The New Shadow Banks
December 8, 2023
Posing as traditional banks, online-only ‘imitation banks’ are exploiting the public’s faith in financial institutions.
The Roosevelt Rundown features our top stories of the week.
(Photo by Javier Ghersi/Getty Images)
The Threat of Imitation Banks
In recent years, predatory fintech firms have used deceitful marketing to pose as safe, traditional banks—all while evading the banking laws that protect customers and the financial system.
Imitation banks promise unusually high returns and sometimes even claim to offer “deposits” and “savings” accounts, but their activities aren’t subject to the regulatory oversight that governs traditional banks—making them dangerous options for vulnerable consumers. In a new brief, Todd Phillips, Roosevelt Institute fellow and assistant professor at the Robinson College of Business at Georgia State University, exposes the imitation bank playbook.
“Like crypto issuers in years past,” Phillips writes, “imitation banks make specious promises of high returns to gain ground with consumers who may have been historically locked out of more traditional wealth-building opportunities.”
The brief outlines how to rein in imitation banks, including by using the powers of existing agencies like the Securities and Exchange Commission and Consumer Financial Protection Bureau, and by calling on Congress to consider new legislation.
Read more in “Imitation Banks: Abusing the Public’s Faith in Banks.”
What We’re Talking About
“There couldn’t be a clearer case of conflict of interest.” @NikoLusiani breaks down what shareholders Justices Roberts and Alito stand to gain in Moore v. US and what that says about our society’s problematic intertwining of economic and judicial power: https://t.co/i8nxIJBZQH pic.twitter.com/L6znItowZN
— Roosevelt Institute (@rooseveltinst) December 5, 2023
I understand why everyone is nervous, I am too, especially going into this morning’s jobs report.
But this print is basically exactly what you’d want and expect to see from a soft landing, where inflation is falling because the difficult reopening process is over. /1 pic.twitter.com/ZUaafiHEkW
— Mike Konczal (@mtkonczal) December 8, 2023
What We’re Reading
Floating in the Same Direction – The American Prospect
Ronald Reagan’s Policies Continue to Exacerbate the Racial Wealth Gap – Time
Biden Forgives Another $5 Billion in Student Loans – Axios
Trade Beyond Neoliberalism: Concluding a Global Arrangement on Sustainable Steel and Aluminum – Center for American Progress