CRL Hearing Tackles Lending, Mobile Payments-Style and Beyond
If you’ve been watching the news in the last few days, you could be forgiven for thinking that everything right now revolves around the Brett Kavanaugh hearing, investigation, and circus. There’s a lot more than that going on, though, and one of the biggest new developments hits home for mobile payments users, as the House Financial Services Committee held hearings on financial technology (fintech) as relates to lending practices. The Center for Responsible Lending (CRL) was on hand for that, and tipped us off about its connection therein
One of the big issues surrounding fintech right now is the growing movement of banks to connect to fintech operations to provide a new avenue for making loans. The CRL stepped in on that particularly issue, and via its director of federal advocacy Scott Astrada, noted that “Using financial technology does not entitle a business to a ‘Get Out of Jail Free’ card. Policy makers must ensure that fintech companies follow the law, including state usury laws, and that consumers are protected from debt trap loan products.”
CRL also had some sharp words for calls to perform substantial deregulation for non-bank lenders, including fintech operations that connected to banks. The report also called for the repeal of the Payday Rule put in place by the Consumer Financial Protection Bureau (CFPB), along with the establishment of specialized bank charters geared toward fintech firms. Such a move would put a new regulatory burden on fintech operations, but a burden that CRL seems to believe is necessary.
It would be easy to dismiss CRL as an organization with vested interests trying frantically to fend off competitors who can deliver round-the-clock service that customers so clearly want. With a major non-bank lender in India defaulting only recently, it’s easy to see where a little extra protection for the consumer beyond that of the market’s invisible hand might be welcome.
No one wants to be on the bad end of a default or similar disaster, so a little extra hedging and protection could be welcome. It’s easy to go overboard on protection, though, so hopefully cooler heads here will prevail for the sake of the market.