U.S. House Lawmakers Ask Regulators to Scrutinize Bank Cloud Providers

Two U.S. lawmakers have called on a top financial regulatory panel to consider direct oversight of the cloud services big tech companies provide to banks, saying they have become a critical component of the global financial system.

In a letter sent on Thursday evening to the Financial Stability Oversight Council (FSOC), Democratic House Representatives Katie Porter and Nydia Velázquez said Amazon.com Inc’s Amazon Web Services, Microsoft Corp’s Microsoft Azure and Alphabet Inc’s Google Cloud should be considered systemically important like payment and settlement services.

“Cloud services have become an essential element of our modern banking system and should be overseen commensurately,” the pair, who both sit on the House Financial Services Committee, wrote in the letter seen by Reuters. “Cloud services are not currently subject to an appropriate and enforced regulatory regime.”

The letter follows a massive data breach at Capital One disclosed last month that has raised questions over the risks posed by banks’ reliance on third-party cloud providers. While FSOC is not obliged to act on the letter, it signals financial policymakers are also growing wary of big tech firms, which are already in the crosshairs over privacy and competition concerns.

Porter and Velázquez said FSOC, a panel comprised of top federal regulators including the Treasury and Federal Reserve, should consider designating the three cloud services providers as “systemically important financial market utilities.”

Federal law allows FSOC to designate firms whose failure could result in significant liquidity or credit problems spreading among financial institutions. Currently, eight utilities are designated as systemically important, which carries strict risk management and governance requirements.

Adoption of cloud computing has intensified in the financial services industry in recent years, with banks running everything from trading applications to capital calculations on platforms provided by third parties. In 2017, Bank of America Corp said it planned to move 80% of its technological workload to cloud and virtual platforms in the next several years.

Amazon Web Services, Microsoft Azure and Google Cloud account for 57% of the cloud market, the lawmakers said in the letter, citing analysis from Synergy Research Group.

The lawmakers said the outsized presence of these firms in the financial services sector made them similarly critical cogs as payment and settlement firms, meriting more scrutiny.

Speaking to Reuters in an interview, Porter said a disruption at any major cloud computing platform could compromise the stability of the market and that policymakers needed to pay attention.

“It’s a very fundamental, entrenched part of financial institutions, but the policymaking is not there,” she said.

(Reporting by Pete Schroeder in Washington; Editing by Michelle Price and Matthew Lewis)


  1. I am confused.

    Congress has to update regulation policies to ensure that consumers (that includes you and me) are protected and that our money is secure and available in an era of fast technological change when things can easily go bump in the night. As members of the House Financial Services Committee that is their jobs, and all you two can complain about is that the legislators have skin in the game?

    No wonder this country is falling apart! You are nuts!

  2. Interesting how Nydia Velazquez ( who’s a representative from NY) is for monitoring the Cloud services for this but doesn’t want accountability for how Puerto Rico spends the money given from the federal government. She talks the talk but fails to walk the walk.

    1. Perhaps it has to do with the possibility that the next cloud service attack may impact HER finances, versus, once the taxpayer’s money is given to Puerto Rico graft and corruption there won’t dip into her bank account.

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