Utah’s growth over the last few decades is something we should all be proud of. The combination of a friendly business climate, effective leadership, and a growing and capable workforce has made our state a top destination for businesses of all shapes and sizes.
It’s difficult to drive through any part of our great state without seeing a new company or firm that has either moved to or started in Utah and grown into a tremendous success. And few industries have had a larger part in our story than our tech, specifically our financial technology sector.
According to the Kem Gardner Policy Institute at the University of Utah, in 2023, 67 fintech companies in Utah created nearly 8,000 jobs, producing more than $1 billion in total annual wages. They also estimate that fintech affects Utah’s employment, with each job in the industry generating an additional 2.8 jobs throughout the broader economy and an economic impact of $7.3 billion across all Utah industries.
But right now, much of that innovation and success is at risk, pending the outcome of a critical debate at the Consumer Financial Protection Bureau over a complex policy called Rule 1033, or the Open Banking Rule.
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Mandated by Dodd Frank, the first Trump administration began the development of a rule that would set clear rules of the road for data access, ensuring that even if someone banked with a larger financial such as Bank of America or JPMorgan Chase, they could easily share their own banking data with other financial services such as Venmo, Paypal, Stripe, Coinbase, or any of the hundreds of other financial technology tools people use every day to make their lives easier.
The rule was finalized under the Biden administration and came under immediate attack by Big Banks and the Big Bank lobby, which have argued that they should have more control of consumer data and also have the right to charge fees when consumers attempt to share their data with third parties.
JPMorgan Chase went so far as to attempt to use the short-term uncertainty as the CFPB was considering vacating the rule entirely to announce new fees for fintechs and crypto platforms to access any data — a move that some called flatly illegal under Rule 1033.
Financial innovators have compared this to “Operation Chokepoint 3.0,” a reference to the debanking policies that began under former President Barack Obama, in which banks used the broad terms of “reputational risk” to take away banking access from certain types of businesses and industries. That has expanded in more recent years, and earlier this year, the House of Representatives opened an investigation into “politically motivated debanking of thirty tech founders.”
Utah Treasurer Marlo Oaks has been a powerful voice against the influence of politics in determining access to banking and investment. While he’s been a longtime champion against banks and large financial institutions promoting political agendas through environmental, social, and governance, he’s also helped lead an effort alongside 30 other state financial officers committed to ending discriminatory banking practices.
And just as Oaks engages from the jurisdiction as our state treasurer, I am closely tracking this debate as Utah’s chief legal adviser, responsible for ensuring that the industries that power our economy have fair practices and are governed appropriately under the law.
And just two weeks ago I joined a group of 22 attorneys general commending Sen. Tim Scott (R-SC), the chairman of the Senate banking committee, for introducing legislation to curtail debanking, noting I “wholeheartedly agree with the proposed legislation’s finding that all ‘law-abiding citizens regardless of political ideology should have equal opportunity to obtain financial services and should not face unlawful discrimination in obtaining such services.’”
I firmly believe that debanking means both access to banking services, but also access to the banking tools Utah families like, whether they be for payments, investing, financial planning, or any other purpose. And exorbitant fees constitute moats or barriers to block innovation and stifle competition. In every phase of industrialization and innovation, there have been efforts from larger players to crush smaller players. Consider the development of telecommunications, in which AT&T’s monopoly controlled the entire system and prevented any competitors from connecting to it. Regulations were put in place to allow third parties to connect with the system. Similarly, Rule 1033 may be a regulation, but by forcing larger financial institutions to grant consumers the ability to share their data, it acts as a form of deregulation by regulation and paves the way for greater innovation.
As the CFPB enters the rulemaking process and evaluates a wide range of comments and perspectives, I am confident that its members will focus on striking the right balance of ensuring consumers have access to data and the financial innovation they care about, ensuring that the bad actors who have previously led the charge in debanking are not given undue deference.
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As Utah’s attorney general, I will continue to stand with Oaks and our state’s innovators in applauding the administration’s efforts to get this critical balancing act right. I believe they will use this rulemaking period to put consumers first — by guaranteeing access to their own data, protecting lawful industries from discrimination, and ensuring that competition thrives.
Utah’s future, and the future of consumer choice in America, depends on it.
Derek Brown is the attorney general of Utah.