[1]U.S. Sen. Elizabeth Warren [2] (D-Massachusetts), the chief architect of the Consumer Financial Protection Bureau, is concerned that a communications company might be touting its technology as a way for companies to circumvent compliance with government regulations.
On Monday, Warren sent a letter to six financial regulators [2] regarding possible compliance and enforcement issues brought about by a new communications tool by Symphony Communications. Warren said the new system appears to let companies know with "a wink and a nod" that Symphony can be used as a way for the company to "reduce compliance and enforcement concerns."
Warren sent a letter to the heads of the Consumer Financial Protection Bureau (CFPB [3]), Commodity Futures Trading Commission (CFTC [4]), Department of Justice (DOJ [5]), Federal Deposit Insurance Corporation (FDIC [6]), Financial Industry Regulatory Authority (FINRA [7]), and Securities and Exchange Commission (SEC [8]). She asked the regulators about how the system will affect their ability to enforce the law, noting that Symphony has said its system is a way to "prevent government spying" with "no backdoors."
"The communications that Symphony will allow companies to hide from ‘government spying' – such as text messages and chat room transcripts – have proven to be ‘key evidence' in many previous regulatory and compliance cases that have uncovered criminal action by Wall Street..." Warren said. "If banks are now making this information more difficult for regulators to obtain and interpret, it could prevent these regulators from identifying and preventing future illegal behavior."
In the last year, many banks and financial institutions have sought relief from increased regulation as more components of the controversial Dodd-Frank Act have been implemented, saying the increased regulation has driven up their costs of operation. Some have even withdrawn certain services, as in the cases of Wells Fargo and Prospect Mortgage. In late July, the two companies announced [9] their intention to withdraw from activities that depend on marketing services agreements (MSAs), citing regulatory uncertainty.
To read the full text of each letter written by Warren to the regulators, click on the name of the agency: CFPB [10], CFTC [11], DOJ [12], FDIC [13], FINRA [14], and SEC [15].