Co-Founder and Managing Director at Klaros Group | Regulatory Strategy Expert for Banks and Fintechs| x OCC District Counsel and Assistant Director | x Director at Promontory Financial Group
It’s no wonder consumers caught up in the Synapse mess are confused and outraged right now. As the diagram 👇 shows, the U.S. financial regulatory system is complex and siloed. Consumers dealing with the Synapse fallout and unable to access their funds may need to turn to one or more of each of the following regulators: ▪ CFPB ▪ FTC ▪ State financial agencies ▪ Federal Reserve ▪ SEC ▪ FDIC ▪ SIPC Which agency should you turn to? The answer can depend on: ▪ The financial product (savings acccount or sweep account) in question; and/or ▪ The license of the entity involved (e.g. nonbank, chartered bank, or broker-dealer); and/or ▪ The solvency of the bank or brokerage involved. Makes sense? Not much, right? I’m an experienced regulatory lawyer, and it took me years to learn how this all works. I sympathize with consumers trying to figure it out in real time and while their financial health hangs in the balance. It shouldn’t be this hard. #Synapse #BaaS #Banking #Bankingregulation
Tom Abraham
6mo
Michele Alt Agreed, it should not be this hard. It is, so banks need good advisors 😁. Like the diagram. The real travesty is the impact on customers, as you point out. They have no one to whom they can turn in the Synapse/Evolve case. In that case, Evolve should be compelled to cough up. The banks should have ultimate responsibility. If their partner is incapable or bankrupt, the banks should assume the burden. Evolve has $200 mm in capital and is a good starting point. I have grave doubts, however, they have the expertise or resources to sort it out. Can one file amicus curiae briefs in bankruptcies? The judge needs to move on this.
Michele Alt A compelling argument for regulatory reform - of the regulators!
Not only are consumers caught up in the Synapse mess confused, but fintechs that operate in the U.S. as well.
Sushma Kaza PhD
6mo
Wow this is a messy mesh 😂🙃
Kayce Seifert
6mo
I’ve used this diagram in so many internal decks — such a good visual of how tangled the web of oversight can become. Shoutout to whoever at the GAO put this together originally!
Laxmi Ramanath
6mo
Yes indeed
Product legal, regulatory and policy at Trustly
6moYou're right it's complex, but I think the CFPB has all the tools it needs to bring an enforcement action against Synapse and — relatedly — use the Civil Penalty Fund to make consumers whole.