Washington, D.C. – John Munn, Director of the Nebraska Department of Banking and Finance, testified today on behalf of the Conference of State Bank Supervisors (CSBS) before the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit.
In his testimony, Director Munn expressed serious concerns with proposed legislation (H.R. 6139) that would establish a federal charter for non-depository consumer credit industries, including payday lenders, check cashers and issuers of stored value cards. Munn said the bill would establish an option for a federal business charter without meeting the necessarily high thresholds traditionally required by Congress.
“Historically, Congress has created federal charters only in highly limited circumstances,” Munn testified. “In fact, most industries and businesses – large and small – in the United States thrive and meet important consumer needs very successfully without a federal charter.”
Munn also expressed concern that the bill would circumvent the ability of state regulators to establish and enforce laws governing financial services providers.
“As state regulators, we benefit from our proximity to the consumer transaction and to the communities served by the financial services providers,” Munn said in his oral testimony. “We hear first-hand about the regulatory burdens, and we see up close the consequences of bad actors. These bills take this perspective out of the picture, to the detriment of the marketplace and of consumers.”
Finally, the bill also undermines the carefully structured state-federal balance in financial services regulation.
”Members of Congress on both sides of the aisle and in both chambers have repeatedly voted to keep existing state regulatory regimes,” Munn said. “Unfortunately, both bills run contrary to the goal of state-federal collaboration and will fundamentally undo our existing partnership.”
Munn’s written testimony is available here.