Last month, President Biden announced that former Obama administration official and law professor Michael Barr had made his election as vice chairman of the Federal Reserve for oversight. A hearing before the Senate committee is scheduled for May 19. The position is responsible for the supervision and regulation of the largest banks and financial institutions.
“Barr has spent his career protecting consumers and while at the Treasury Department played a critical role in the creation of the Consumer Financial Protection Bureau and the position for which I am nominating him,” the White House said in its statement in mid-April. “He was instrumental in passing Dodd-Frank to ensure that a future financial crisis would not result in devastating economic hardship for working families.”
Financial Disclosure Documents released by Barr et al reported on by the Revolving Door Project, a non-profit DC think tank, showcase investments in over 80 fintech (financial technology) companies, including cryptocurrency, debt collection, and microfinance companies. This is worrying, says the Revolving Door Project, given the ongoing meltdown in the cryptocurrency market and increasing scrutiny from regulators.
“The next Vice Chair of Oversight will play a key role in determining how fintech and cryptocurrency will impact the financial system. Especially after the total collapse of the cryptocurrency market last week, the Fed needs a regulator who everyone can trust to act independently of industry pressures, personal financial interests and the desire for powerful private sector jobs after his tenure,” according to Revolving Das said the Door project’s lead researcher, Max Moran, in a press release.
“The Jerome Powell Fed did notoriously lax about ethical concerns‘ continues Moran’s explanation. “Senators and the press need to explore the extent of Barr’s financial and personal interests in fintech and cryptocurrency, how he views these digital ‘innovations’ in finance (always a risky 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 backed 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 reportedly earned $133,110 in 1099 earnings and between $15,000 and $50,000 in capital gains. Barr has also invested in crypto-related fintech companies such as Zero Hash (which provides infrastructure for financial institutions to facilitate crypto trading), micro-investment app Acorns Grow, Tint Technologies (a company that provides insurance for bitcoin mining equipment and crypto offering deposits), wallet anti-fraud firm Sardine AI Corp, institutional blockchain firm Axoni, and blockchain network surveillance firm Metrika.
A major Barr’s investment, GRIT Financial, offers the kind of “earned wage access” products that have gone under fresh exam by the Consumer Financial Protection Bureau — which Barr helped create — because of their similarity to payday loans. Another investment is TrueAccord, a digital debt collector made by a Trump administration verdict This allows collectors to contact an unlimited number of times by email and up to 7 times a week by calling or texting.
Barr isn’t the only NYCA Partners advisor to enter the public sector. one of his colleagues and frequent collaborators at the University of Michigan and a member of the Biden-Harris transition team, Adrienne Harris (no relation to the vice president), has been appointed head of the New York State Department of Financial Services (DFS). .
As a revolving door project reported at the time, harris had long been skeptical about regulatory approaches that scrutinized the fintech industry. Harris has served an attorney and consultant for Wall Street firms, Brigit, home buying app Homie, “Insurtech” startup States Title, and served on the board of directors of LendingClub. The day before Harris joined the boardthe Federal Trade Commission announced that the company was in agreement an $18 million settlement for smuggling in hidden fees for loans explicitly advertised as none. Harris left NYCA and the LendingClub board after joining DFS, which oversees nearly 1,800 insurance companies and over 1,400 financial institutions (with over $8.4 trillion in assets).
This is just the latest in a long line of worrying developments as the tech sector – but particularly the cryptocurrency industry – is desperate to not only set up a revolving door between the public and private sectors, but also to shield itself from scrutiny.
The crypto industry has spent millions of dollars lobbying Congress, the Biden-Harris transition team has been full of Silicon Valley employees and past nominees for this and Miscellaneous Key regulatory positions were crushed in vicious fighting that kept positions open for more moderate officials. When it hasn’t been able to block nominations, tech companies have thrown tantrums and demanded the waiver of regulators like Federal Trade Commission Chair Lina Khan. As long as technology and crypto remain hostile to regulation, we will continue to see pain brought on by the ongoing market crash, fraud and exploitation endemic to the crypto industry.