WASHINGTON – The chairman of a powerful Congressional subcommittee delivered a full-throated support of short-term lending during a Thursday hearing in Washington D.C.
Rep. Randy Neugebauer, R-Texas, Chairman of the Financial Institutions and Consumer Credit Subcommittee, said that “short-term, small dollar credit is essential to millions of Americans.”
“According to the FDIC, roughly 51 million American consumers are unbanked or underbanked, meaning they don’t have sufficient access to traditional banking services or products,” Rep. Neugebauer said, according to a transcript of his remarks to the Committee. “Fortunately, these individuals have been able to access a variety of products from non-bank lenders (and)… the marketplace is evolving and becoming more competitive.”
The Congressman’s committee held a hearing on new rules proposed by the Consumer Protection Finance Bureau (CPFB) that would diminish access to short-term loans.
“Unfortunately, the CFPB’s efforts represent yet another example of a Washington-knows-best mentality,” Rep. Neugebauer said. “Using behavioral economics, which by its very principles says policymakers should make choices for unsophisticated individuals, the CFPB has set down a road of paternalistic erosion of consumer product choice and access to credit.
“By its own analysis, the Bureau expects a roughly 60-70% market contraction for these products. This is the type of behavior that people across this country are tired of seeing come out of Washington,” he said. “I hope members will leave today’s hearing with a better understanding about the people who use the products, why they are important, and how they are already regulated.”
Read Congressman Neubebauer’s entire testimony here: