CHICAGO (8/12/15)--Regulators should support and encourage innovation that helps consumers, Comptroller of the Currency Thomas Curry said at a conference focused on new and innovative ideas in finance.
Hosted by the Federal Home Loan Bank (FHLB) of Chicago, the forum gave Curry a chance to expound on how new products and services are the “lifeblood of our nation’s economy.”
“As the industry continues to innovate, it’s important that regulators strike the right balance between encouraging responsible innovation and managing risk,” he said, citing virtual currency as an example.
He said virtual currencies such as Bitcoin could be used to keep track of ownership and prevent double spending, leading to less expensive ways for institutions to settle transactions. The anonymity of these currencies also requires strict adherence to laws aimed at deterring money laundering and terrorist financing, he noted.
Curry brought up the new FHLB Chicago Mortgage Partnership Finance Government mortgage-backed securities program, which allows lenders to deliver government-insured home loans to the Chicago FHLB, which will act as a Ginnie Mae security issuer.
This approach eliminates barriers that small financial institutions would face in becoming Ginnie Mae issuers themselves, and “will be particularly attractive for low-volume mortgage lenders,” Curry said.
Curry also encouraged caution when it comes to new innovations, citing many complex services that he believes led to the financial crisis.
“Very risky activities created huge losses for financial institutions and their customers, and ultimately threatened the entire financial system. So new products and services have to be evaluated with an eye toward risk management,” he said. “However, while our views of innovative products and services are informed by the experience of the financial crisis, we can’t let that memory blind us to the importance of continued innovation in the financial marketplace.”