Biden Pick for Fed Financial Oversight Post Invests in Group of Crypto Firms

Last month, President Biden announced former Obama administration official and law professor Michael Barr as his pick to be the Federal Reserve’s Vice Chairman for Oversight, with a Senate committee hearing scheduled for May 19. The position is responsible for the supervision and regulation of major banks and financial institutions.

“Barr has spent his career protecting consumers and, during his time at the Treasury, played a vital role in the creation of both the Consumer Financial Protection Bureau and the position for which I appoint him,” the House said. Blanche in its press release in mid-April. “He was instrumental in getting Dodd-Frank through, to ensure that a future financial crisis would not create devastating economic hardship for working families.”

Financial disclosure documents released by Barr and reported by the Revolving Door Project, a nonprofit DC think tank, reveal investments in more than 80 fintech (fintech) companies, including cryptocurrency, debt collection and microfinance businesses. This is concerning, according to the Revolving Door Project, given the collapse of the cryptocurrency market and increasing scrutiny from regulators.

“The next vice president for oversight will play a key role in determining the impact of fintech and cryptocurrency on the financial system. Especially after last week’s total collapse in the cryptocurrency market, the Fed needs a chief regulatory officer who everyone can trust to act independently of industry pressures, personal financial interests and the desire for powerful jobs in the private sector after their tenure in government,” Revolving Max Moran, research director of The Door Project, said in a press release.

“Jerome Powell’s Fed has been notoriously lax on ethics,” Moran’s statement continues. “Senators and the press should uncover the extent of Barr’s financial and personal interests in fintech and cryptocurrency, how he views these digital ‘innovations’ in finance (always a dicey prospect at best), and why they should trust him to act in the best interest of the public.

The lion’s share of Barr’s investments are in companies invested in by NYCA Partners, a fintech-focused venture capital fund with nearly $1 billion under management. He invested in payday loan app Brigit and was a consultant at LendingClub from 2013 to 2020, where he earned $133,110 in 1099 income and between $15,000 and $50,000 in capital gains according to disclosures. Barr has also invested in crypto-related fintech companies such as Zero Hash (which provides infrastructure for financial institutions to facilitate crypto transactions), microinvestment app Acorns Grow, Tint Technologies (a company that offers insurance for Bitcoin mining equipment and crypto deposits), anti-fraud holding firm Sardine AI Corp, institutional blockchain firm Axoni, and blockchain network monitoring firm Metrika.

A major Barr’s investment, GRIT Financial, offers the kind of “earned wage access” products that have come under renewed scrutiny from the Consumer Financial Protection Bureau — which Barr helped create — for their resemblance to payday loans. Another investment is in TrueAccord, a digital debt collector empowered by a Trump administration decision allowing debt collectors to make contact an unlimited number of times via email and up to 7 times per week via call or text. .

Barr isn’t the only NYCA Partners adviser to enter the public sector; one of his frequent colleagues and collaborators at the University of Michigan and member of the Biden-Harris transition team, Adrienne Harris (no relation to the vice president), has been named head of the Department of Financial Services of New York State (DFS).

As the Revolving Door Project reported at the time, Harris has long been skeptical of regulatory approaches that scrutinize the fintech industry. Harris has served as an attorney and advisor for Wall Street firms Brigit, home shopping app Homie, “insurtech” startup States Title, and served on the board of LendingClub. The day before Harris joined the board, the Federal Trade Commission announced that the company had agreed to an $18 million settlement for paying hidden fees to loans that were explicitly advertised as having none. Harris left NYCA and the LendingClub board after moving up to DFS, which oversees nearly 1,800 insurance companies and more than 1,400 financial institutions (overseeing assets exceeding $8.4 trillion).

This is just the latest in a long line of concerning developments as the tech sector, but especially the cryptocurrency industry, desperately tries not only to establish a revolving door between the public sector and the private sector, but also to protect themselves from scrutiny.

The crypto industry has spent millions lobbying Congress, the Biden-Harris transition team was full of Silicon Valley personnel, and previous candidates for this and other key positions regulators were crushed in nasty brawls that kept positions open for more moderate officials. When they were unable to block nominations, tech companies threw tantrums demanding the recusal of regulators like Federal Trade Commission Chair Lina Khan. As long as technology and crypto remain hostile to regulation, we will continue to see the pain caused by the stock market crash, fraud and exploitation endemic to the crypto industry.

Comments are closed.