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OCC’s Remarks on Fintech Charter – “A Work in Progress”

October 19, 2017 Leave a comment

It is already, Thursday. It has been a hectic week so far, so I thought I would include a photo I took of more peaceful and serene moments – Michigan’s Upper Peninsula. Beautiful…

Back to the issue at hand,

2017-09-01 18.01.03

Today, Keith A. Noreika, Acting Comptroller of the Currency gave remarks concerning Fintech Companies at Georgetown University’s Fintech Week.

You can read Mr. Noreika’s remarks here

Fintech recap…

The prior OCC, Thomas Curry announced earlier this year that OCC would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

 

“The OCC published a paper discussing the issues and conditions that the agency will consider in granting special purpose national bank charters.” You can check that paper out here

 

Fintech Charter: Praise, Debate, Criticism and a Lawsuit.

The propriety of a Fintech charter has been supported by the Fintech community in general.

 

As reported by Crowdfund InsiderBrian Peters, Executive Director of Financial Innovation Now  “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal” stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the

OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

 

That being said, the propriety of such action by the OCC has been questioned by others, and officially sued by the Conference of State Bank Superviso

rs as an “unprecedented, unlawful expansion of the chartering authority”- check out the Press Release from the CSBS back in April.

 

The OCC’s present Stance on a Fintech Charter – a Work in Progress.

 

Mr. Noreika stated today that “If, and it is still an if, a fintech company 

 

has ambitions to engage in business on a national scale and meets the criteria for doing so, it should be free to seek a national bank charter.

 

It appears no action will be taken until at least the lawsuit is resolved.

“As for our initiative to use our authority to charter nondepository fintech companies, that remains a work in progress, and as you know that authority is also being challenged by the Conference of State Bank Supervisors and the New York Department of Financial Services. Although we will defend our authority vigorously, we have not decided whether we will exercise that specific authority.”

 

Mr. Noreika also addressed some of the criticism of Fintech Charters.  I won’t go through his entire remarks, but he concludes by reassuring that any fintech comp

 

any approved would – at its core  – be a bank:

“The chartered entity, regulated by the OCC, would be a bank, engaged in at least one of the core activities of banking—taking deposits, paying checks,or making loans. The folks who suggest that the OCC is considering granting charters to nonfinancial companies are wrong.

 

 

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

 

That’s social entrepreneurship at its finest.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Fintech Company “Lemonade” Following Through on Its Purpose Driven Mission.

In the past I have posted on Fintech Companies – and highlighted a few – namely Lemonade.  Below is an update on some exciting things Lemonade is doing.

2015-11-26-13-04-02

 

But as a threshold matter:

What is Fintech?

 

According to FinTech Weekly:

Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.

 

The idea of a business’ purpose of “disrupting incumbent”…anything is intriguing to me.

Some systems need to be disrupted. I have previously posted my own thoughts on being a disruptive force for good.

To that point, Lemonade seemingly fits the bill. Look no further than it’s mission statement on its homepage: “Instant everything. Killer prices. Big heart.

About Lemonade:

According to its website, Lemonade is the “World’s First P2P Insurance Company” (Peer-to-Peer).

Lemonade provides Renters and Homeowners Insurance to New

Yorkers.

According to a CrowdFundInsider article: “Lemonade has positioned its platform in a David vs. Goliath battle to challenge antediluvian insurance incumbents by providing a far better service at a superior price.”

Who doesn’t root for the underdog?

Technology Driven.

Shai Wininger, co-founder and President of Lemonade, explained to CrowdfundInsider that technology drives everything at Lemonade.

“From signing up to submitting a claim, the entire experience is mobile, sim

ple and remarkably fast. What used to take weeks or months now happens in minutes or seconds. It’s what you get when you replace brokers and paperwork with bots and machine learning.”

Disruptive Force for Good.

Daniel Schreiber, co-founder and CEO of Lemonade. told CrowdfundInsider “the opportunity is unusual. Disrupting an industry that has not changed for a hundred years ”

According to an article posted by Venture Beat:

Lemonade is also setting out to combat existing models through an annual “giveback,” where it donates unclaimed money to good causes.”

Talk is cheap.  Has Lemonade followed through on its actions?

Apparently so – in a very impressive way.

 

Lemonade’s 2017 GiveBack

Lemonade posted today that its Giveback for 2017 was $53,174:

this amounts to 10.2% of its 2017 revenue.

 

The article highlighted one such GiveBack recipient: New Story

“New Story builds safe homes for the homeless, and aims to transform slums into thriving communities in the developing world.”

 

“Through the Giveback to New Story, the Lemonade community built a new home for the Quitéño family, from start to finish. Now, the Quitéño family will have a safe home to return to every day, giving them a stable foundation to improve their health, education, and income.”

 

Conclusion.

Lemonade is doing some innovative work for the social good.

I love the concept of this startup –

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

That’s social entrepreneurship at its finest.

If you are a homeowner or tenant residing in New York, this company is worth checking out.

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Entrepreneurs and Small Businesses: Crowdfunding Law Update.

Last year  Representative Tom Barrett introduced House resolution2015-11-26-13-04-02 235 (HR 235)

“to support the (SEC)’s recent adoption of rules…to facilitate small and start-up companies’ access to capital raised through crowdfunding.”

The resolution supports crowdfunding as viable tools for start-up businesses.

The resolution acknowledges:

Businesses in Michigan have greatly benefited from the opportunities created by the…Michigan Invests Locally Exemption (MILE) program. MILE has allowed everyday Michiganders, referred to as unaccredited investors, the ability to play a larger role in growing Michigan’s creative business ventures through Michigan-based crowdfunding platforms while still enjoying investor protections and security in their investments” (Emphasis added.)

 

Is Crowdfunding a Viable Option in Michigan?

Fast forward to today,  MIBiz recently reported that Michigan’s crowdfunding law hasn’t gained much traction

However, it may remain a viable tool for cash-strapped startups and the Michigan legislature has not given up on it.

 

Yesterday the Michigan House passed HB 4035 that amended the Michigan Invests Locally Exemption to Intrastate Crowdfunding.

 

According to yesterday’s announcement from the Michigan House Republican Website:

The amendments contained in HB 4035 “will expand the program so people can also invest in small businesses primarily doing business in the state and allows Michigan’s law to remain active under new Federal regulations

You can check out the House Fiscal Agency’s Analysis Here

The HB now moves to the Senate Commerce Committee for consideration.

 

Entrepreneurs and Start-ups:

 

Proponents of Crowdfunding: access to capital.

A while back Candace Klein Chief Strategy Officer at DealStruck was Interviewed by CrowdfundInsider and talked about how small business might benefit from crowdfunding. She had this to say, in part:

“Most businesses are community-based, and have an immediate impact for those in their community, whether geographic or industry-based.  Crowdfunding brings these companies together with the everyday investors in their communities.”

 

Crowdfunding for Social Enterprise?

I agree. As I’ve previously written about, crowdfunding appears to be a viable tool for community based businesses.

People are willing to invest in projects that will enhance their local community.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Update on Fintech, Social Entrepreneurship and Special Purpose National Bank Charters for Fintech Companies.

January 19, 2017 1 comment

Last month, Thomas J. Curry, Comptroller of the Currency gave remarks about Special Purpose National Bank Charters for Fintech Companies. You can read Mr. Curry’s remarks here.

Mr. Curry announced that the Comptroller of the Currency (OCC) would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

Mr. Curry had this to say, in part:2015-11-26-13-04-02

“Over the past year, no topic in banking and finance has drawn more interest than innovative financial technology, and for good reason. The number of fintech companies in the United States and United Kingdom has ballooned to more than 4,000, and in just five years investment in this sector has grown from $1.8 billion to $24 billion worldwide.

“The OCC published a paper discussing the issues and conditions that
the agency will consider in granting special purpose national bank charters.” You can check that paper out here

Support for Special Purpose National Banks from the Fintech Community.

Today I read an article from CrowdFund Insider: Financial Innovation Now supports the OCC’s charter.

Financial Innovation Now is “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal”

Some heavy hitters.

As reported by Crowdfund Insider, Brian Peters, Executive Director of Financial Innovation Now, stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the
OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

That’s social entrepreneurship at its finest.

Given the hot water that big banks continue to find themselves in, it isn’t surprising that a consumer friendly alternative is attractive.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Update on Community Development and Affordable Housing: Is an Answer Found in Social Enterprise?

October 31, 2016 4 comments

Today the Community Development Financial Institutions Fund released its five year Strategic Plan

If you are not familiar with the CDFI, the CDFI “works to spur economic growth and opportunity in many of our nation’s most distressed communities.2015-11-26-13-04-02

“The CDFI Fund’s mission is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers.”

Included in the overarching goal for the CDFI’s strategic plan is promoting community development. If you have a few minutes, take a look at the strategic plan.

The Affordable Housing Problem in Grand Rapids

As many of you may know, a few weeks back the Grand Rapids Chamber hosted an Issue Summit on the Housing Crisis in Grand Rapids.

The Summit brought speakers representing many community stakeholders, including representatives from 616 DevelopmentGrand Rapids Urban League,Rockford ConstructionICCFMSHDA, and many local non-profits, including Mel Trotter MinistriesHQHeartside Ministries, on this lack of affordable housing, what is as Mayor Bliss emphasized, admittedly, “a complex issue”.

I have previously offered my own perspective, both as a lawyer representing real estate developers/investors, and as Board Chairman at Mel Trotter Ministries.Is there an answer found in Social Enterprise?

Last week Jim Harger with MLive posted a thorough article on the affordable housing crisis.

One community partner highlighted was Pastor Jim Davis and his company “Purpose Properties

“The mission of Purpose Properties is to “raise enough money from local foundations and philanthropists to buy market-rate and affordable rental properties in the city.”

According to Jim Harger’s article:

Purpose Properties plans to charge market rates for its properties to those who can afford them and use their profits to subsidize the rents of those who cannot afford market rates.”

My thoughts:

This is social entrepreneurship at its finest. Social entrepreneurs engage their community by using the power of business to solve a social problem.

We need more businesses and community stakeholders to approach our community problems like Jim Davis and Purpose Properties.

The question we should all ask ourselves: Am I working to build a better community?

Jeshua@dwlawpc.com

 

Twitter: @JeshuaTLauka

Small Business, Social Entrepreneurs and Crowdfunding

Just a few days ago I posted on the Michigan House Resolution supporting Equity Crowdfunding.

This morning I read an article on CrowdfundInsider on the topic of financing for small businesses.

Access to Capital: What are the Options for Small Company Finance?

Candace Klein Chief Strategy Officer at DealStruck was Interviewed and talked about how small business might benefit from crowdfunding. She had this to say, in part:

“Most businesses are community-based, and have an immediate impact for those in their community, whether geographic or industry-based.  Crowdfunding brings these companies together with the everyday investors in their communities.”

 

I agree. As I’ve previously written about, crowdfunding appears to be a viable tool for community based businesses.

People are willing to invest in projects that will enhance their local community.

This is what makes local equity-based crowdfunding attractive for social entrepreneurs.

Comments? Questions?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Entrepreneurs and Start-ups: House Resolution Supports Crowdfunding for Start-up Businesses

March 8, 2016 1 comment

On March 3,  Representative Tom Barrett introduced House resolution 235 (HR 235).  Today HR 235 was on the agenda for the Commerce and Trade Committee Meeting.

HR 235 is a  “resolution to support the United States Securities and Exchange Commission’s recent adoption of rules pursuant to Title III of the JOBS Act which are designed to facilitate small and start-up companies’ access to capital raised through crowdfunding.”

The resolution supports crowdfunding as viable tools for start-up businesses.

The resolution acknowledges:

Businesses in Michigan have greatly benefited from the opportunities created by the…Michigan Invests Locally Exemption (MILE) program. MILE has allowed everyday Michiganders, referred to as unaccredited investors, the ability to play a larger role in growing Michigan’s creative business ventures through Michigan-based crowdfunding platforms while still enjoying investor protections and security in their investments” (Emphasis added.)

HR 235 ends by stating that:

“we support the United States Securities and Exchange Commission’s recent adoption of final rules pursuant to Title III of the JOBS Act which are designed to facilitate small and start-up companies’ access to crowdfunding capital, fostering entrepreneurial growth and continued job creation in the state of Michigan and across the United States”

Entrepreneurs and Start-ups:

Although the resolution has no real significant legal effect, Michigan legislators want you to know that they are on your side.

A key point addressed in the resolution is the balance between allowing startups access to capital, all the while ensuring adequate “investor protections” for the unaccredited investor.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com