National Installment Lending Association

The Issue

What is the legislative issue?

President Obama has proposed regulating ALL financial products regardless of whether they contributed to the financial crisis. At the same time, Chairman of the House Financial Services Committee, Congressman Barney Frank (D-MA) introduced H.R. 3126: the Consumer Financial Protection Agency Act of 2009. The House of Representatives is expected to vote on this bill in September. A companion bill has not been introduced in the U.S. Senate at this time, but we do expect the Chairman of the Senate Banking Committee, Senator Chris Dodd (D-CT), to offer a similar bill in the fall.

How will this legislation affect the installment loan industry?

The installment loan industry serves people who are trying to meet both day-to-day and unexpected expenses. Most customers are employed, but like many Americans, have little savings. Many have damaged credit histories, which further inhibits access to credit even in the best economy. Because commercial banks rarely offer small dollar (under $2,000) loans to their existing depositors—much less to non-depositors—the options for the installment loan customer are few.

Establishing a Consumer Financial Protection Agency (CFPA) will give bureaucrats in Washington power far beyond regulating mortgages and real estate. The CFPA may regulate consumers’ credit cards, debit cards, consumer loans, installment loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only a few.

Handing over consumer protection and enforcement powers to a new agency that does not understand the business side of banking will be burdensome for lenders and add extra layers of bureaucracy and nightmarish legal liabilities.The creation of a new federal agency, in addition to the state agencies we currently comply with, will restrict what installment lenders can charge for our services and could well force us out of business altogether.

How will a Consumer Financial Protection Agency affect installment loan employees and customers?

H.R. 3126 would create a new regulator appointed by President Obama. It would have the power to strip from consumers their freedom of choice and restrict their credit opportunities in the midst of a financial recession -- all in the name of "consumer protection." For example, agency bureaucrats could tell our customers how many loans they may take and how they will borrow money. They will also have the authority to assess fees on lenders to pay for the cost of the new agency, thus increasing the cost to the consumer. Rules that regulate an already working industry to “streamline” the regulatory system are unnecessary. Finally, this agency will give the government control over compensation standards for employees of financial services institutions and could eliminate arbitration clauses.

What can we do to help?

Get involved! Write your Representative and Senators in Washington. Meet with them when they are home. They want and need to hear from you before they vote on legislation. You may also contact your state representatives and ask them to help familiarize the federal legislators from your state about the importance of this legislation to their common constituent.

Tell your customers about this legislation and encourage them to write as well. In this packet and on our website, you will find a letter for customers to readily communicate with their legislators.

Let us know of your interest and what you're doing. If you want to arrange a meeting with your Representative and Senators, contact us and we will help you arrange meetings with your legislators when they are home.