One official at a federal consumer protection agency is reportedly raising concerns over JPMorgan Chase’s plan to charge fintech fees for customers’ account data.
An unnamed politically appointed official with the Consumer Financial Protection Bureau (CFPB) believes the agency’s efforts to kill in court an open banking rule enacted under former US President Biden may be giving JPMorgan Chase the opportunity to charge the fees, reports Bloomberg.
The same official is discussing the issue with concerned fintech firms, according to multiple sources who asked to remain anonymous to talk about the controversial matter.
The CFPB open banking rule, which was finalized last year, prevents banks from imposing charges on third parties such as Coinbase, Venmo and PayPal to access customers’ deposit and credit card account information as a way to ensure competition.
However, CFPB’s Acting Director Russell Vought is now asking a federal judge to vacate the rule on several grounds, arguing that Section 1033 of the Dodd-Frank Act “does not authorize the Bureau to prohibit banks from charging any fees for maintaining and providing access through the required developer interfaces.”
Critics of JPMorgan Chase’s fee proposal say it could stifle the fintech sector.
Graham Steele, the former assistant Treasury secretary for financial institutions in the Biden administration, says the Trump administration’s efforts to shutter the CFPB and delete Biden-related policies are wreaking havoc in the fintech industry.
“By repealing the rule without fully thinking it through, they have caused a lot of problems in the marketplace and for consumers.”
The CFPB did not respond to the media’s request for comment at time of publication.
Meanwhile, JPMorgan CEO Jamie Dimon defended the fee proposal during the bank’s second-quarter earnings call.
“It just costs a lot of money to set up the APIs and stuff like that to run the system protection.”
Critics of the bank fees include cryptocurrency companies and investors.
Says Alex Rampell, a general partner at venture capital firm Andreessen Horowitz,
“Make no mistake: this isn’t about a new revenue stream. It’s about strangling competition. And if they get away with this, every bank will follow.”
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