Since kicking off on the campus of Georgetown University Law Center in 2017, Washington DC’s Fintech Week has grown into one of the world’s top fintech policy conferences. For DC Fintech Week 2021, the conference will cover three main themes: the “Innovation”, “Inclusion”, and “Integrity” of the global financial system.

And we’ll again be joined by a range of interesting and important partners. This year, DC Fintech Week will be teaming up with The Bank for International Settlements on Day One to explore cutting edge developments in fintech policy, including issues of coordination and competition in international payments, digital assets and more.

In preparation for our virtual conference, we are requesting the submission of papers for consideration to be included in the conference. The deadline for submissions is Monday, August 23, 2021, at noon GMT. Selected papers will be featured on the conference website, and available as a resource to participants and presenters. Additionally, select authors might be asked to present their paper during Fintech Week as “Flash Presentations” for our global audience. Applications for virtual speakers for our live program will also be considered without an academic paper.

Possible agenda/paper topics include, but are not limited to: • Compliance and De-Fi • The Community Reinvestment Act in a Digital Economy • Central Bank Digital Currencies • Smart Contracts and Financial Inclusion • New applications for Alternative Data • Quantum Computing • De-Risking, and Pricing Crypto • Platform Gamification–and Nudges • MDIs, CDFIs and the Digital Economy • Fintech and National (In)security • ESG and Fintech.

The submission page for the Call For Papers can be found here!

With that in mind, I crunched the numbers and added an Addendum to the Working Paper.  The full paper, with the Addendum and attendant explanations, can be found here on SSRN.  The addendum reflected the information that I referenced in my recent SEC keynote speech.

The findings are as follows:

Table A.1

Table A.1 indicates that only 1.55% of all financial regulatory leaders have been African American.  Notably the table, like the Working Paper, presents the data in the most optimistic light possible.  It does not include heads of defunct agencies like the OTS, where none of its half dozen Directors (0%) were Black. Moreover, the two individuals who have served did so at arguably the smallest of all financial agencies.  No African American (0%) has served as the head of any of the most economically influential regulatory agencies.

As to the second query:

Table A.2

The findings here are sobering, and add context to the challenges outlined in the Working Paper. With only two identifiable African American Division Directors across the two agencies, ever, the data in Table A.2 point to a failure by virtually all past SEC and CFTC Chairmen, from Progressive Democrats to Conservative Republicans, to select or promote any African Americans to these key executive policy leadership roles.

We’ll be putting the programming online soon, but here is a conversation I had with Patrick Njoroge, the head of the central bank of Kenya on the future of Mpesa.  (If you’re interested in the podcast, you can find it here)

California Gov. Gavin Newsom signed legislation Wednesday that will require the boards of publicly traded companies based in the state to have at least one racially, ethnically or otherwise diverse director by 2021.

[….]

Under the new law, individuals who identify as Black, African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who identify as gay, lesbian, bisexual or transgender, would be considered eligible for meeting the requirement.

My hunch is that under the right circumstances these changes could bring significant changes to corporate policy, especially for Silicon Valley firms whose Board make up lacks ethnic minorities. Among them: fiduciary duties might be exercised by new Board members in ways that prioritize mounting data about the higher returns on capital presented by diverse work forces–which in turn could catalyze significant changes in recruiting and promotions.  Management might also become more aware of how demographic changes might well usher in forms of cultural disruption that rival technological ones, leading them to take more socially responsible decisions in how they view the very missions of their firms.

Still, these statutory reforms are in themselves no panacea.  There will be Constitutional questions raised.  And in order to catalyze change, newcomers will have to not only have a seat at the table, but also the power to speak up.  As in democracy more generally, numbers matter. And although the statutory reforms might end up upgrading a company Board, they won’t necessarily change its culture if diverse members find themselves ignored or excluded.

I have the pleasure of presenting “What do CBDCs mean for derivatives law?” for the CFTC later today as part of the agency’s live Technical Advisory Committee proceedings.  I’m now up at NOON and will discuss:

• Basics of CBDCs
• Stablecoins and cryptographic vs. legal claims
• The potential/theoretical usage of swaps as CBDC facilitators
• Questions arising for regulated FCMs in light of their brokerage activities
• Implications for custodians and clearinghouses

Here are my slides (plus dial-in details for listening in can be found here):

SLIDES: What do CBDCs mean for Derivatives Law?

For more, see my post, which is available on Medium, see here.

Today marks the 90^th anniversary of the Bank for International Settlements, and in celebration of it, the BIS is formally launching its new book, Promoting Global Monetary and Financial Stability, The Bank for International Settlements after Bretton Woods, 1973-2020..  The collection of essays are designed to highlight the significant role in the momentous changes the international monetary and financial system has undergone over the past half century.  It was a pleasure to contribute.  Authors include Agustín Carstens, Claudio Borio, Stijn Claessens, Piet Clement, Robert N. McCauley, Hyun Song Shin, Harold James, Catherine R. Schenk, Chris Brummer, Andrew Baker, Barry Eichengreen, William C. Dudley.

Problems have appeared already in several government assistance programs. The Washington Post, for example, reported Friday that several million people who filed their taxes via H&R Block, TurboTax and other services were unable to get payments because the IRS did not have their direct deposit information on file, according to the Treasury, companies and experts.

Meanwhile, the IRS launched a “Get My Payment” tool Wednesday for people to trackthe status of their payment and enter direct deposit information, but which has failed to provide any information for millions of Americans who have logged on. The reason? The IRS uses software first developed in 1962, and Congress’ economic stimulus has required multiple coding changes to the software. But ultimately, the Post reports, the agency has at least 16 other databases with taxpayer information, none of which easily can communicate with the other, said a person familiar with the matter.

Similar challenges have riddled efforts to assist small businesses. The new Paycheck Protection Program (PPP), designed to effectively offer grants to companies to keep their workforce, was slow to get out the gate. Bureaucratic challenges played a major part, but the underlying challenges of the Small Business Administration program’s technology also had a role.

The SBA’s application portal E-Tran, for example, can only support 3,000 applications per hour. But in today’s environment, there are 7,000 per hour. As Brayden McCarthy, a strategist for Stripe, observed in the Town Hall last week, there is no ability to support programmatic submission of applications to the SBA. The agency’s systems are instead dependent on people manually overseeing operations like cleaning up error messages. Consequently, the system is not designed to support over a matter of days what the SBA traditionally would have to support over 15 years — and the SBA’s ETran has been overwhelmed by demand for loan approvals.

Big banks unready (or unwilling?) for their new role Complicating things even further is that the SBA’s PPP program initially depended on big banks that are themselves surprisingly underdeveloped when it comes to key processes and capabilities necessary to execute successful policy responses.

The PPP is based on the SBA’s existing 7(a) loan program where the SBA doesn’t make loans; instead, SBA-approved banks do. But given the demand and need, there have not been enough banks to get the job done. Not only is the demand immense, but many SBA-approved banks haven’t exactly been in the mood to take on new customers. Big banks, in particular, have long been reputed to concern themselves most with servicing and keeping their largest customers, not getting new ones. And, as a result, they reportedly haven’t invested in systems designed to onboard new customers or make efficient or automate the kinds of compliance that accompanies it, like antimoney laundering and sanctions programs. So taking on new customers in bulk would require a relaxing of internal processes that could potentially open them up to government charges and penalties.

Thus not surprisingly, when the PPP was launched, many SBA lenders were only willing to offer loans to existing customers that had taken out loans with them in the past. As a result, small businesses with no existing relationships had difficulties getting financing assistance under the program.

Reviewing the problem, the government clarified its guidance for lenders and gradually opened up the program to fintech firms that had the infrastructure in place to process new customers and quickly get loans out. But days after the first fintechs received approval to participate in the program, the funding for the PPP program — all $349 billion of it — had been exhausted. And with the program working on a first come, first served basis, the initial iteration had the appearance of assisting those firms with the best connections and relationships.

The myriad technological issues aren’t going away soon, and just don’t look great for the United States. America is certainly not, when it comes to our infrastructure, number one. Or even average. Indeed, even middle-income countries now largely enjoy more advanced tools and technical infrastructure to financially assist and access their populations than the United States. From our government IT to our largest, most sophisticated institutions underinvesting in everyday people, we’re behind.

The stakes of such shortcomings have grown as quickly as the pandemic. No longer isthe country’s technological underdevelopment just embarrassing. It is now, in  very real sense, a national emergency in itself. Like many, I shudder to think what would be the consequences if an even deadlier virus was to emerge, and endanger the country’s public health. Upgrading not only our bureaucratic and political responses, but also the base layer infrastructure enabling public policy, will be a necessary component of effective reform.