From the American Financial Services Association
WASHINGTON, March 2, 2011…Consumers and the economy need to expand traditional installment credit, not look for ways to curtail it, said American Financial Services Association (AFSA) president and CEO Chris Stinebert at today’s hearing on “The Effects of the Dodd-Frank Act on Small Financial Institutions” on behalf of the association’s non-bank finance company members.
Stinebert emphasized the valuable role that finance companies play in local communities in testimony before the House Subcommittee on Financial Institutions and Consumer Credit. Finance companies provide small-dollar personal loans to individuals, families, and small business owners such as “the carpenter who needs to repair the transmission on his pickup, the family that needs a new washer and dryer, or the start-up company that needs a little short-term help to land the next client,” he said.
Finance companies are fundamentally different from depositories. “When a finance company makes a loan, the deposits of its customers are not at risk, and the government and its taxpayers do not insure its capital.” Some regulators and others in the industry are calling for a level playing field for supervision and examination, but finance companies operate under an entirely different structure than banks and credit unions, Stinebert said.
State regulators are often the first to identify emerging issues, practices or products that may need further investigation or may pose additional risk to the financial industry due to their familiarity with local and regional situations and issues faced by lenders, as well as their geographic proximity. According to Stinebert, AFSA’s finance companies are concerned that this wealth of knowledge will be lost on federal regulators and their emphasis on bank-centric experience. In addition, U.S. Small Business Administration studies show that the expense for small firms to comply with federal rules is 45 percent greater than for larger businesses.
Based in Washington, D.C., AFSA (www.afsaonline.org) is the national trade association for the consumer credit industry, protecting access to credit and consumer choice. Its 350 members include consumer and commercial finance companies, auto finance/leasing companies, mortgage lenders, credit card issuers, industrial banks and industry suppliers.
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