In an opinion piece published in the Financial Times on Tuesday, Acting Comptroller of the Currency Brian Brooks put forward the need to reconfigure banking regulations for an age of algorithms.
Brooks, who currently leads the Treasury's Office of the Comptroller of the Currency, compared existing banking regulations to traffic laws. He further used the analogy of self-driving cars for new steps in decentralized finance. "Just as the original rules of the road protected us from other drivers, so our current bank regulations exist mainly to prevent human failings," wrote Brooks.
The overall tone of Brook's letter is confident that banking regulators are capable of retooling, of learning how to appraise algorithms for bias and fraud — which he says will ultimately prove simpler than trying to root those same issues out of human bankers. Brooks concludes:
"Could we usher in a future where we eliminate error, stop discrimination, and achieve universal access for all? Optimists like me think so. How different would banking in the US be today if regulators, bankers, and policymakers were as bold as carmakers 10 years ago?"
The OCC charters and directs national banks. Formerly the leader of Coinbase's legal team, Brooks has been a major proponent of integrating crypto technology into the national payments system. Under his watch, the OCC recently authorized national banks to run stablecoin payments and nodes.
Brooks has similarly been a proponent of a national charter for non-depository institutions, specifically aimed at giving fintech firms a chance at national licensing rather than having to go through each state in the U.S. Near the end of December, however, state regulators struck back with a lawsuit deriding what they call the OCC's "non-bank charter" as an overreach of federal power. In today's opinion piece, Brooks may have been referring to these issues with state regulators when he wrote that:
"There is also a risk that, in the absence of federal regulatory clarity, US states rush to fill the void and create a patchwork of inconsistent rules that impede the orderly development of a national market."
While President Trump nominated Brooks to be the full Comptroller back in November, the Senate never moved forward on his nomination. With the new administration taking over next week, Brooks' continued tenure at the OCC seems dependent upon a Biden nomination.