Recently in the US, there has been talk of regulation to limit the power of community banks. However, the American Fintech Council (AFC), the industry association representing responsible fintech companies and innovative banks, has opposed this potential legislation for fear of removing financial options for rural families, with the potential of further damaging local economies.
The AFC delivered testimony before the Rhode Island Senate Committee on Commerce and Policy and the D.C. Council Business and Economic Development Committee.
Phil Goldfeder, AFC CEO and former member of the New York State Assembly, appeared in Providence and Ian P. Moloney, senior vice president, head of policy and regulatory affairs, testified in DC to urge legislators and councilmembers to oppose legislation that would put state-chartered community banks at a disadvantage, remove financial options for local families and potentially devastate the local economy.
“Under the guise of consumer protection, these bills in Rhode Island and DC will harm consumers who need access to safe and affordable financial services and will put local state-chartered banks at a disadvantage,” said Phil Goldfeder, chief executive officer of AFC.
“AFC’s diverse members represent a cross section of responsible Fintech companies that embrace transparency and are rooted in regulatory compliance and consumer protection. Our members have stepped in to serve communities long forgotten by large financial institutions and are creating safe, responsible, and affordable financial options for Rhode Island and DC families.”
Community banks need the same opportunities and rights as chartered banks
AFC testified before the Rhode Island Senate Committee on Commerce and Policy and the D.C. Council Business and Economic Development Committee in strong opposition to legislation that would opt their states out of a federal law that provides state-chartered community banks the same opportunities and rights as nationally chartered banks.
Although the legality of such legislation is still in question, passage would create uncertainty for responsible community banks providing financial access to Rhode Island and DC families.
“Unfortunately, this bill is a blunt legislative solution for an issue that requires nuance and will end up harming consumers,” said Goldfeder in his remarks before the committee in Providence. “If passed, SB 2275 will decrease access to responsible credit…put community banks at a disadvantage and leave many Rhode Islanders— particularly those in minority communities— with no option but to rely on far too many predatory and high-interest alternatives.”
“Both as a representative of the fintech industry and a resident of DC, I am deeply concerned about the impact that passing this bill will have on my fellow DC citizens. Therefore, we respectfully request that this committee table this bill to consider the nuance needed to properly solve the issues discussed, and not harm the thousands of DC residents being responsibly served by AFC members,” said Ian P. Moloney in his prepared remarks to the D.C. Council.
Positive impacts of fintech
In addition, Elizabeth Gorz, chief strategy officer and head of legislative affairs at AFC travelled to Albany to follow up on last week’s hearing that covered the many positive impacts of fintech on New York’s banking system and consumers. Representatives of Oportun, DailyPay, Affirm, Brigit and many others met with staff for Governor Kathy Hochul and more than a dozen members of the legislature to discuss responsible access to credit, buy now pay later (BNPL), earned wage access (EWA) and bank-fintech partnerships.
“As a mission-driven CDFI dedicated to putting the financial goals of our 2.1 million members within reach, we are proud to join AFC to discuss the importance of responsible innovation and strong consumer protections in expanding access to affordable credit for New York consumers,” said Ezra Garrett, senior vice president, public affairs and impact at Oportun.
AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. AFC has publicly supported 36 per cent rate caps at state and federal levels, which is a key component of their advocacy and of addressing responsible lending. Members are also lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable products.
