Banking Regulators Told to Use Existing Tools to Police Fintechs

Banks and consumer advocates pushed federal banking regulators to use existing powers to better police partnerships between banks and financial technology companies.

The Federal Reserve, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency sought comments on bank-fintech partnerships in July following the collapse of Synapse Financial Technologies Inc.

Synapse, backed by Andreessen Horowitz and other top Silicon Valley venture capital funds, was a “banking as a service” provider, serving as a middleman between fintechs and smaller banks. When Synapse filed for bankruptcy in April, around 100,000 fintech customers were shocked to find they couldn’t ...