Phil Goldfeder


Joseph Garba

The goal of modern financial services should be to provide access to affordable, fair and safe financial products for consumers, regardless of race, gender or ability to reach a physical financial institution. Through responsible innovation, bank-fintech partnerships have allowed consumers to efficiently access safe and competitive credit options, providing them options to make the best choices for themselves and their families. These options are crafted to meet consumers where they are, rather than defining those needs arbitrarily through state borders.

Although well intentioned, a recent bill introduced in the state legislature (HB 23-1229), if passed, will have a devastating impact on Colorado families who require access to safe, reliable and affordable credit options, and could have lasting repercussions on Colorado.

The American Fintech Council (AFC) agrees with the bill’s intent of creating proper guardrails to ensure Colorado consumers are protected from high-interest lenders operating outside the state’s regulatory perimeter. Proposition 111, overwhelmingly supported by Colorado voters in 2018, put a vice on the payday lending industry and served to protect Colorado consumers. However, this bill in its current form will decrease access to responsible credit, put community banks at a disadvantage and leave many Colorado consumers particularly those in minority and rural communities  with no option but to rely on far too many predatory and high-interest alternatives.

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Fintech companies that partner with community banks to originate transparent consumer loans provide safe alternatives to high-priced credit cards and predatory lenders. In addition, they create safe pathways out of debt and foster financial stability at responsible rates without compromising on regulatory compliance or consumer protection.

In August of 2020, AFC members, including Cross River, worked with Colorado Attorney General Phil Weiser on a settlement that encouraged responsible bank-fintech partnerships to create safe and affordable access to credit. The settlement was predicated on the idea that sustainable access to safe and affordable credit should always exist, and that innovation can be a driver of fair and responsible access. Key to the success of the settlement, and subsequent lending activity, was the focus Attorney General Phil Weiser and AFC members placed on ensuring lenders provided transparent loans with responsible interest rates.

Today, bank partnerships with fintech companies are not only facilitating financial inclusion, but moreover, they are keeping community banks and smaller financial institutions vibrant, competitive and independent. A key provision of the bill would limit nonbank fintech lenders from partnering with state-chartered banks outside of Colorado to offer affordable consumer credit options at or below 36% APR. Cross River, a state-chartered, FDIC insured community bank has facilitated more than $1.5 billion in consumer loans to Colorado consumers in 2021 and 2022 alone in partnership with many Colorado supervised lenders at fair and competitive rates very much below the 36% APR rate. These are affordable installment loans offered through a responsible bank partnership that must remain available for Colorado consumers.   

In January of this year, Attorney General Weiser delivered a study, performed in conjunction with the Financial Health Network, that sought to determine the availability of safe and affordable credit for Colorado families. The study concluded that credit gaps exist in the current structure. HB23-1229 would not only exacerbate those gaps in credit availability identified by the report but it could also magnify the role of unlicensed lenders in the state, ultimately limiting necessary oversight and leaving consumers open to potential harm.

HB 23-1229 will restrict responsible bank-fintech partnerships, further undermine market competition and limit affordable consumer credit options. Ultimately, it is the consumers who will be harmed the most. Hundreds of thousands of consumers that would have received credit at responsible rates prior to this bill, will be turned away due to the limitations placed on lenders by HB 23-1229, resulting in hundreds of millions of dollars in lost credit. In addition, companies will be forced to close existing credit card accounts currently in use by Colorado consumers as a result of the proposed law change for open-end credit. Similarly, for closed-end credit, any refinance options for consumers in Colorado with respect to wanting lower annual percentage rates (APRs) following on-time payments will be significantly limited for unsecured loans.

We urge Colorado legislators to work with us, and our members, to craft a law that builds on the 2020 Colorado Attorney General settlement, that addresses problems identified in the recent Attorney General study and that mirrors laws of other diverse states such as California, New Mexico and Illinois. Together, we must strike the right balance between responsible access to credit and protecting consumers from high-rate predatory lenders to ensure a safe, fair and inclusive financial system.  

Phil Goldfeder is a former senior advisor to U.S. Sen. Charles Schumer and is a retired member of the New York State Assembly. He currently serves as the CEO of the American Fintech Council. Joseph N. Garba is the Head of External Affairs at Cross River Bank, a New Jersey-based technology-driven financial services organization that provides core infrastructure and embedded financial solutions.

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