Earned Wage Access: Innovation or Payday 2.0?

Professor Anat Admati, co-author of The Bankers' New Clothes, discusses the new and expanded edition of her groundbreaking book. Anat and Lee reflect on the persistent fragility of the banking system, the Federal Reserve's Basel Endgame proposal, and the future of international regulatory coordination. Anat also shares her insights on why stronger bank equity requirements are essential and how myths perpetuated by the banking industry continue to shape public policy. Related Links: The Bankers' New Clothes | Princeton University Press Nonsense and Bad Rules Persist in Banking by Anat R. Admati - Project Syndicate What is bank capital? What is the Basel III Endgame? Speech by Vice Chair for Supervision Barr on Basel III endgame - Federal Reserve Board A Federal Reserve Regulator Who Deserves the Boot - WSJ

Yasmin Farahi and Lucia Constantine from the Center for Responsible Lending discuss the promises and perils of Earned Wage Access programs. Discover how these fintech products operate, the financial traps they can create, and the regulatory debates shaping their future. Related Links: A Loan Shark in Your Pocket: The Perils of Earned Wage Advance Paying to be Paid: Consumer Protections Needed for Earned Wage Advances and Other Fintech Cash Advances Not Free: The Large Hidden Costs of Small-Dollar Loans Made Through Cash Advance Apps CFPB Proposes Interpretive Rule to Ensure Workers Know the Costs and Fees of Paycheck Advance Products House of Representatives Digital Assets, Financial Technology, and Inclusion Subcommittee Hearing "Modernizing Financial Services through Innovation and Competition." Statement for the Record Ram Palaniappan, CEO, EarnIn October 25, 2023

Justin Sherman is the founder and CEO of Global Cyber Strategies, a nonresident senior fellow at the Atlantic Council, and an adjunct professor and senior fellow at Duke University's Sanford School of Public Policy, where he founded and leads its data brokerage research project. He joins Lee to discuss how data brokers obtain and use sensitive data, the role they play in financial services, and the current regulatory landscape attempting to address these practices. Lee's X: @leereiners Justin's X: @jshermcyber Related Links: CFPB Launches Inquiry Into the Business Practices of Data Brokers | Consumer Financial Protection Bureau (consumerfinance.gov) Prepared Opening Remarks of CFPB Director Rohit Chopra at the Aspen Institute on Abuse and Misuse of Our Personal Data | Consumer Financial Protection Bureau (consumerfinance.gov) CFPB Takes Action to Curb Unchecked Worker Surveillance | Consumer Financial Protection Bureau (consumerfinance.gov) How to surveil a federal regulator - POLITICO Fed, intel and military groups warn data broker practices may threaten national security - Nextgov/FCW Microsoft Word - Duke Team Response to CFPB RFI on Data Brokers.docx Data Brokers and the Sale of Data on U.S. Military Personnel - Tech Policy @ Sanford | Tech Policy @ Sanford (duke.edu) The U.S. Needs Controls on Data Brokerage | TechPolicy.Press Examining data broker Equifax's relationships with millions of employers - Tech Policy @ Sanford | Tech Policy @ Sanford (duke.edu)

Dan Berkovitz and Laurian Cristea discuss the regulatory and ethical challenges surrounding political event contracts. They explore the history, recent legal developments, and the future implications of betting on political outcomes, especially as the CFTC tightens its stance on these controversial markets. Lee's X: @leereiners Related Links: CFTC proposed amendments to its rules concerning event contracts in certain excluded commodities: https://www.federalregister.gov/documents/2024/07/05/2024-14610/event-contracts Elections Bets Go Live on Kalshi After CFTC's Court Loss: https://news.bloomberglaw.com/securities-law/betting-on-us-congress-elections-outcome-green-lit-by-judge US appeals court clears Kalshi to restart elections betting: https://www.reuters.com/legal/us-federal-court-upholds-ruling-letting-kalshiex-list-election-betting-contracts-2024-10-02/ Statement of Chairman Rostin Behnam Regarding CFTC Order to Prohibit Kalshi Political Control Derivatives Contracts: https://www.cftc.gov/PressRoom/SpeechesTestimony/behnamstatement092223 A Mystery $30 Million Wave of Pro-Trump Bets Has Moved a Popular Prediction Market: https://www.wsj.com/finance/betting-election-pro-trump-ad74aa71

Ed DeMarco is president of the Housing Policy Council and former acting director of the Federal Housing Finance Agency. He discusses the rise of nonbank mortgage companies and what the Financial Stability Oversight Council's recent report on nonbank mortgage servicing gets right and what it gets wrong. Ed also offers his thoughts on the FHFA's Title Insurance Waiver Pilot Program, Freddie Mac's proposal to purchase second mortgages, and the CFPB's inquiry into junk fees in mortgage closing costs. Finally, DeMarco shares his views on Kamala Harris' housing policy proposals and their potential impact on the housing market. Lee's X: @leereiners Related Links: FSOC Report on Nonbank Mortgage Servicing: https://home.treasury.gov/news/press-releases/jy2331 Director Sandra Thompson's Statement on Title Acceptance Pilot: https://www.fhfa.gov/news/statement/director-sandra-thompsons-statement-on-title-acceptance-pilot FHFA Announces Conditional Approval of Freddie Mac Pilot to Purchase Second Mortgages: https://www.fhfa.gov/news/news-release/fhfa-announces-conditional-approval-of-freddie-mac-pilot-to-purchase-second-mortgages CFPB Launches Inquiry into Junk Fees in Mortgage Closing Costs: https://www.consumerfinance.gov/about-us/newsroom/cfpb-launches-inquiry-into-junk-fees-in-mortgage-closing-costs/ Housing Finance Quick Takes video series: https://www.housingpolicycouncil.org/hfqt

Graham Steele is the former Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury. He discusses insights from his latest paper for the Roosevelt Institute, "The End of Banking History? Finishing the Unfinished Business of Financial Reform." From the impact of the 2018 deregulatory "tailoring" project, which weakened post-crisis reforms, to the cascading failures of regional banks like Silicon Valley Bank and Signature Bank in 2023, Graham laid out his view on why the current regulatory framework is falling short and what needs to change. Graham's X: @steelewheelz Lee's X: @leereiners Related Links: The End of Banking History? Finishing the Unfinished Business of Financial Reform: https://rooseveltinstitute.org/publications/the-end-of-banking-history/ Remarks by Assistant Secretary for Financial Institutions Graham Steele at the George Washington University Law School Business & Finance Law Program: https://home.treasury.gov/news/press-releases/jy2029

Kathryn Judge is a professor at Columbia Law School and Aaron Klein is a Senior Fellow at the Brookings Institution. They discuss the origins of the Federal Home Loan Banks, the role they played in propping up failing banks in the 2023 regional banking crisis, and their ideas for how the FHLBs can be reformed to better fulfill their public mission to promote housing and community development. Kate Judge's X: @ProfKateJudge Aaron Klein's X: @Aarondklein Lee's X: @leereiners Related Links: Comment Letter on FHLB Mission Statemen, Kathryn Judge and Aaron Klein: https://www.brookings.edu/wp-content/uploads/2024/07/Klein-Judge-FHLB-mission-statement-comment-FINALpdf.pdf Forum on the future of the Federal Home Loan Bank system: Highlights from the Brookings and BU Law event, Aaron Klein, Cornelius Hurley, and Harrison Fregeau: https://www.brookings.edu/articles/forum-on-the-future-of-the-federal-home-loan-bank-system-highlights-from-the-brookings-and-bu-law-event/ How to fix the Federal Home Loan Banks, Kathryn Judge and Aaron Klein: https://www.brookings.edu/articles/how-to-fix-federal-home-loan-banks/ FHLBank System at 100: Focusing on the Future, Federal Housing Finance Agency: https://www.fhfa.gov/sites/default/files/2024-01/FHLBank-System-at-100-Report.pdf

John Coates is the John F. Cogan, Jr. Professor of Law and Economics at Harvard Law School and author of "The Problem of Twelve: When a Few Financial Institutions Control Everything." According to John, a problem of twelve arises when a small number of institutions acquire the means to exert outsized influence over the politics and economy of a nation. In this episode, John discusses insights from his book and how the concentration of corporate power in the hands of a small group of institutional investors, specifically index funds and private equity funds, undermines our democracy. Lee's X: @leereiners Lee's Website: www.leereiners.com Related Links: The Problem of Twelve: When a Few Financial Institutions Control Everything: https://www.amazon.com/Problem-Twelve-Financial-Institutions-Everything/dp/B0BW67PX7B

Art Wilmarth, Professor Emeritus of Law at the George Washington University Law School, reflects on the regional banking crisis of spring 2023 and how decisions made by regulators to resolve Silicon Valley Bank, Signature Bank, First Republic Bank, and Credit Suisse reveal that we have still not solved the Too Big to Fail problem. Lee's X: @leereiners Lee's Website: www.leereiners.com Related Links: The FDIC's resolution plan for failed megabanks is an empty promise: https://www.americanbanker.com/opinion/the-fdics-resolution-plan-for-failed-megabanks-is-an-empty-promise Regulators should reject big-bank arguments against stronger capital requirements: https://thehill.com/opinion/4715182-regulators-should-reject-big-bank-arguments-against-stronger-capital-requirements/ We Need a New Glass-Steagall Act to End the Toxic Symbiosis Between Universal Banks and Shadow Banks, Which Professor Corrigan Has More Fully Revealed: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4794680 Statement by Martin J. Gruenberg, Chairman, Federal Deposit Insurance Corporation on Title 1 Resolution Plan Feedback Letters for 8 U.S. GSIBs: https://www.fdic.gov/news/speeches/statement-martin-j-gruenberg-chairman-federal-deposit-insurance-corporation-title-1 Martin J. Gruenberg, Chairman, FDIC Lessons Learned from the U.S. Regional Bank Failures of 2023 Florence School of Banking and Finance: https://www.fdic.gov/news/speeches/martin-j-gruenberg-chairman-fdic-lessons-learned-us-regional-bank-failures-2023 US regulator criticises Swiss handling of Credit Suisse as 'unhelpful': https://www.ft.com/content/9fb79310-b8e4-47d8-99cf-a7630eae59e7 FDIC Board of Directors Approves Final Revised Rule to Strengthen Resolution Planning for Large Banks: https://www.fdic.gov/news/press-releases/fdic-board-directors-approves-final-revised-rule-strengthen-resolution-planning Overview of Resolution Under Title II of the Dodd-Frank Act: https://www.fdic.gov/sites/default/files/2024-04/spapr1024b_0.pdf

Eric Spitler, former Director of the Office of Legislative Affairs at the FDIC, discusses his paper on the history of bank runs and how he would reform deposit insurance to address the weaknesses revealed by last spring's regional banking crisis. Lee's X: @leereiners Related Links: Yelling 'Fire' in the Financial Theater: Bank Runs in the Social Media Age and the Threat to Financial Stability: https://scholarship.law.unc.edu/ncbi/vol28/iss1/5/ The Deposit Insurance Funds as an Early Resolution Tool: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4897571