Executive Summary
- Gutting the Consumer Financial Protection Bureau, chopping back regulatory staff at other agencies, and tinkering with federal bank regulatory structure have marked the Trump administration’s strategy, with more likely to come.
- At the same time, major new initiatives in complex areas like AI and cryptocurrency are raising the stakes for the industry and the country.
- In times like this, Washington should be building up a talented cadre of regulators, rather than taking away the guardrails, says a veteran regulator, banker and fintech executive.
As we stand at the crossroads of technological transformation in financial services — AI, open banking, crypto innovation, embedded finance, real-time payments, agentic commerce and more — a question we need to ask as a country is:
Are our federal financial regulators adequately staffed and prepared for what’s next?
Over nearly four decades I have been a regulator, a banker, an executive of a fintech-turned-bank, and now a fintech executive.
I’ve seen this business from all sides. I’m concerned about what I see going on in Washington.
Regulatory Agencies Aren’t Businesses. Period.
Applying the same logic used to trim and streamline private businesses may have appeal at some levels, but this concept fails to account for a critical factor: Profit-oriented financial institutions are fundamentally different than federal agencies.
Financial institutions’ core mission is to generate returns for shareholders. That means they prioritize growth, innovation and competitiveness. Sometimes this pushes them to take on riskier ventures or pursue short-term profits aggressively. Many value customer trust and long-term stability, but those goals can clash with market pressures for growth and profit.
By contrast, government banking agencies are designed as guardrails for the financial system. Their north star isn’t profit — it’s public interest, consumer protection and systemic risk management. Agencies like the FDIC or the Federal Reserve focus on keeping banks solvent, ensuring fair practices and shielding the public from fallout during financial shocks.
Have we already forgotten the events of Financial Crisis? The bank closures of early 2023? The concerns about public confidence in the financial system?
Throughout my career in banking and fintech, I had a front-row seat. I saw the caliber of people who work in regulatory agencies. Contrary to what some may assume, there was minimal fluff or excess. What I saw were competent, experienced and deeply committed professionals — policy experts, examiners and application analysts — working hard to ensure our banking system remains safe, fair and competitive.
That’s why I find the deep staffing cuts ordered by the Trump administration concerning. Regulatory oversight isn’t bureaucracy for bureaucracy’s sake. It’s a form of risk mitigation for consumers, businesses and the broader financial system.