1. United States
2. R.I.
3. Letter

I am writing to urge Congress to expand the principles of the Glass–Steagall Act to encompass fintech companies, neobanks, digital-wallet providers, payment platforms, and other nonbank financial intermediaries that perform functions traditionally associated with banks. The governing principle should be simple: when a company acts like a bank, markets itself like a bank, and profits from holding or directing the public’s money, it should assume the responsibilities and regulatory obligations of a bank. Consumers increasingly use fintech platforms and neobanks to receive wages, store savings, pay bills, make purchases, transfer funds, obtain debit cards, and manage their daily financial lives. These services often resemble conventional checking or savings accounts. Yet many of the companies providing them are not chartered banks and are not directly insured by the Federal Deposit Insurance Corporation. Instead, they may rely upon complex arrangements involving partner banks, payment processors, program managers, middleware providers, and pooled custodial accounts. To customers, the service appears unified. Legally, however, responsibility may be divided among several companies. This structure becomes especially dangerous when a platform fails, freezes withdrawals, enters bankruptcy, loses records, or disputes arise among the firms involved. Consumers may discover that the company they trusted was not legally a bank, that FDIC insurance did not protect against the failure of a nonbank intermediary, or that no institution possesses a complete and authoritative record of their balance. A person who cannot access wages, rent money, savings, or public benefits experiences immediate harm regardless of whether the money has been permanently lost or merely trapped within a failed financial arrangement. The purpose of the original Glass–Steagall framework was to protect ordinary depositors and the financial system by imposing structural boundaries upon institutions entrusted with the public’s money. Congress recognized that deposits should not be exposed to speculative activity, conflicts of interest, or institutional risks that consumers could not reasonably evaluate. That principle should now be extended to digital finance. Fintech companies and neobanks should not be permitted to obtain the commercial benefits of banking while avoiding the duties that accompany banking. A company should not be allowed to present itself as a secure place to deposit money and then deny that it is a bank when consumers demand access, restitution, or deposit protection. I therefore urge Congress to enact a modern Digital Glass–Steagall Act based upon the following policies. First, federal law should regulate companies according to the financial functions they perform rather than the labels they adopt. Any company that accepts customer funds, maintains stored balances, processes direct deposits, offers debit-card access, pays interest or rewards, transfers money, extends credit, or directs customer funds into investment products should be subject to federal financial oversight once its activities reach a meaningful scale. Second, customer transaction and savings funds should be legally and operationally separated from speculative or unrelated commercial activities. Fintechs and neobanks should be prohibited from using customer balances to support proprietary trading, cryptocurrency speculation, securities activity, venture investments, affiliated businesses, or ordinary corporate expenses. Third, companies that function as primary repositories for customer funds should be required either to obtain a banking charter or to operate under a new restricted federal custodial license. Such a license should impose capital, liquidity, cybersecurity, recordkeeping, examination, and resolution-planning requirements comparable to those imposed upon regulated financial institutions. Fourth, customer funds represented as insured should be continuously and verifiably held at an identified FDIC-insured institution. Companies should not be permitted to advertise themselves as “FDIC insured” when only a partner bank carries insurance. All disclosures should state clearly that the fintech itself is not insured, identify the institution holding the funds, explain when insurance applies, and identify the circumstances that insurance does not cover. Fifth, partner banks and fintech companies should maintain real-time or daily reconciled records identifying each customer, the amount owed to that customer, the location of the corresponding funds, and any restrictions upon access. A regulated bank should not be permitted to rely exclusively upon the private ledger of an unregulated intermediary. Sixth, federal law should establish a rapid-access procedure for fintech or intermediary failures. Verified customer balances should be transferred to another insured institution or returned directly to consumers within a defined period. Regulators should have authority to obtain account records, ledgers, and technological systems necessary to restore access. Seventh, the customer-facing fintech, the partner bank, the program manager, the processor, and any custodial intermediary should bear joint responsibility for accurate records, truthful disclosures, and access to customer funds. Private contracts may allocate costs among the companies, but they should not eliminate responsibility to the consumer. Eighth, Congress should prohibit deceptive banking language and design. A nonbank should not be allowed to use terms, interfaces, insurance claims, or account descriptions that create the reasonable impression that the company itself is a federally insured bank. Ninth, consumers should receive a private right of action when companies make misleading insurance claims, lose records, wrongfully freeze accounts, fail to safeguard funds, or prevent lawful access. Remedies should include actual damages, statutory damages, attorney’s fees, and enhanced penalties for reckless or knowing misconduct. Finally, the expanded Glass–Steagall framework should apply to embedded-finance arrangements in which banking services are offered through payroll applications, retail platforms, delivery services, investment applications, social-media companies, or commercial marketplaces. A large technology or retail corporation should not be permitted to become a de facto bank without accepting public financial oversight. These reforms would not prohibit financial innovation. They would establish a legitimate boundary between technological innovation and regulatory evasion. A company that develops budgeting software or payment technology should remain free to innovate. A company that holds wages, savings, or household funds should be required to demonstrate that it can protect them. Responsible fintech firms would benefit from clear national standards. Uniform rules would increase consumer confidence, reduce regulatory ambiguity, and prevent irresponsible competitors from gaining an advantage by avoiding the costs of safeguarding customer money. The history of American financial regulation demonstrates that voluntary promises are not sufficient. Depositor protections, federal insurance, capital requirements, institutional separation, and regulatory supervision were created because financial failures impose costs far beyond corporate shareholders and executives. When an institution holding household funds fails, the consequences are immediate and personal. Families may be unable to buy food, pay rent, obtain medicine, reach work, or meet basic obligations. Congress should not wait for another large-scale fintech collapse before acting. The digital financial system now exercises substantial influence over the economic lives of millions of people. Its legal responsibilities must reflect that reality. I respectfully urge Congress to expand Glass–Steagall protections to fintechs, neobanks, payment platforms, and other