Senator Toomey says new financial products benefit consumers

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Senate Banking Committee Ranking Member Pat J. Toomey (R-PA) urged regulators to adopt policies that facilitate innovation and consumer choice through the development of a healthy competitive market.

In an address to the Committee at a hearing on new consumer financial products, Senator Toomey said that as financial institutions develop technology-driven solutions to meet consumer needs, consumers are gaining knowledge to help them make informed decisions, and individual consumers are better placed than politicians to understand their own needs.

Senator Toomey said innovative financial technologies, such as “buy now, pay later” services or access to earned wages to receive payday advances, have the potential to benefit both consumers and retailers. . He said “marketplace competition has successfully generated more and cheaper options for many consumers to meet their needs.[,]and reminded regulators that healthy competition often benefits consumers the most.

Senator Toomey said regulation should leave room for innovation, and he criticized Democrats for having a “panic” reaction to new technologies. He criticized direct actions taken by regulators such as the CFPB for its “demonstrated hostility” to innovation, as well as Democrats for their role in the OCC overturning regulations that cemented partnerships between financial institutions and FinTechs.

Comment

The fundamental question Senator Toomey poses is whether regulatory resistance to new consumer loan products protects low-income consumers from a bad deal or deprives them of the credit they need. Unless regulators are able to point to other, cheaper and more readily available sources of credit, it seems difficult to argue that consumers have protection that prevents them from accessing credit.

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