Washington, DC – Today, the National Community Reinvestment Coalition’s Director of Policy and Government Affairs Gerron Levi testified before the U.S. House of Representatives Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit regarding financial technology (FinTech) and marketplace lending. In the testimony, NCRC detailed the opportunities and challenges of FinTech and discussed the need for Congress and regulators to act to ensure that predatory practices are prevented.
“The rapid growth of non-bank lending – so-called marketplace lending – to small businesses raises serious concerns that Congress should address,” said Gerron Levi, NCRC’s Director of Policy and Government Affairs. “We see echoes of the early days of the subprime mortgage boom, in which rapidly growing non-bank mortgage lenders innovated in the worst possible way. If lightly regulated non-bank small business lenders – including financial technology (FinTech) firms – are left unchecked, our fear is the impact may be similar: millions of small businesses stuck with exploding loans they can’t afford, and the American taxpayer left on the hook to clean up the mess.”
“There is no doubt that innovative solutions are needed to address a fundamental issue: traditional bank lending to small businesses is down, and businesses are dying on the vine for lack of credit. But whatever innovation FinTech firms bring to the marketplace, Congress and regulators should act to ensure it is responsible, and that consumers actually benefit from the innovation.”
“The regulatory response to FinTech companies will be critical in determining whether they are helpful and responsible financial institutions or whether they will become another in a line of predatory lenders that will ultimately become extinct after fleecing borrowers. The objective must be to apply a comprehensive set of regulations to FinTech companies and more traditional lenders so that consumers and financial institutions can both thrive in the marketplace.”
The testimony can be read here.
NCRC and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business development.