deal on children's privacy, just sort of a much more narrow, um, you know, privacy effort, um, that was also bipartisan, that has not been able to find its way through, um, the legislative process either. Um, and that was something that, you know, a lot of folks sort of agreed should be done, sort of was the bare minimum, um, on, on privacy, particularly, you know, given the, um, concerns around social media and, and whatnot. Um, so, so that, that didn't, that didn't make it. Peter's initial point from the beginning of the conversation is whatever we do here, it's. It has to be bipartisan. Um, and even, even that, you know, on this, on that set of issues, privacy, data security, et cetera is, Is really challenging.

Speaker C: And the, the committee's jurisdiction have been really a problem as well. I mean, Izzy mentioned. I mean, I don't know what was in the water in Spokane, Washington, but you got Maria Cantwell and Kathy McMorris Rogers to agree to a bill. But Patrick McHenry didn't agree to that bill. And he, he had, you know, if we're talking about financial services, he's got his own bill. And that would have all had to come together as well. And we just have not seen that perfect storm on something as significant as privacy, um, that would allow for a preemptive national standard. So, um, it's easier to do these things when they're in one committee's jurisdiction, um, when we're looking at Capitol Hill. So I would say just because we can't get it all in privacy, I mean, we'll Take another whack at it. And I think children's privacy issues are probably at the top of that list, as Izzy pointed out. But it doesn't mean that we couldn't get something, um, in terms of some sort of a fintech charter or payments charter, um, that would go through just Financial Services Committee and just the Senate Banking Committee. Um, this privacy debate also includes the Judiciary Committee because you're also talking about penalties and enforcement actions. So it gets even muckier. And it gets muckier between the House, the Senate, D's, R's, um, and then, you know, then you, you get into counting votes and we haven't even gotten to that point, um, with. We basically got out of one committee on one side of the House.

Speaker A: Well, um, what's the old adage like? Anything, uh, that's easy to do isn't worth doing. Obviously there's going to be a lot of hard work that has to be done and hopefully it's hard, thoughtful work, as we were talking about before. Um, but I want to sort of head to our last topic to wrap things up and I'm going to do it on an uncharacteristically optimistic, optimistic note, um, which is not the way I anticipated ending this particular episode. Everyone, my listeners know that I can get very, very cranky about these, these topics sometimes. Um, there have been lots of industry participants, you um, who have been unable to raise money, um, in the past several years. Um, the venture environment for Fintech had slowed considerably, uh, during the last administration. Um, banks were looking to, um, you know, were looking for mergers, acquisitions or divestitures, um, because of regulatory uncertainty and in part because of the regulatory approach to a lot of their more innovative concepts. Bas being one, AI regulation is another. Given the sea change, um, my hope is that a lot of those fears fall away and you have um, a re, you know, a reigniting and investment back into funding startups, building innovative products and then having banks and consumers actually be able to use them. Um, are we poised for that or am I. Or is like my glass half full just like not gonna work? I should just spill it out now?

Speaker B: I mean, look, I, I think that the M M and A and venture environment is going to be pretty active for some number of years. I think venture funding has, has sort of drifted towards AI, social and green energy stuff, um, less so on Fintech, um, perhaps. And I think that that pendulum sort of shifts a little bit, um, in the, um, in the new administration and the new sort of world order. Um, I don't Think it shifts completely. Um, but I, I do think that um also there, there are going to be you know I think that all of the existing financial services institutions have very robust um, internal like R and D, innovation, development, etc. Um and you know perhaps we'll see more of that coming out of the cities and JP Morgan's etc. In addition and there might be some acquisition right of you know, some of these leading fintech companies buy some of the, the bigger players as well. So I think there's gonna be a lot of action. Um, and I think it should be fun to watch.

Speaker A: What do you think Peter?

Speaker C: I don't think it's freewheeling M and a time on uh, when we're talking about big financial institutions or, or big, big tech. Um, I do think that you're comment about you know, startups and ah, and innovation and, and money coming off the sidelines. I think that's all going to happen and, and that's all obviously very, very positive for, for, for the economy and for job creation. I, I do think the skepticism around like you know, big tech and big banks, um, especially in this new economic populism age, um is, is, is you know, it's not going anywhere. And the professionalism of a Fed, that's not really probably changing until 2026. Um, I don't think you're going to see like major activity at the kind of top, top uh, of the, of the spectrum. Um, there may be attempts, I mean I do think you know, obviously Cap one discover mergers already on the, on the plate but there may be other attempts to um, and within the regional bancorp, um, but I don't think anything's a slam dunk. Um, especially if there's bsam, um, health concerns which we already mentioned. That's, that's a nonpartisan issue, not even a bipartisan issue. Um, so in, you know, in those banks that have had issues in those areas, I think that uh, those are still off limits. Um, uh so yeah, I think a lot of activity um, on the innovation side, on the startup side and same level of scrutiny um, on kind of big bank and big tech.

Speaker A: All right, well we're sort of nearing the end of our time. Thank you both so much for joining us. I feel like we could have talked for six hours instead of the short time we had together. Um, so maybe we'll get the band back together in six months and see if any of our predictions come true and now that hopefully we're going to have some names to throw around and we can actually maybe make some more accurate predictions. Um, any final thoughts you'd like to leave my listeners with?

Speaker C: I would just say, you know, you mentioned names. I mean, I think in the spaces and where Trump's policy is not as clear cut, um, as it is in, you know, tariffs, taxes and immigration, you know, around the edges, I think it does really matter who ends up in these important positions, and they will bring with it their own experience and their own policy priorities. And, um, you know, I think six months is a good amount of time maybe to come back and talk a little bit about, uh, what those look like, because it may take that long, as Izzy pointed out, to get some of these, uh, bank regulator positions.

Speaker A: I figure we should give them a generous timeline.

Speaker C: Yeah, yeah, yeah.

Speaker B: Yep, I think that's right. And look, Dara, thanks for having us on. This, um, was a ton of fun and, um, look forward to being back soon.

Speaker C: Thanks so much.

Speaker A: Thanks a lot.

Speaker C: Hoya Saxon.

Speaker A: Hoya Saxon. I can't believe those words.

Speaker C: Just can't edit that one out.

Speaker A: Just exited my mouth. Also, Go Cats. I had to do it. So we're actually going to end on the Go Cats. Um, thank you both, um, and, uh, see you all next time.