There is so much noise around Trump's executive orders, but when it comes to repealing the Dodd-Frank Wall Street reform and the Consumer Protection Act, there is a deafening silence.
Although I think everyone should care, I know that financial legislation is boring for most people. But you know who should not be boring for … VCs and Fintech Startups.
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Some people feel that deregulation will release Fintech startups, but what is most likely is to kill them. Trump hands over regulatory decisions to his Goldman Sachs friends – and they're getting ready to eat your meal.
First, access to banking information will be rejected at will. Remember that moment when Meerkat was totally winner until Twitter cut access to his social graph with only 2 hours notice? Now, imagine the banks doing this at a startup anytime.
Dodd-Frank provides open and accessible financial data. In Section 1033, the law allows the Consumer Financial Protection Bureau (CFPB) to standardize the format of all this data and how it is shared with third parties in digital format. They protect the right of the consumer to access his data through any service of his choice and the banks are obliged to comply with it. Which means that protecting your customers to access their data is why you have access to it.
But guess what happened yesterday? A bill has been introduced by Ted Cruz to eliminate the Consumer Financial Protection Bureau. This will probably pass, and the way things look, it will happen without a single fuck given by Silicon Valley or the startup ecosystem.
I was completely in fusion mode. I've called everyone I know looking for someone to talk to. I finally found a friend who works in a hedge fund. He suggests that we would all buy canned food and a ranch where we could grow our own food.
We are moving towards an economic grouping of epic proportions.
Want to know who else is about to be touched? Online Lenders – Want to know why? Because banks can now open the floodgates and give people bad loans. No regulation! Ya! Banks can start sending checks that are actually loans and encourage people to deposit them again. Consumers will have a good time for a moment. People are going to party like in 2005. But they will not borrow from a startup. They will roll in easy access, money high interest rate because the banks will rain.
And last but not least – the management of the market's saturated and market-saturated wealth and robo-advisers will eat a huge pile of shit. Why? Because President Trump has already asked the Labor Department to stop the implementation of the "fiduciary rule" which requires that advisors work exclusively in the best interests of their clients.
This is a bit crooked, but compliance would be expensive for fund managers, so their clients would have been pushed online (much like what happened with loans). But that will not happen. In addition, to go back, I do not really understand how they will do what they do if the data is taken.
Investors and Entrepreneurs – This should keep you awake at night. Dodd-Frank could destroy Fintech as we know it. Reduce even the most successful businesses to ashes, and this can happen at the speed of lightning.
Are you panicking now? Good. It's time to motivate yourself. Share this, talk to people – talk to me … leave a comment or send me a ping on twitter @sarahnadav