Comment for Proposed Rule 91 FR 12516

Comment Text:

My work founding the Berkeley Student Credit Union illustrated something the banking industry knows but rarely says: regulatory frameworks that treat all actors identically don't produce neutral outcomes — they produce outcomes that favor whoever has the scale and legal resources to operate within them. When UC Berkeley ran a competitive RFP for campus banking, every credit union invited declined. Not because Berkeley students weren't worth serving, but because the structural economics made participation irrational for mission-driven institutions. The university ended up with a commercial bank by default. That's not a market failure — it's what happens when regulatory design doesn't account for mission-differentiated actors.

I saw the same pattern during my time in management consulting advising community and regional banks. At one client, every OCC examination required the institution to drop everything else — all normal operations subordinated to exam preparation and response. For a large bank, that's a manageable disruption absorbed by dedicated compliance staff. For a small institution, it's an organizational event. The banks least equipped to absorb that burden were consistently the ones whose missions most closely aligned with underserved communities.

The Commission's § 3(b) fair competition analysis should ask not just whether commercial actors compete on equal terms with each other, but whether the framework makes it possible for nonprofit and research-purpose actors to exist at all. Identical requirements applied to a for-profit prediction platform and a university-affiliated research market don't level the playing field — they optimize it for operators who can absorb the overhead.

The Commission's own no-action letters for the Iowa Electronic Markets and PredictIt implicitly recognized that research-purpose prediction markets are a distinct category. Codifying that distinction — rather than administering it through discretionary staff letters — is the logical next step. I support that approach.