Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen
Note: The FDIC on Wednesday approved applications from two firms outside the regulated banking sector that seek to obtain charters for industrial loan companies, a designation that gives them access to government-subsidized funding. The firms are technology company Square and student loan servicer Nelnet.
In an act of regulatory malpractice, President Donald Trump’s bank overseers have pierced the wall separating banking and commerce. At a time when they should be laser-focused on stabilizing the country’s financial system, regulators instead let Wall Street corrode the foundation of the safeguards meant to protect Main Street’s interests.
For 200 years, American policymakers have declared that bankers and commercial business should be separate. This policy keeps the providers of credit vested in the success of their borrowers, not competitors, or worse, predators. It is craven strategy to breach this principle while we struggle with a pandemic.
This move also allows an online lender to evade state interest rate caps and escape consumer safeguards.
The Trump administration should suspend all policy moves unrelated to the crisis, rather than exploit these times for a dangerous agenda for which American consumers will eventually pay dearly.