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Biden Pick for Fed Financial Oversight Post Invests in Group of Crypto Firms

Last month, President Biden announced former Obama administration official and law professor Michael Barr as his pick to be the Federal Reserve’s Vice Chairman for Oversight, with a Senate committee hearing scheduled for May 19. The position is responsible for the supervision and regulation of major banks and financial institutions.

“Barr has spent his career protecting consumers and, during his time at the Treasury, played a vital role in the creation of both the Consumer Financial Protection Bureau and the position for which I appoint him,” the House said. Blanche in her press release in mid-April. . “He was instrumental in getting Dodd-Frank through, to ensure that a future financial crisis would not create devastating economic hardship for working families.”

Financial Disclosure Documents published by Barr and reported by the Revolving Door Project, a nonprofit think tank in DC, reveals investments in more than 80 fintech (fintech) companies, including cryptocurrency, debt collection and microfinance companies. This is concerning, according to the Revolving Door Project, given the collapse of the cryptocurrency market and increasing scrutiny from regulators.

“The next vice president for oversight will play a key role in determining the impact of fintech and cryptocurrency on the financial system. Especially after last week’s total collapse in the cryptocurrency market, the Fed needs a chief regulatory officer who everyone can trust to act independently of industry pressures, personal financial interests and the desire for powerful jobs in the private sector after their tenure in government,” Revolving Max Moran, research director of The Door Project, said in a press release.

“Jerome Powell’s Fed was notoriously lax on ethical issues“, continues Moran’s statement. “Senators and the press should find out the extent of Barr’s financial and personal interests in fintech and cryptocurrency, how he views these digital ‘innovations’ in finance (still a risky prospect at best), and why they should trust him to act in the best interest of the public. »

The lion’s share of Barr’s investments are in companies invested by NYCA Partners, a fintech-focused venture capital fund with nearly $1 billion under management. He invested in payday loan app Brigit and was a consultant at LendingClub from 2013 to 2020, where he earned $133,110 in 1099 income and between $15,000 and $50,000 in capital gains according to disclosures. Barr has also invested in crypto-related fintech companies such as Zero Hash (which provides infrastructure for financial institutions to facilitate crypto transactions), microinvestment app Acorns Grow, Tint Technologies (a company that offers insurance for Bitcoin mining equipment and crypto deposits), anti-fraud holding firm Sardine AI Corp, institutional blockchain firm Axoni, and blockchain network monitoring firm Metrika.

A major Barr’s investment, GRIT Financial, offers the type of “earned wage access” products that have come under the new exam of the Consumer Financial Protection Bureau – which Barr helped create – for their resemblance to payday loans. Another investment is in TrueAccord, a digital debt collector empowered by a Trump administration decision allowing collectors to get in touch an unlimited number of times by e-mail and up to 7 times a week by call or SMS.

Barr isn’t the only NYCA Partners adviser to enter the public sector; one of his frequent colleagues and collaborators at the University of Michigan and member of the Biden-Harris transition team, Adrienne Harris (no relation to the vice president), has been named head of the Department of Financial Services of New York State (DFS).

Like the revolving door project reported At the time, Harris was long skeptical of regulatory approaches that scrutinize the fintech industry. Harris has served as an attorney and advisor for Wall Street firms Brigit, home-buying app Homie, “insurtech” startup States Title, and served on the board of LendingClub. Harris Eve joined the boardthe Federal Trade Commission announced that the company had agreed to $18 million settlement to sneak in hidden fees for loans explicitly advertised as having none. Harris left NYCA and the LendingClub board after moving up to DFS, which oversees nearly 1,800 insurance companies and more than 1,400 financial institutions (overseeing assets exceeding $8.4 trillion).

This is just the latest in a long line of concerning developments as the tech sector, but especially the cryptocurrency industry, desperately tries not only to establish a revolving door between the public sector and the private sector, but also to protect themselves from scrutiny.

Crypto industry spent millions lobbying Congress, Biden-Harris transition team was full of Silicon Valley staff and former nominees for this and other key regulatory posts were crushed in nasty brawls that kept posts open for more moderate officials. When they were unable to block nominations, tech companies threw tantrums demanding the recusal of regulators like Federal Trade Commission Chair Lina Khan. As long as technology and crypto remain hostile to regulation, we will continue to see the pain caused by the stock market crash, fraud and exploitation endemic to the crypto industry.