NAFSA to press for Treasury research to be comprehensive and include all relevant online lending products
WASHINGTON, DC (July 20, 2015) – The Native American Financial Services Association (NAFSA) today praised the U.S. Department of the Treasury for its announcement of a study on the growing online marketplace lending industry.
“Treasury’s announcement is a tremendous affirmation of what NAFSA has been saying all along,” said Barry Brandon, Executive Director of NAFSA. “Innovations in the financial services industry, like those pioneered by the Tribal businesses that make up NAFSA, are providing underbanked consumers with safe and affordable access to credit when they need it the most.”
According to the most recent study by the Federal Deposit Insurance Corporation (FDIC), nearly 93 million Americans are unbanked or underbanked. The Treasury announcement emphasized the barriers these consumers have faced in accessing affordable credit from traditional lenders, and acknowledged the challenges of consumers having little or no credit history as well as the high underwriting costs that can make it uneconomical for traditional lenders to make small-dollar consumer loans.
The Treasury announcement seeks public comment through a formal Request for Information (RFI) published today in the Federal Register, and highlights plans to host roundtables later this summer with key industry stakeholders. Though the RFI stated certain types of loan products it asserts are subject to “potential” rulemakings by the Consumer Financial Protection Bureau (CFPB) will not be part of the scope of the study, NAFSA will press for their inclusion.
“Unlike the CFPB, which has taken a narrow-minded view of the online lending industry and its impact, the Treasury Department has the opportunity with this study to conduct a much more thorough review that examines the issue at both the macro- and microeconomic levels,” Brandon said. “A transparent and comprehensive analysis will be essential to ensuring the study’s findings are valid and useful for policymakers.”
NAFSA will seek to participate in both avenues of research and provide the department with insights into industry operations, the essential service NAFSA lenders provide to historically underserved consumers, and the importance of these businesses to Native American economic development.
“NAFSA looks forward to directly engaging with the Treasury Department on this issue, which has proven to be a critical economic development lifeline for sovereign Native American Tribes across the country,” Brandon continued. “With many tribes facing extreme poverty and unemployment rates, and tied to geographically remote reservations lacking access to traditional avenues of economic growth, e-commerce has proven itself to be an indispensable tool for improving the social welfare of Native Americans. The recently released documentary film An Unlikely Solution tells this story in a compelling and comprehensive way, and would be a great starting point for officials at Treasury and elsewhere seeking to understand these issues.”