AFREF joined a letter urging CFPB oversight of new products like buy now, pay later (BNPL) loans, income share agreements, cash advances, “fintech” overdraft or overdraft avoidance products, and earned wage access products or look-alike products that are evading consumer protection laws and creating debt traps for consumers. The letter states that the CFPB should supervise providers and ensure that each of these products are complying with applicable consumer protection laws.
What industry calls “innovation” is often easily mapped to a longstanding financial service and therefore the existing laws should apply. At the same time, certain tools and certain forms of partnerships should have no place in our economy whatsoever. Treating innovation as an unqualified good leads regulators to ignore both considerations of equity and long-term, sustainable innovation. Give the interface between powerful corporations, complex products, and the public, precaution should be the norm, as it is in food and drug regulation.
The AFR Ed Fund and allied organizations submitted a comment to banking regulators highlighting concerns that digital banking activities may discriminate by race or otherwise threaten our civil rights.
Because Faceboook’s active-user network alone represents more than a third of the global population, its ambitions raise the spectre of systemic risk not only in the United States, but across jurisdictional lines. Indeed, a global stablecoin system like the Libra project could pose especially substantial risks to certain developing economies, where Libra Coins could functionally replace the local currency.
The AFR Education Fund sent a statement for the record to the House Financial Services Committee concerning Facebook’s proposal for the Libra digital token and payment system. The statement describes ways in which Facebook is attempting to create an unregulated financial product of potentially global scale and the dangers this would pose to the users of the token and the broader financial system.
The CFPB is exceeding its authority under the law that created the agency and would set a dangerous precedent with its “disclosure sandbox” policy, its label for granting companies exemptions from disclosure rules. The CFPB would allow firms to obfuscate or eliminate important information in the name of “financial innovation,” a label often applied to defend practices in mortgage lending that led to the 2008 crisis.