AG Zoeller testifies before U.S. House subcommittee on preserving state authority to regulate lending, consumer access to credit

 Indiana Attorney General Greg Zoeller testified before the U.S. House Subcommittee on Financial Institutions and Consumer Credit today in opposition to new rules proposed by the Consumer Financial Protection Bureau (CFPB) that would preempt state authority to regulate small loan lending and consumer access to credit.

While small loan lending is a policy area that has historically been left to the states, Zoeller said the CFPB’s proposal would create a vast regulatory framework at a national level that would undermine years of state efforts to carefully regulate the industry based on local markets and consumer needs. The top-down regulations, Zoeller said, would constrict the small loan lending market by reputable lenders and force Hoosiers to turn to less scrupulous offerings.

As Indiana’s chief consumer protection advocate, Zoeller testified before committee members on Indiana’s work crafting meaningful, state-specific regulations that give Hoosiers access to credit while not inadvertently driving them to unregulated, unsafe loan products.

“Like other states, Indiana has worked hard to strike this balance between access to credit and protections against predatory lenders,” Zoeller said in his testimony to the subcommittee. “The proposed federal regulations would throw this balance off and reduce access to short-term loans for the people in my state and others who need this type of financial assistance the most and who need it from reputable lenders.”

The CFPB’s proposed regulatory framework was first introduced in March 2015. Zoeller and several other state attorneys general sent letters to the CFPB sharing concerns about the proposal to little avail. A copy of Zoeller’s letter to CFPB Director Richard Cordray is attached.

“The progress we’ve made to advance strong consumer protections that work best for our states should not be undermined,” Zoeller said in his testimony today. “One-size-fits-all, blanket regulations from a federal bureaucracy will only wipe out years of thoughtful, state-specific efforts to assist and protect our citizens.”

The U.S. Subcommittee on Financial Institutions and Consumer Credit heard testimony from various individuals during its hearing today on the topic of federal vs. state regulation of small loan lending.