Community bankers ask regulator Rohit Chopra to block Google, Amazon, Facebook, and Apple from finance. And they pushed something called "banking neutrality."
The ICBA undoubtedly knows how to persuade the people who need to be persuaded. So I'm not trying to second guess them! Still, neutrality is the opposite of the proper goal.
Neutrality implies a mechanical process using a single global algorithm. Zillow proved that global algorithms are useless for judging local values. Their algorithm overvalued many of the houses they flipped, because it didn't know about crime or convenience or local perceptions.
A local bank knows which businesses are likely to succed and which aren't, and can't be fooled by a Twitterstorm or similar media push.
Neighbourhood stores, small business and of course small community banks represent values of local culture, local knowledge and local values across world and more so in the US. A local community bank knows the credit seeker and customers know the credit giver. There is an inherent strand of trust that is there which needs to be strengthened, as many of the customers are not aware they are 'algorithmed' everyday by Big Tech.
The concept of neutrality is pretty much embedded in the letter of the Bank Holding Company Act, if not how the Fed has interpreted it for the past 40 years. Neutrality simply implies that a seller of credit is not cross-marketing something else unrelated to the credit. In this view, credit is not just another commodity. Of course, the ILCs that MS mentioned are not covered by the Bank Holding Company Act.
The ICBA undoubtedly knows how to persuade the people who need to be persuaded. So I'm not trying to second guess them! Still, neutrality is the opposite of the proper goal.
Neutrality implies a mechanical process using a single global algorithm. Zillow proved that global algorithms are useless for judging local values. Their algorithm overvalued many of the houses they flipped, because it didn't know about crime or convenience or local perceptions.
A local bank knows which businesses are likely to succed and which aren't, and can't be fooled by a Twitterstorm or similar media push.
Neighbourhood stores, small business and of course small community banks represent values of local culture, local knowledge and local values across world and more so in the US. A local community bank knows the credit seeker and customers know the credit giver. There is an inherent strand of trust that is there which needs to be strengthened, as many of the customers are not aware they are 'algorithmed' everyday by Big Tech.
The concept of neutrality is pretty much embedded in the letter of the Bank Holding Company Act, if not how the Fed has interpreted it for the past 40 years. Neutrality simply implies that a seller of credit is not cross-marketing something else unrelated to the credit. In this view, credit is not just another commodity. Of course, the ILCs that MS mentioned are not covered by the Bank Holding Company Act.