Following today’s House Financial Services Committee (HFSC) hearing titled, “Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps,” OLA CEO Mary Jackson issued the following statement:
“Today’s hearing clearly demonstrates that many members of the House Financial Services Committee have more work to do when it comes to understanding the borrowers of these types of financial products, why consumers rely on them, and their overall satisfaction with them.
Bank-fintech partnerships lead to increased innovation and more competition in the marketplace, providing consumers with loans that satisfy their unique requirements. This competition has led to better financial products at lower costs, and these partnerships benefit both small banks and consumers. These partnerships are operating within the bounds of federal law. What is baffling is that the proposal of a national rate cap preempts 43 state consumer finance laws and that some witnesses complained that bank products can’t pre-empt the state law, but they are ok with a national preemption.
Consumers are satisfied with small dollar lending products, as evidenced by the fact that only one percent of all consumer complaints in the CFPB’s consumer complaint database are related to these loans.
We encourage the Committee to rethink this dangerous, restrictive policy proposal and focus on promoting policies that help consumers access the financial products they continue to demand.”