“One outcome of today’s hearing is clear: there are arguments on both sides of this debate, but more research is needed to understand the true impact of some of the policy changes discussed during the hearing. We need policies that promote a fair and transparent credit market that extends credit at reasonable terms to subprime consumers.
“We are confident that additional research will show that the 36% rate cap being considered by the committee will not make loans cheaper for consumers. It will only eliminate an option that many consumers need and depend on. For many Americans, these products are their only opportunity to establish a credit history, get into the credit spectrum, and get on a pathway to prime.
“One Federal Reserve study found that consumers who couldn’t access non-bank short-term loan products because of rate caps were pushed instead to bounced checks, late fees on bills and bankruptcy. That further demonstrates that if small dollar, short-term loans are forced to comply with a 36% rate cap, non-bank lenders will be unable to cover the cost of providing credit and managing risk, forcing borrowers already on the fringes of the system outside of it altogether.”
