About F%$#ing Time

The reason that PayPal was a success, and parasites like Peter Thiel and Elon Musk became fabulously wealthy, was not because they used computers and the internet in innovative and new ways, PayPal's technology has been created many times before the company was founded.

Their innovation was to use computers and the internet as an EXCUSE not to follow rules and regulations set up for consumer banking that had been established in the century or so prior to their founding.

Well, the new head of the Consumer Financial Protection Bureau (CFPB) has made it clear, if tech gets into payments, it will have to follow the same rules as banks.  "Because Internet," simply does not cut it:

Consumer Financial Protection Bureau Director Rohit Chopra is laying the groundwork for regulatory oversight of the largest technology companies as the agency crafts rules around consumer choice and control over financial data, observers said.

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The information request was seen as a sign by many that the bureau is gearing up to be tougher on tech giants that expand their financial services offerings, despite complaints by big-tech advocates that the agency is veering outside of its lane.

“A tech company that decides to start engaging in basic financial services like payment processing is right inside of the wheelhouse of the CFPB,” said Chris Peterson, a law professor at the University of Utah's S.J. Quinney College of Law and a former special advisor at the CFPB.

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The orders demanding the payments-related information from the largest tech companies come as the tech firms are already under massive scrutiny and public pressure in Congress, including the release of the so-called Facebook Papers divulging internal policies of the social media giant that are the subject of investigative stories by The Wall Street Journal and others.

The level of scrutiny means lawmakers from both parties who rarely agree on much may be receptive to Chopra examining the tech giants.

The information request requires the tech firms to submit details on their payments offerings, sale and handling of consumer data, fees, how they respond to consumers' complaints, and more. Chopra is set to testify this week before the House and Senate banking committees.

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The CFPB already has the authority to regulate, supervise and oversee payment processors through the Electronic Funds Transfer Act.

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Bankers allege that fintech companies increasingly are offering products and services that traditionally were handled by banks but they are not subject to the same federal supervisory oversight.

This is how the "PayPal Mafia" became the "Paypal Mafia".  Not innovation, nor brains, but regulatory arbitrage.

It's good that they are not getting a pass, because whenever tech gets a pass, particularly the tech giants, they proceed to abuse that advantage.