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It up a little we have spoken basically on.

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crypto

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Now, let's speak a little on fintechs.

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Let's speak of what's going

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 on with fintech. What is what's going on cedra?

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I started this way before I will start this way.

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Now so that makes you the first Miss Grim

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 as all of you get comfortable.

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Miss Grimm

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Good afternoon. Um, I like

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 to thank you Senator Sanders and the rest of the committee for inviting us here to

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 speak today. Hi, my

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 name is Natalie Pappas, and I'm the assistant general counsel for

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 a company called rapid Finance.

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However, today I'm here on behalf of the small

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 business finance Association the sbfa which

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 is a leading trade Association for alternative

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 Finance providers these types of providers

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 offer small business loans small business signs of credit

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 as well as sales based financing products.

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So we're here to talk today about your

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 bill that you've proposed Senate Bill 1450 regarding

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 licensure of small business finding

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 per products as well as the Brokers

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 that might assist these small businesses with Finance

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 with these types of products the spfa

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 shares your goal shares your common goal in order

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 to license these entities so that

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 the state of New York is able to understand not overly the

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 companies that are operating in New York as well

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 as the types of products that are being offered here. It is

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 important in order to

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to license her to propose legislation with after

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 understanding who is actually in the industry and

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 what the goals are.

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Our initial go. I know we've worked with you in the passenger Sanders regarding

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 licensing and other bills regarding the

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 fintech or the commercial financing industry

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 and we believe that

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 you know, implementing licensure bringing everybody

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 that's in the space together is a good a

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 good first step for this. We know

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 that

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we had proposed trying to do licensure before the small

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 the commercial financing disclosure bill just so that we could

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 get you the state could get a better understanding of what's going on.

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 Unfortunately, it was reversed.

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 So the small business Commercial disclosure are

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 the commercial financing bill is

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 currently in place in the regulations go into effect shortly. However,

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 that the regulations do not come with

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 any licensure of the providers of this commercial financing

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 nor for the Brokers. So we do think that

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 is important to also have some type of Licensing regime

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 regime so that so that

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 these providers are licensed in

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 the state is able to

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To further work and you know build.

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To build this licensing out so that they know who's here.

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While we are very in support of this licensure, we

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 think the bill has a couple of technical amendments. So we'd love to work with you in

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 the future one to try to make it so that it

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 it makes sense. It's in line with maybe some of the

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 definitions that are in the commercial disclosures and

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 regulations just so everything's more cohesive. But like

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 I said, you know, we're here to work with

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 you and we are happy to be of any assistance and resources, so

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 I want to thank you today.

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Thank you.

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Yes, good afternoon. My name is Amy Carpenter

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 homes. I am a deputy General closer. Look closer.

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That better. Yes, okay.

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My name is Amy Carpenter homes. I am

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 a deputy General Consulate capitis. Thank you

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 very much for having me here today to testify regarding the

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 regulatory framework for financial technology

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 or fintech companies. I will be

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 addressing the regulatory framework for fintech that

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 provide financing to small businesses or who

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 act as Brokers on behalf of small businesses in those transactions.

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Small businesses, as you know are a backbone of the economy of

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 the United States and here in the state of New York, and I'd

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 like to thank you in the entire committee for bringing attention to these

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 important issues.

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To some background capitis is a financial technology company

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 founded in New York City in 2006 that

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 provides Capital to small businesses through

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 in technology enabled under writing.

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Capitis has provided billions and financing to small businesses

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 exception in section. Excuse me,

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 increasing small businesses access to Capital

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 in New York capitis enters into contracts with

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 small businesses. We're a purchases a percentage

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 of a small businesses future income in exchange for

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 a fixed payment to the business unlike loans provide

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 by many traditional Banks campuses financing options

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 allow small businesses to use

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 the financing for any purpose. The finding scene

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 options are extended faster and more efficiently do not

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 require personal collateral from the owner of the business and

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 importantly adjust small businesses repayment obligations,

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 either automatically or upon request if the

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 small business experiences fluctuations in its income.

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Capital supports sensible regulation to ensure that

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 small businesses are not taken advantage of by Bad actors

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 any regulation.

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Should allow companies like capitis to offer

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 small businesses the products and the financing necessary

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 to run their businesses and any such

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 regulation should seek to create a level regulatory playing

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 field regardless of the product offered.

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This is why capitis has worked with youth center

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 Sanders to support a bill that would license providers

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 and Brokers of financing small businesses. This was

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 in fact the approach taken in California or capitis

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 has been licensed since 2008.

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The attempt of this bill was and remains

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 to ensure that all entities providing or brokering

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 financing to small businesses would have

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 to make certain basic criteria such as the absence of

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 a criminal background and would have to register with the

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 Department of Financial Services. This is important so that

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 DFS can gain an accurate and complete understanding

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 of the non-bank commercial Finance Market.

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In capitis's opinion it is difficult if not impossible for

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 DFS to regulate an unknown population

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 of entities without some type of licensure or

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 registration program. It is unclear how DFS

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 would even know who was providing commercial financing in

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 New York or brokering those transactions in New York

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 something that remains critical as DFS moves

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 to enforce the regulations implementing the

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 small business finance disclosure statute sponsored by

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 Senator Thomas in 2020.

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The reason this is important is because unfortunately there are

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 unscrupulous entities that are taking advantage of small businesses

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 by for example, charging unnecessary and

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 inappropriate fees misleading small businesses as

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 the term as to the terms of the products they offer or

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 engage in invade and switch tactics.

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Capitis initially supported a licensure rather

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 than a disclosure bill because capitalists believe

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 that licensure was the first step to protecting these small businesses.

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 There are two main reasons for this first licensure

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 protects small businesses on the front end

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 by ensuring that entities must be certain basic

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 criteria before being able to offer or

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 broker financing small businesses. Small businesses

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 are then assured that they are only interacting with

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 companies that have met these basic requirements.

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Second. It ensures that DFS knows who is providing

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 or brokering financing to small businesses. This

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 is essential to provide proper supervision that

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 is difficult for DFS to

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 supervise entities. It does not know exist.

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Rather than passing a licensure Bill. However, New York passed a

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 disclosure bill.

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Capita still believes that licensure would have made

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 more sense as a first step but capitis has provided

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 multiple comments to DFS in an

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 effort to improve the regulations meant to implement the disclosure

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 bill.

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And capita still believes that legislation is

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 needed to identify the providers and brokers

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 who are required to make the disclosures DFS is

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 implementing whether under your pending legislation or in some

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 other form again, the goal is to ensure that

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 the people providing financing to small businesses and acting

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 as brokers in such transactions meet certain basic

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 criteria and are known to the DFS. So

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 these entities can be appropriately supervised. So that

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 bad actors can be weeded out.

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Thank you very much for the invitation to speak here today campus to

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 continue to support you and your work and

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 is happy to work with you in the committee to support efforts at

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 sensible regulation.

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Thank you last but never least sir.

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Thank you.

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Mr. Chair, thank you for inviting me to testify today.

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 My name is Christopher Grimm and I'm here

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 on behalf of the Innovative lending platform Association.

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Ilpa members provide New York businesses with hundreds

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 of millions of dollars annually in capital to invest

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 in their business purchase inventory.

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Higher additional hands or upgrade equipment and they

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 do it with Innovative underwriting and in as little

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 as 24 hours.

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In 2016 ilpa created the first model

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 disclosure tool Smart Box with Comprehensive pricing

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 metrics and key financing terms presented in

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 plain easy to understand language.

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We were also the prime proponents of New York's gold standard

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 commercial Finance disclosure law, which has been

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 introduced and copied by a number of States since it passed here.

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Following the Great Recession small business Capital all

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 but disappeared.

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Only businesses with great risk profiles significant collateral and

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 existing Bank relationships have access to Capital.

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Ilpa members of the fintechs and

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 Community Development financial institutions are filling that Gap.

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In fact a recent study by the Federal Reserve concluded fintex lenders

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 have a potential to create a more inclusive Financial system

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 allowing small businesses that were less likely to

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 receive credit through traditional lenders to access Credit and

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 do so at a lower cost.

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But providing small businesses with capital is increasingly challenging.

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Inflation and Rising interest rates have made credit more costly

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 mortgage rates are now twice as high as they were just a

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 few years ago.

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It's against this backdrop that we have some concerns with Senate

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 Bill 1450 and the proposal for licensing commercial Finance providers.

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First we are concerned that this is pursuing a

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 one-size-fits-all approach based on an experience

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 regulating consumer financing.

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Commercial financing is a significantly different Market with

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 different products than consumer financing. They have different

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 uses and evaluating the risk of a small business is incredibly complex.

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Unlike consumer credit where credit scores

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 are standard risk indicator commercial financing requires

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 a more comprehensive risk evaluation to capture capture

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 factors that are unique to small businesses.

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A deadly pandemic and you competitor opening down

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 the street changing suppliers increased costs

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 from inflation and labor issues can all seriously impact

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 a small businesses bottom line. And those are all impossible to

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 predict. That's why 65% of businesses fail during

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 their first 10 years and only 25% make it

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 to 15 years or more.

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Second while 50 different state licensure requirements may

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 appear relatively manageable on its face. The truth

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 is that licensing can be extraordinarily burdensome and costly and

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 can cause several unintended problems. For example,

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 Nevada has an extraordinarily complex

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 licensing structure. They're currently considering a bill

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 to change that that no one understands watching the

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 hearing was interesting to see the least

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 as a result several of our members. Do not currently

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 operate in Nevada and provide credit small businesses.

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However, we understand and appreciate that Regulators

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 need to know who's operating in their state to enforce existing laws

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 including the commercial Finance disclosure law.

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We believe our registration or a requirement to notify the regulator

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 DFS of operations in the state through

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 the Nationwide multi-state licensing system would provide

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 Regulators with that needed information to enforce the

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 Law Without creating significant compliance burdens for providers.

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Also, I understand the focus. This hearing is on licensing. I

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 want to take this opportunity to to make this committee aware that

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 the state's current low commercial usury rate

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 caps are making it incredibly difficult to provide financing

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 to small businesses. These caps don't

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 consider several factors including the recent inflation that I mentioned on Rising

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 interest rates.

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Just last week the president and CEO of the National Association of

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 federally insured Credit Unions wrote that the

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 18% cap that's imposed on credit unions is forcing

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 Credit Unions to reduce services to Consumers and

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 small businesses in their communities.

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An ilp8 member recently reported that New York

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 for the first time has fallen from fourth in the state to fifth

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 in originate fourth in the country to fit an origination

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 volume below, Illinois a state

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 with two-thirds New York's population, but no usury cap

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 for commercial financing. We hope that as part of this discussion on

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 regulating fintech the legislature will consider raising

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00:13:23.500 --> 00:13:26.500
 or eliminating the current usually cap on a commercial financing

266
00:13:26.500 --> 00:13:29.500
 aligning with 39 other states that don't impose

267
00:13:29.500 --> 00:13:32.400
 these arbitrary caps on Commercial Landing, including California

268
00:13:32.400 --> 00:13:36.100
 and Illinois, just a name to do by keeping

269
00:13:35.100 --> 00:13:38.300
 the current status in place. The state

270
00:13:38.300 --> 00:13:41.400
 will continue to severely restrict access to credit for small businesses and

271
00:13:41.400 --> 00:13:44.200
 choke off Economic Development. Thank you, and I'm happy to answer

272
00:13:44.200 --> 00:13:44.500
 any questions.

273
00:13:45.700 --> 00:13:48.600
Thank you. Thank you all I have a several questions

274
00:13:48.600 --> 00:13:51.000
 and I'm glad I don't have to yield to anyone.

275
00:13:53.200 --> 00:13:56.200
I'll yield to myself. Let me start

276
00:13:56.200 --> 00:14:00.100
 with some some basic facts

277
00:13:59.100 --> 00:14:01.100
 that.

278
00:14:02.800 --> 00:14:03.000
the

279
00:14:04.400 --> 00:14:07.600
the mwbe community minority women own

280
00:14:07.600 --> 00:14:10.400
 business enterprises have found it

281
00:14:10.400 --> 00:14:13.800
 very difficult to use to be

282
00:14:13.800 --> 00:14:16.500
 fully funded by traditional Banks.

283
00:14:17.300 --> 00:14:19.900
And they have found it easier.

284
00:14:20.800 --> 00:14:22.900
to use fintechs

285
00:14:23.800 --> 00:14:26.400
which has led to

286
00:14:26.400 --> 00:14:29.200
 the food the rise of fintex and

287
00:14:29.200 --> 00:14:30.100
 in some quarters.

288
00:14:32.500 --> 00:14:35.500
But traditional banks have to use a

289
00:14:35.500 --> 00:14:38.900
 CRA. They have a community reinvestment

290
00:14:38.900 --> 00:14:41.400
 act that they

291
00:14:41.400 --> 00:14:43.000
 have to abide by.

292
00:14:43.900 --> 00:14:44.700
why don't

293
00:14:45.200 --> 00:14:48.700
Why doesn't defend takes create one and

294
00:14:48.700 --> 00:14:49.400
 use it themselves?

295
00:14:56.600 --> 00:14:59.500
Food for thought of maybe I think

296
00:14:59.500 --> 00:15:03.300
 I think that the advantage of fintechs

297
00:15:02.300 --> 00:15:05.800
 a particularly I can speak on behalf of capitis is

298
00:15:05.800 --> 00:15:08.900
 the the process of obtaining financing

299
00:15:08.900 --> 00:15:12.700
 is is in fact much easier because it

300
00:15:12.700 --> 00:15:14.800
 is all online is all the phone.

301
00:15:15.600 --> 00:15:18.900
There's no need to go to a specific bank and the

302
00:15:18.900 --> 00:15:22.000
 past panel there was discussion of a bank deserts

303
00:15:21.500 --> 00:15:24.400
 deserts or there. No are no opportunities for

304
00:15:24.400 --> 00:15:29.200
 people to have traditional commercial opportunities words.

305
00:15:28.200 --> 00:15:32.100
 I think we do provide that because you really

306
00:15:31.100 --> 00:15:34.400
 just need a phone or a computer to obtain

307
00:15:34.400 --> 00:15:37.200
 that financing which I do think it makes it

308
00:15:37.200 --> 00:15:40.900
 much more accessible and we

309
00:15:40.900 --> 00:15:42.000
 obviously are

310
00:15:43.600 --> 00:15:47.500
doing our very best to make our products available

311
00:15:46.500 --> 00:15:50.800
 and accessible to

312
00:15:50.800 --> 00:15:54.600
 everyone across all populations

313
00:15:53.600 --> 00:15:55.200
 across all

314
00:15:56.100 --> 00:15:59.000
locations Etc. And I do

315
00:15:59.100 --> 00:16:02.300
 think the mechanism by which people contact us

316
00:16:02.300 --> 00:16:06.300
 to obtain financing actually is very

317
00:16:06.300 --> 00:16:09.700
 helpful in that in that regard and the

318
00:16:09.700 --> 00:16:12.600
 only additional thing is that I will say is I think as I'm

319
00:16:12.600 --> 00:16:16.700
 sure you're aware 1071 is is now in

320
00:16:15.700 --> 00:16:18.400
 the spent has been passed and will

321
00:16:18.400 --> 00:16:18.800
 be in the

322
00:16:18.800 --> 00:16:22.100
I mean implemented and I think that will be

323
00:16:21.100 --> 00:16:24.100
 very instructive in terms of

324
00:16:26.800 --> 00:16:29.800
the statistics being gathered under

325
00:16:29.800 --> 00:16:30.200
 that rule

326
00:16:31.300 --> 00:16:34.600
okay, anyone else sure, I just

327
00:16:34.600 --> 00:16:37.500
 like to add I'm not as familiar with the specifics

328
00:16:37.500 --> 00:16:40.700
 of the community reinvestment act as some other

329
00:16:40.700 --> 00:16:43.500
 laws, but as I said earlier in in my

330
00:16:43.500 --> 00:16:44.000
 testimony

331
00:16:45.200 --> 00:16:45.500
the

332
00:16:46.500 --> 00:16:49.500
credit gap for small businesses exists partly because

333
00:16:49.500 --> 00:16:53.000
 of the regulatory regime that exists on banks right

334
00:16:52.300 --> 00:16:55.500
 after the Great Recession credit because Banks

335
00:16:55.500 --> 00:16:58.700
 had the more closely managed their risk profile, right

336
00:16:58.700 --> 00:17:01.600
 and a lot of that is because they hold customer deposits.

337
00:17:02.300 --> 00:17:04.300
for a non-depository Institution

338
00:17:05.100 --> 00:17:08.400
trying to fit that round peg in a square hole, right. Our our

339
00:17:08.400 --> 00:17:11.700
 members don't have customer deposits right? So there's nothing that's at

340
00:17:11.700 --> 00:17:14.100
 risk of a run a lot of the things

341
00:17:14.100 --> 00:17:18.400
 that we heard in the previous panel. So trying to apply a

342
00:17:17.400 --> 00:17:20.800
 regulatory structure that's dealing

343
00:17:20.800 --> 00:17:23.500
 with banks and depository institutions doesn't always

344
00:17:23.500 --> 00:17:24.900
 apply to non Banks.

345
00:17:27.100 --> 00:17:30.300
Also, just so the way the companies are members work is

346
00:17:30.300 --> 00:17:33.300
 you know, we're here to serve the businesses if they want to

347
00:17:33.300 --> 00:17:36.100
 have a call at 6 o'clock in the morning. I know somebody from our company is going

348
00:17:36.100 --> 00:17:39.200
 to be on the phone with them. You know, we try to work around are at

349
00:17:39.200 --> 00:17:42.600
 the business the owners their time instead of the traditional, you know, eight to

350
00:17:42.600 --> 00:17:45.400
 four of a bank or something like that because my parents have a

351
00:17:45.400 --> 00:17:48.500
 small business everybody, you know, you know that you're never the

352
00:17:48.500 --> 00:17:51.100
 days never done so and things come up so we try to

353
00:17:51.100 --> 00:17:54.700
 be accommodating for this for those businesses. And so, you know

354
00:17:54.700 --> 00:17:57.400
 by being you know, we're phone call away or text

355
00:17:57.400 --> 00:18:00.000
 away or an email away. So it's you know, we're trying to

356
00:18:00.200 --> 00:18:03.500
 be at the service of you know, those businesses to be at

357
00:18:03.500 --> 00:18:06.100
 their disposal at their time what works best for them instead of

358
00:18:06.100 --> 00:18:09.100
 being like well you need to come here at this time because this is when we're here, so we're trying to

359
00:18:09.100 --> 00:18:12.400
 be more accommodating and cross the board because we know everybody's days different

360
00:18:12.400 --> 00:18:15.700
 everybody's schedules different and things come up. So that

361
00:18:15.700 --> 00:18:18.700
 is another way that our companies are able to help small businesses being

362
00:18:18.700 --> 00:18:21.300
 on their schedule other than being on ours or traditional

363
00:18:21.300 --> 00:18:22.300
 bank or something like that.

364
00:18:23.400 --> 00:18:26.400
Will put all can I encourage all of you to

365
00:18:26.400 --> 00:18:29.400
 become aware more aware

366
00:18:29.400 --> 00:18:32.500
 of CRA Community reinvestment act.

367
00:18:32.500 --> 00:18:36.300
 I have recently the credit

368
00:18:35.300 --> 00:18:38.500
 unions have

369
00:18:39.500 --> 00:18:42.200
played now playing a larger role in

370
00:18:42.200 --> 00:18:46.000
 New York state and I have working with

371
00:18:45.200 --> 00:18:49.000
 them to create a CRA for

372
00:18:48.400 --> 00:18:51.500
 credit unions and if the

373
00:18:51.500 --> 00:18:54.300
 fintechs are going to have a larger role

374
00:18:54.300 --> 00:18:58.600
 in New York, I would encourage you to look

375
00:18:57.600 --> 00:19:01.000
 at CRA and

376
00:19:00.700 --> 00:19:02.800
 what what does it mean?

377
00:19:03.800 --> 00:19:06.300
but I will take you to

378
00:19:09.200 --> 00:19:13.900
Mr. Grimm you spoke you alluded perhaps to

379
00:19:13.900 --> 00:19:16.400
 the PPP loans at

380
00:19:16.400 --> 00:19:19.600
 the fintechs were able to to give out

381
00:19:19.600 --> 00:19:22.400
 one of the studies that came

382
00:19:22.400 --> 00:19:25.300
 out from that period was that

383
00:19:25.300 --> 00:19:28.700
 in terms of the mwbe community

384
00:19:28.700 --> 00:19:31.600
 minority and women-owned business community that

385
00:19:32.600 --> 00:19:35.900
we found two different things first that the

386
00:19:35.900 --> 00:19:38.600
 fintechs were more effective in

387
00:19:38.600 --> 00:19:42.900
 giving money to the mwbe community

388
00:19:42.900 --> 00:19:44.900
 then traditional Banks.

389
00:19:45.800 --> 00:19:49.000
But the Federal Reserve also found that

390
00:19:48.300 --> 00:19:52.300
 the satisfaction of the mwbe community

391
00:19:51.300 --> 00:19:54.800
 was not very high

392
00:19:54.800 --> 00:19:58.600
 and they would have preferred a Traditional

393
00:19:57.600 --> 00:20:01.100
 Bank at the at the end. Very interesting.

394
00:20:00.100 --> 00:20:03.700
 I I encourage you

395
00:20:03.700 --> 00:20:06.600
 to look at it. You also

396
00:20:06.600 --> 00:20:09.800
 spoke of these small cap the 18 percent that

397
00:20:09.800 --> 00:20:13.700
 New York state has and I

398
00:20:13.700 --> 00:20:16.400
 suspect that you would have preferred us to use the

399
00:20:16.400 --> 00:20:19.200
 the military model that is out there.

400
00:20:19.200 --> 00:20:22.200
 The US military allows of my memory

401
00:20:22.200 --> 00:20:25.800
 serves me correct up to 36% or

402
00:20:25.800 --> 00:20:26.600
 something of that nature.

403
00:20:29.700 --> 00:20:32.400
I've I'm certainly hearing the

404
00:20:32.400 --> 00:20:35.300
 industry and I'm mulling it over and trying

405
00:20:35.300 --> 00:20:35.900
 to figure out.

406
00:20:36.900 --> 00:20:39.900
what to do there Miss Holmes

407
00:20:39.900 --> 00:20:40.400
 you

408
00:20:41.500 --> 00:20:44.800
you guys have been around since 2006 congratulations.

409
00:20:44.800 --> 00:20:48.500
 That's that's in this

410
00:20:48.500 --> 00:20:52.000
 day and age. There's something were you

411
00:20:51.900 --> 00:20:54.300
 I don't believe the answer is yes,

412
00:20:54.300 --> 00:20:57.500
 but were you was your firm ever involved

413
00:20:57.500 --> 00:21:00.200
 and cojs certificate of

414
00:21:00.200 --> 00:21:04.300
 judgments or any any of those things? I I

415
00:21:04.300 --> 00:21:08.300
 have not been there since 2000. Okay, but certainly

416
00:21:07.300 --> 00:21:10.300
 as long as I have been there and to

417
00:21:10.300 --> 00:21:13.000
 my knowledge the answers that is no we do and we certainly do not do that.

418
00:21:14.500 --> 00:21:17.400
Yes, we're still looking into that

419
00:21:17.400 --> 00:21:21.600
 matter to see what we can even

420
00:21:20.600 --> 00:21:23.500
 at this late date do about

421
00:21:23.500 --> 00:21:25.900
 these things. So I did hear you.

422
00:21:28.100 --> 00:21:31.200
Speak of yes disclosure is

423
00:21:31.200 --> 00:21:31.900
 a good thing.

424
00:21:35.400 --> 00:21:39.900
And in addition to disclosure licensing

425
00:21:38.900 --> 00:21:41.100
 makes the most

426
00:21:41.100 --> 00:21:45.300
 sense people having a license makes

427
00:21:44.300 --> 00:21:48.100
 the most sense. I obviously agree with

428
00:21:47.100 --> 00:21:50.700
 you I can

429
00:21:50.700 --> 00:21:55.100
 say so myself. In fact, I did miss

430
00:21:53.100 --> 00:21:56.800
 Pappas you were

431
00:21:56.800 --> 00:21:59.300
 speaking of how to

432
00:21:59.300 --> 00:22:02.900
 deal with the bad players how

433
00:22:02.900 --> 00:22:07.400
 they are Bad actors out here and we

434
00:22:06.400 --> 00:22:09.300
 absolutely could use

435
00:22:09.300 --> 00:22:12.300
 help in from all of

436
00:22:12.300 --> 00:22:16.700
 you in any ideas that you have that can

437
00:22:16.700 --> 00:22:20.300
 help weed out this this new

438
00:22:20.300 --> 00:22:23.500
 and emerging industry and find ways

439
00:22:23.500 --> 00:22:26.300
 of getting the Bad actors. I

440
00:22:26.300 --> 00:22:29.400
 have found the industry. I

441
00:22:29.400 --> 00:22:31.700
 I don't go to the industry as

442
00:22:32.600 --> 00:22:35.500
and automatic opposition

443
00:22:36.800 --> 00:22:40.300
I go with an open mind saying let's

444
00:22:39.300 --> 00:22:42.200
 see if you will give us

445
00:22:42.200 --> 00:22:44.200
 ways what how do you believe

446
00:22:45.200 --> 00:22:48.500
We should find these bad players. You may

447
00:22:48.500 --> 00:22:51.800
 know the inside situation for

448
00:22:51.800 --> 00:22:54.400
 better than we in time. We will learn

449
00:22:54.400 --> 00:22:57.300
 it. But you you probably know it

450
00:22:57.300 --> 00:23:00.700
 already. Are there any practices Miss Pappas

451
00:23:00.700 --> 00:23:03.600
 that we have missed so far in catching up

452
00:23:03.600 --> 00:23:06.500
 with the bad bad blood actors?

453
00:23:08.200 --> 00:23:11.200
Um, so like I said, you know, I think licensures one thing

454
00:23:11.200 --> 00:23:14.300
 because that way they're on the come. They're on the states radar

455
00:23:14.300 --> 00:23:18.200
 in California some of our members my

456
00:23:17.200 --> 00:23:20.300
 are my particular company work

457
00:23:20.300 --> 00:23:23.600
 for Rapid Finance. We are licensing California, they require and you

458
00:23:23.600 --> 00:23:26.100
 are audits. So there are ways that, you

459
00:23:26.100 --> 00:23:29.600
 know by licensing that you are able to then look into certain

460
00:23:29.600 --> 00:23:33.500
 things to see these practices ask additional questions. There are

461
00:23:33.500 --> 00:23:34.000
 some other

462
00:23:36.800 --> 00:23:39.300
Potential ways out there. I know we had

463
00:23:39.300 --> 00:23:42.900
 there had been some common letters or back and forth specifically

464
00:23:42.900 --> 00:23:46.400
 with certain companies, you know with DFS regarding,

465
00:23:46.400 --> 00:23:49.300
 you know, potential additional additions to the regulations that

466
00:23:49.300 --> 00:23:52.100
 we think that you know would bring light to small businesses, you know,

467
00:23:52.100 --> 00:23:56.200
 potential fees that are being charged. It might not being disclosed, you

468
00:23:55.200 --> 00:23:58.300
 know certain other items that are out

469
00:23:58.300 --> 00:24:01.900
 there that the you know that these small businesses might not know are

470
00:24:01.900 --> 00:24:04.500
 there that might be being charged

471
00:24:04.500 --> 00:24:07.300
 separately potentially by a broker or something like that. So

472
00:24:07.300 --> 00:24:10.400
 by really just trying to see who's playing who's

473
00:24:10.400 --> 00:24:14.000
 participating what's being charged outside of

474
00:24:13.100 --> 00:24:16.500
 the provider the you know, thus providing

475
00:24:16.500 --> 00:24:19.000
 the commercial financing. I think that's definitely a step in the

476
00:24:19.100 --> 00:24:22.800
 right direction because once you understand potentially the whole picture when everybody's involved

477
00:24:22.800 --> 00:24:25.700
 and what's specifically going on you can say, oh, well

478
00:24:25.700 --> 00:24:28.300
 this seems like a problem. I might have you know, this might not

479
00:24:28.300 --> 00:24:31.400
 be something the small business is happening. Maybe we

480
00:24:31.400 --> 00:24:34.700
 could go and you know have some type of disclosure there or requirement

481
00:24:34.700 --> 00:24:36.700
 there for, you know other aspects of

482
00:24:36.900 --> 00:24:37.600
destroyed

483
00:24:38.200 --> 00:24:41.200
To your right is Paul Alexander from my

484
00:24:41.200 --> 00:24:44.500
 office. Can I encourage the three of you? If you

485
00:24:44.500 --> 00:24:48.200
 can think of any ways that we can

486
00:24:48.200 --> 00:24:51.400
 use to get the Bad actors

487
00:24:51.400 --> 00:24:54.600
 out of the industry out from amongst

488
00:24:54.600 --> 00:24:57.100
 you please share it with him so that we

489
00:24:57.100 --> 00:25:00.700
 can continue be more than happy, too. Thank you, and I

490
00:25:00.700 --> 00:25:03.300
 want to thank all of you for appearing today. I

491
00:25:03.300 --> 00:25:06.800
 trust it was useful to you because it certainly was useful

492
00:25:06.800 --> 00:25:09.200
 to us. Thank you very much, and you

493
00:25:09.200 --> 00:25:12.700
 can call the next panel. Thank you, sir. Thank

494
00:25:12.700 --> 00:25:13.600
 you for the world.

495
00:25:18.200 --> 00:25:19.400
So approach the case.

496
00:25:37.200 --> 00:25:41.500
Well, Miss Fisher, you picked a bad panel because you're sitting

497
00:25:41.500 --> 00:25:44.200
 with Phil goldfedder, and I have to give him a hard time.

498
00:25:45.200 --> 00:25:48.600
So I guess it will be trouble it will be shared with you, too.

499
00:25:50.300 --> 00:25:53.900
Good to see you. I almost said assemblyman. I

500
00:25:53.900 --> 00:25:56.200
 still could I still can

501
00:25:56.200 --> 00:25:58.100
 nice to see there's a pleasure.

502
00:25:59.300 --> 00:26:02.800
Miss Fisher Mr. Bell a pleasure. Let's see

503
00:26:02.800 --> 00:26:04.700
 where you this is such a tough one.

504
00:26:06.700 --> 00:26:09.200
I think that I have Consumer Report go last.

505
00:26:10.100 --> 00:26:13.400
That way you're whatever they say that

506
00:26:13.400 --> 00:26:15.900
 it needs for the clarification.

507
00:26:17.700 --> 00:26:20.600
Miss Fisher, I promised that

508
00:26:20.600 --> 00:26:23.300
 I would focus on you and I shall

509
00:26:23.300 --> 00:26:26.400
 Miss Fisher good to see you you can speak first. Thank you,

510
00:26:26.400 --> 00:26:29.100
 Senator Sanders and thank you for the opportunity to be

511
00:26:29.100 --> 00:26:32.400
 part of this important hearing on fintech. My name

512
00:26:32.400 --> 00:26:35.300
 is Kate Fisher. I'm a partner with a law firm Hudson cook and

513
00:26:35.300 --> 00:26:38.400
 I'm here today representing the revenue-based finance Coalition

514
00:26:38.400 --> 00:26:41.900
 a coalition of responsible providers of financing to

515
00:26:41.900 --> 00:26:44.100
 small and medium-sized businesses Nationwide.

516
00:26:45.600 --> 00:26:48.900
Revenue based financing is fair flexible and

517
00:26:48.900 --> 00:26:49.500
 fast.

518
00:26:50.600 --> 00:26:53.800
Revenue-based financing is able to serve businesses where

519
00:26:53.800 --> 00:26:54.800
 traditional Banks cannot.

520
00:26:55.800 --> 00:26:58.400
Our financing tends to be between $5,000

521
00:26:58.400 --> 00:26:59.700
 and $100,000.

522
00:27:00.600 --> 00:27:03.600
Are underwriting focuses on business Revenue instead

523
00:27:03.600 --> 00:27:06.200
 of traditional factors such as assets and

524
00:27:06.200 --> 00:27:07.000
 credit scores.

525
00:27:09.100 --> 00:27:12.500
This band's access to capital for minority and women-owned businesses.

526
00:27:13.500 --> 00:27:16.500
a recent study conducted by an NYU Stern

527
00:27:16.500 --> 00:27:17.400
 business school professor

528
00:27:18.200 --> 00:27:22.200
found that fintex were able to reach substantially more black owned

529
00:27:21.200 --> 00:27:24.400
 businesses than traditional Banks were during

530
00:27:24.400 --> 00:27:25.500
 the PPP program.

531
00:27:27.200 --> 00:27:30.100
One reason the study explores is that fintechs were able

532
00:27:30.100 --> 00:27:33.100
 to provide smaller dollar financing which tends to

533
00:27:33.100 --> 00:27:35.200
 serve smaller minority-owned businesses.

534
00:27:36.400 --> 00:27:39.900
And our focus on Revenue instead of assets aligns

535
00:27:39.900 --> 00:27:42.400
 our interest with our customers we do. Well only

536
00:27:42.400 --> 00:27:43.600
 when our customers do well.

537
00:27:45.200 --> 00:27:48.800
Revenue-based financing is flexible because our business customers

538
00:27:48.800 --> 00:27:51.400
 pay according to a percentage of their revenue.

539
00:27:52.500 --> 00:27:55.400
In a typical scenario a small business may need

540
00:27:55.900 --> 00:27:57.000
 $30,000 to expand.

541
00:27:58.500 --> 00:28:01.500
The business could quickly access that $30,000 in

542
00:28:01.500 --> 00:28:04.500
 exchange for the promise to pay 10% of its future

543
00:28:04.500 --> 00:28:04.900
 Revenue.

544
00:28:05.900 --> 00:28:08.300
Plus until the business

545
00:28:08.300 --> 00:28:10.700
 has repaid that $30,000 plus a fee.

546
00:28:11.500 --> 00:28:14.400
There's no interest accruing each day, and there are

547
00:28:14.400 --> 00:28:16.700
 no fixed daily weekly or monthly payments.

548
00:28:17.800 --> 00:28:20.800
The business simply promises to deliver that 10%

549
00:28:20.800 --> 00:28:23.400
 of each day's Revenue up to the total payment

550
00:28:23.400 --> 00:28:24.000
 obligation.

551
00:28:26.200 --> 00:28:30.100
What happens if the revenue drops the businesses payment obligation

552
00:28:29.100 --> 00:28:31.100
 drops as well?

553
00:28:32.100 --> 00:28:35.800
What happens if the business has to temporarily close their payment

554
00:28:35.800 --> 00:28:38.500
 obligation stops completely until the business

555
00:28:38.500 --> 00:28:39.300
 can reopen.

556
00:28:40.300 --> 00:28:43.800
This flexibility provides a kind of economic shock absorber

557
00:28:43.800 --> 00:28:44.800
 for small businesses.

558
00:28:46.400 --> 00:28:49.300
And revenue-based financing is fast a business can

559
00:28:49.300 --> 00:28:52.000
 obtain needed funds within 24 to 48 hours.

560
00:28:53.100 --> 00:28:57.000
The reason for the speed is that Revenue based financing providers underwrite

561
00:28:56.600 --> 00:28:59.300
 based on whether the business's future Revenue

562
00:28:59.300 --> 00:29:01.100
 can support the financing amount.

563
00:29:02.200 --> 00:29:05.500
There's no requirement that the business owner put up personal collateral

564
00:29:05.500 --> 00:29:07.400
 and generally no collateral at all.

565
00:29:08.300 --> 00:29:10.600
And there is no personal guarantee of repayment.

566
00:29:12.300 --> 00:29:15.800
This fast access to Capital is a critical economic engine for

567
00:29:15.800 --> 00:29:16.400
 small businesses.

568
00:29:18.500 --> 00:29:21.500
Before I close I would like to address the issue of Licensing for

569
00:29:21.500 --> 00:29:22.300
 fintechs.

570
00:29:22.800 --> 00:29:25.900
We support legislation that keeps out Bad actors and

571
00:29:25.900 --> 00:29:27.700
 sets reasonable guardrails.

572
00:29:28.400 --> 00:29:31.300
We also want to protect access to capital for New

573
00:29:31.300 --> 00:29:32.200
 York small businesses.

574
00:29:33.200 --> 00:29:34.600
And avoid over regulation.

575
00:29:35.400 --> 00:29:38.500
I have a couple examples of over-regulation from

576
00:29:38.500 --> 00:29:39.900
 Senate Bill 1450.

577
00:29:41.300 --> 00:29:44.300
Senate Bill 1450 would require a provider of small

578
00:29:44.300 --> 00:29:48.400
 business financing to get Advanced approval from DFS 40

579
00:29:47.400 --> 00:29:50.200
 days before changing an office location.

580
00:29:51.800 --> 00:29:56.000
We have member companies located in Utah, California South

581
00:29:54.300 --> 00:29:57.400
 Dakota. Should they

582
00:29:57.400 --> 00:30:01.500
 be required to ask DFS for permission 45 days

583
00:30:01.500 --> 00:30:04.900
 before they moved their office from one location in Sioux

584
00:30:04.900 --> 00:30:07.200
 Falls or Salt Lake City to another down the street.

585
00:30:09.300 --> 00:30:12.700
Another example, is that the penalty for a failure to obtain a

586
00:30:12.700 --> 00:30:14.000
 license is very harsh.

587
00:30:14.900 --> 00:30:17.200
Senate Bill 450 states that if a

588
00:30:17.200 --> 00:30:20.500
 financing provider fails to obtain a license or even potentially

589
00:30:20.500 --> 00:30:23.900
 if a broker involved in the transaction was unlicensed.

590
00:30:24.600 --> 00:30:27.200
The entire financing transaction is void and

591
00:30:27.200 --> 00:30:27.900
 uncollectible.

592
00:30:30.200 --> 00:30:33.900
This could result in financing providers avoiding New York because the

593
00:30:33.900 --> 00:30:36.300
 consequence of accidentally missing the

594
00:30:36.300 --> 00:30:40.300
 fact that a broker was unlicensed is too

595
00:30:39.300 --> 00:30:40.500
 severe.

596
00:30:41.300 --> 00:30:44.400
A better approach would be to impose a fine for failure to

597
00:30:44.400 --> 00:30:46.900
 obtain a license and make it a really defined.

598
00:30:47.400 --> 00:30:51.200
But not make the entire financing obligation

599
00:30:50.200 --> 00:30:52.600
 void and collectible.

600
00:30:53.700 --> 00:30:56.700
We would love to work with you to craft legislation that strikes

601
00:30:56.700 --> 00:30:59.300
 the right balance. And again, thank you for inviting us

602
00:30:59.300 --> 00:31:00.200
 to participate today.

603
00:31:05.800 --> 00:31:07.300
The Honorable, Philadelphia

604
00:31:08.300 --> 00:31:11.900
I'm having a hard time doing this with a straight face here. My friends

605
00:31:11.900 --> 00:31:15.500
 Mr. Goldfetter was formerly

606
00:31:14.500 --> 00:31:17.900
 an employee of mine a my

607
00:31:17.900 --> 00:31:19.200
 stuff people who?

608
00:31:20.600 --> 00:31:23.400
Who decided that he wanted to go to a

609
00:31:23.400 --> 00:31:26.600
 larger world. And so he's no longer

610
00:31:26.600 --> 00:31:29.100
 on this side is now on this side.

611
00:31:29.100 --> 00:31:32.600
 So it's very interesting thing that we we have.

612
00:31:32.600 --> 00:31:35.400
 Let's hear how well he does this side feels

613
00:31:35.400 --> 00:31:38.400
 different for sure. Well, let me first start by

614
00:31:38.400 --> 00:31:41.300
 saying thank you. Thank you for allowing me the opportunity

615
00:31:41.300 --> 00:31:44.100
 to break into the big world of politics more than 20 years ago

616
00:31:44.100 --> 00:31:47.200
 and free opportunity, which clearly led me here.

617
00:31:47.200 --> 00:31:50.700
 And so we both did something right. I want

618
00:31:50.700 --> 00:31:53.100
 to start by saying and I before I go to my prepared remarks that

619
00:31:53.100 --> 00:31:56.600
 not all fintech has created equal. I think that's the biggest challenge is

620
00:31:56.600 --> 00:31:59.300
 that too often times. We we take one

621
00:31:59.300 --> 00:32:02.100
 aspect of fintech and we quated across the board and we said

622
00:32:02.100 --> 00:32:06.200
 well this aspect did something wrong then it's all bad. It's all and

623
00:32:05.200 --> 00:32:09.000
 it all needs to go away. I think most importantly

624
00:32:08.300 --> 00:32:11.100
 is we need to recognize that crypto companies

625
00:32:11.100 --> 00:32:14.200
 are different than payments companies. We're different lending companies small business

626
00:32:14.200 --> 00:32:17.300
 lending companies different than consumer lending companies. Earn way. Jack

627
00:32:17.300 --> 00:32:20.200
 says by now pay later and the gamut and so

628
00:32:20.200 --> 00:32:20.500
 I think

629
00:32:20.500 --> 00:32:23.400
Think it's number one critically important. We have hearings like this so we

630
00:32:23.400 --> 00:32:26.200
 can continue to find ways to educate about the

631
00:32:26.200 --> 00:32:29.400
 various not just verticals within fintech but

632
00:32:29.400 --> 00:32:33.100
 more importantly the different companies within those verticals some that

633
00:32:32.100 --> 00:32:35.100
 accept and take on a standard

634
00:32:35.100 --> 00:32:38.200
 and some that don't as you know, and I had the

635
00:32:38.200 --> 00:32:41.100
 unique opportunity to serve in the state

636
00:32:41.100 --> 00:32:44.600
 legislature and recognizing that it's not about regulation for regulations

637
00:32:44.600 --> 00:32:47.400
 sake or bills for Bill's sake it's about crafting the

638
00:32:47.400 --> 00:32:50.500
 right regulatory structure together with Partners

639
00:32:50.500 --> 00:32:54.000
 in Industry who are looking to create access to

640
00:32:53.400 --> 00:32:56.200
 to financial services and access to services for

641
00:32:56.200 --> 00:32:56.900
 our constituents. So

642
00:32:58.400 --> 00:33:01.100
Um, I am now representing. I'm the CEO of the

643
00:33:01.100 --> 00:33:04.100
 American fintech Council. The American fintech council is

644
00:33:04.100 --> 00:33:07.600
 the leading industry Association representing responsible fintech companies

645
00:33:07.600 --> 00:33:10.300
 creating critical access to safe and affordable

646
00:33:10.300 --> 00:33:13.300
 Financial Services AFC and its members deliver

647
00:33:13.300 --> 00:33:16.100
 for customers by Leading and advocating for the next

648
00:33:16.100 --> 00:33:19.500
 generation of companies at the intersection of technology and financial services

649
00:33:19.500 --> 00:33:22.300
 with many responsibly lending and providing Services

650
00:33:22.300 --> 00:33:25.600
 right here in New York. We Foster Innovative transparent and

651
00:33:25.600 --> 00:33:28.300
 responsible products that promote competition consumer protection

652
00:33:28.300 --> 00:33:31.400
 and Financial Health inclusion sound public

653
00:33:31.400 --> 00:33:34.100
 policy and Equity AFC is committed to

654
00:33:34.100 --> 00:33:37.300
 robust industry standards with a focus on consumer protection and regular

655
00:33:37.300 --> 00:33:38.500
 and Regulatory Compliance.

656
00:33:39.700 --> 00:33:41.900
In addition to advocating for and embracing Fair.

657
00:33:42.700 --> 00:33:44.300
Fair government regulation

658
00:33:45.400 --> 00:33:48.300
AFC members are at the Forefront of flustering competition and

659
00:33:48.300 --> 00:33:52.300
 Consumer Finance and pioneering better ways to better pioneering ways

660
00:33:52.300 --> 00:33:55.500
 to better serve underserved consumer segments and geographies.

661
00:33:56.100 --> 00:33:59.000
AFC has publicly supported 36% rate caps at

662
00:33:59.800 --> 00:34:03.100
 state and federal levels, which is a team component of our advocacy and

663
00:34:02.100 --> 00:34:05.300
 of addressing responsible lending. Our members

664
00:34:05.300 --> 00:34:08.300
 are also lowering the cost of financial transactions allowing them

665
00:34:08.300 --> 00:34:11.100
 to help meet demand for high quality affordable products. Thank you.

666
00:34:15.200 --> 00:34:18.400
Huh AFC supports policymakers regulators and other stakeholders on

667
00:34:18.400 --> 00:34:21.200
 solutions to issues that regulators and others have

668
00:34:21.200 --> 00:34:25.200
 emphasized throughout public discussions around Financial technology oversight. Our

669
00:34:24.200 --> 00:34:27.700
 members are improving products that help Advance Consumer Financial

670
00:34:27.700 --> 00:34:30.300
 Health and financial capacity AFC members

671
00:34:30.300 --> 00:34:33.500
 are interested in providing more Innovative product products that

672
00:34:33.500 --> 00:34:36.800
 address consumer demand without compromising on Regulatory Compliance

673
00:34:36.800 --> 00:34:39.500
 or consumer protection, and I'm going to say that again because I

674
00:34:39.500 --> 00:34:42.400
 think it's critical AFC members are interested in providing

675
00:34:42.400 --> 00:34:46.100
 more Innovative products that address consumer demand without

676
00:34:45.100 --> 00:34:48.900
 compromising on regulatory Regulatory Compliance

677
00:34:48.900 --> 00:34:51.200
 and consumer protection AFC members

678
00:34:51.200 --> 00:34:54.700
 are focused on products that are responsible fair safe and

679
00:34:54.700 --> 00:34:57.500
 want to work in partner with federal and state Regulators to

680
00:34:57.500 --> 00:34:59.200
 scale responsible options in the marketplace.

681
00:35:01.200 --> 00:35:04.200
The covid-19 pandemic has magnified the

682
00:35:04.200 --> 00:35:07.200
 challenges of ensuring the availability of high quality

683
00:35:07.200 --> 00:35:10.600
 financial services and products Banking and deserts

684
00:35:10.600 --> 00:35:13.600
 and underserved census racks are proliferating and

685
00:35:13.600 --> 00:35:16.600
 in thousands of communities across the country Bank branches are

686
00:35:16.600 --> 00:35:17.700
 closing at record rates.

687
00:35:18.700 --> 00:35:21.100
With the 2008 banking crisis ingrained in

688
00:35:21.100 --> 00:35:24.800
 the minds of New Yorkers particularly and with recent events. We're seeing

689
00:35:24.800 --> 00:35:27.500
 again investor panic and unstable markets

690
00:35:27.500 --> 00:35:29.100
 indicating a potential banking crisis.

691
00:35:30.100 --> 00:35:33.300
The recent collapse of signature Silicon Valley and silvergate Bank

692
00:35:33.300 --> 00:35:36.300
 could be a canary in the colmart for New York Banks particularly those that

693
00:35:36.300 --> 00:35:39.300
 are uninsured by the FDIC since those banks are more susceptible to

694
00:35:39.300 --> 00:35:42.700
 liquidity and solvency crisis economic downturns

695
00:35:42.700 --> 00:35:45.400
 cause every day New Yorkers to suffer their health health

696
00:35:45.400 --> 00:35:48.100
 outcomes state of mind and quality of life depend on

697
00:35:48.100 --> 00:35:51.300
 functioning Capital markets any plan for New York that does

698
00:35:51.300 --> 00:35:54.600
 not include accessibility and comprehensive financial services for

699
00:35:54.600 --> 00:35:57.200
 our most vulnerable communities is inadequate and

700
00:35:57.200 --> 00:35:59.400
 should not be accepted by policy makers.

701
00:36:00.300 --> 00:36:03.100
Regulated and responsible fintech companies are poised to

702
00:36:03.100 --> 00:36:06.300
 leave the future of financial services as we break down the traditional

703
00:36:06.300 --> 00:36:09.900
 barriers to Capital and reach families and businesses. Traditionally Left

704
00:36:09.900 --> 00:36:12.600
 Behind AFC has long advocated

705
00:36:12.600 --> 00:36:15.700
 for regulatory modernization that promotes Innovation, but

706
00:36:15.700 --> 00:36:18.600
 also holds innovators accountable to being

707
00:36:18.600 --> 00:36:20.200
 responsible and transparent.

708
00:36:20.900 --> 00:36:23.400
We're now at a moment in time. We're modern and

709
00:36:23.400 --> 00:36:26.400
 forward-looking Regulatory structures can strengthen Banks and

710
00:36:26.400 --> 00:36:29.500
 fintechs that play by the rules and act responsibly.

711
00:36:31.300 --> 00:36:32.600
And with 15 seconds.

712
00:36:34.800 --> 00:36:37.000
Always impressive Mr. Bell

713
00:36:41.400 --> 00:36:44.300
chairman Sanders members of the committee. Thank you

714
00:36:44.300 --> 00:36:47.500
 so much for the opportunity to testify. I'm Chuck bowel programs

715
00:36:47.500 --> 00:36:50.200
 director or Consumer Reports based in

716
00:36:50.200 --> 00:36:53.800
 Yonkers New York. I'm a financial policy advocate

717
00:36:53.800 --> 00:36:56.400
 in our New York office. I represent our

718
00:36:56.400 --> 00:36:59.100
 positions here in New York state and other Northeastern states.

719
00:37:00.500 --> 00:37:04.000
Um, most of my comments here are really to address fintech

720
00:37:03.100 --> 00:37:06.800
 rather than crypto but to summarize we

721
00:37:06.800 --> 00:37:09.700
 at Consumer Reports, we are very much

722
00:37:09.700 --> 00:37:12.800
 in favor of State oversight and Licensing

723
00:37:12.800 --> 00:37:15.800
 for online lending and and

724
00:37:15.800 --> 00:37:19.200
 for crypto to the extent that new measures can

725
00:37:19.200 --> 00:37:22.800
 be developed to provide for that. We also participate

726
00:37:22.800 --> 00:37:25.700
 here in the Coalition called New Yorkers for responsible lending

727
00:37:25.700 --> 00:37:28.800
 where I coach here at the consumer and insurance working

728
00:37:28.800 --> 00:37:32.100
 group. And in that group, we're quite

729
00:37:31.100 --> 00:37:34.300
 concerned with trying to strengthen the general

730
00:37:34.300 --> 00:37:37.200
 business law 349 the consumer protection law in

731
00:37:37.200 --> 00:37:41.000
 New York state which is not been updated for 40 years. So Senator

732
00:37:40.600 --> 00:37:43.100
 Camry has a bill to strengthen that

733
00:37:43.100 --> 00:37:46.200
 law strengthen the penalties that are in that bill or in

734
00:37:46.200 --> 00:37:49.500
 that law and we think that's one of the best protections we

735
00:37:49.500 --> 00:37:52.400
 can provide for consumers is to have a strong General law

736
00:37:52.400 --> 00:37:55.400
 where consumers who are harmed by unfair deceptive or

737
00:37:55.400 --> 00:37:58.300
 abusive practices have the ability to protect their

738
00:37:58.300 --> 00:37:59.600
 rights in court and

739
00:38:00.500 --> 00:38:03.500
services attorneys around the state can help bring actions

740
00:38:03.500 --> 00:38:04.300
 on their behalf.

741
00:38:05.300 --> 00:38:08.100
We also were very much in support of

742
00:38:08.100 --> 00:38:11.900
 the New York Department of Financial Services proposal couple

743
00:38:11.900 --> 00:38:14.800
 years back to expand their licensing of

744
00:38:14.800 --> 00:38:17.200
 online lenders in particular because we

745
00:38:17.200 --> 00:38:20.900
 as we look at states around the country. We see a lot

746
00:38:20.900 --> 00:38:23.300
 of online lending that takes

747
00:38:23.300 --> 00:38:26.600
 place extremely high rates. I mean New York is a

748
00:38:26.600 --> 00:38:29.200
 non- Payday State there's a over 20

749
00:38:29.200 --> 00:38:32.600
 states that have tight user Recaps that don't after eyes

750
00:38:32.600 --> 00:38:35.500
 really high interest rates for small dollar

751
00:38:35.500 --> 00:38:38.200
 Consumer loans and we think that is a really

752
00:38:38.200 --> 00:38:41.500
 good thing. Both at New York is responsible ending and consumer reports for

753
00:38:41.500 --> 00:38:45.200
 protecting New Yorkers and particularly vulnerable communities

754
00:38:44.200 --> 00:38:47.800
 by having those tight used to

755
00:38:47.800 --> 00:38:51.200
 recelings we have we've been

756
00:38:51.200 --> 00:38:54.600
 able to attract lenders that are willing to lend under those rates.

757
00:38:54.600 --> 00:38:58.000
 We've empowered Credit Unions to make affordable soundly

758
00:38:57.600 --> 00:39:00.800
 underwritten small dollar loans, and

759
00:39:00.800 --> 00:39:03.200
 we've avoided people getting into the

760
00:39:03.200 --> 00:39:04.500
 cycle of recurring

761
00:39:05.300 --> 00:39:08.500
with with payday loans, which we see in so many other states

762
00:39:08.500 --> 00:39:12.400
 that is really devastating that can borrowers

763
00:39:11.400 --> 00:39:14.200
 can be in debt the entire

764
00:39:14.200 --> 00:39:17.400
 year long often forced to borrow money from friends and

765
00:39:17.400 --> 00:39:20.300
 family to repay these usurious loans of

766
00:39:20.300 --> 00:39:23.000
 you know, 300 400% APR

767
00:39:23.700 --> 00:39:26.500
And often declare bankruptcy,

768
00:39:26.500 --> 00:39:29.600
 you know and have their credit damaged as a result. So we

769
00:39:29.600 --> 00:39:32.400
 believe that having those Ironclad usury limits

770
00:39:32.400 --> 00:39:35.500
 as one of the things that's really done the most to protect

771
00:39:35.500 --> 00:39:39.300
 consumers and we've seen regulation wax

772
00:39:38.300 --> 00:39:41.600
 and Wayne over the years. I put

773
00:39:41.600 --> 00:39:44.600
 some material in my statement about the all

774
00:39:44.600 --> 00:39:47.600
 the risks that came out during the financial crisis where many

775
00:39:47.600 --> 00:39:50.100
 of our groups had warned the Federal Reserve about

776
00:39:50.100 --> 00:39:53.600
 the risks of predatory lending and predatory mortgage lending

777
00:39:53.600 --> 00:39:57.000
 how it was harming vulnerable communities and their

778
00:39:56.200 --> 00:39:59.600
 Federal Regulators basically field to take action. And

779
00:39:59.600 --> 00:40:02.400
 so under down Frank, we got the creation of the Consumer

780
00:40:02.400 --> 00:40:05.100
 Financial Protection Bureau and then here in New York

781
00:40:05.100 --> 00:40:08.600
 when the Departments of banking and insurance merged. We got a stronger

782
00:40:08.600 --> 00:40:11.300
 DFS that has a bureau of financial frauds and

783
00:40:11.300 --> 00:40:14.700
 consumer protection and we think enforcement of

784
00:40:14.700 --> 00:40:17.700
 our financial laws is a oversight and

785
00:40:17.700 --> 00:40:21.200
 enforcement is a joint state federal responsibility right

786
00:40:20.200 --> 00:40:23.100
 now. There's a lot of attacks that are coming

787
00:40:23.800 --> 00:40:26.600
The cfpb's funding mechanism. There's a Supreme Court

788
00:40:26.600 --> 00:40:30.200
 case from the fifth circuit that's pending that threatens

789
00:40:29.200 --> 00:40:32.500
 to disrupt their work. They're doing incredibly

790
00:40:32.500 --> 00:40:36.000
 important work and have really improved

791
00:40:35.700 --> 00:40:38.600
 the accountability of financial services for consumers.

792
00:40:38.600 --> 00:40:41.500
 So we but we do think that the state

793
00:40:41.500 --> 00:40:44.900
 Regulators like the attorney general and the DFS are

794
00:40:44.900 --> 00:40:47.300
 also essential for filling in gaps and

795
00:40:47.300 --> 00:40:51.000
 being able to take action if there are any slow

796
00:40:50.400 --> 00:40:53.500
 points and federal action. So for all

797
00:40:53.500 --> 00:40:57.600
 those reasons, we've favored the licensing of consumer-facing

798
00:40:56.600 --> 00:40:59.300
 lenders one example

799
00:40:59.300 --> 00:41:02.300
 of regulatory Arbitrage, which I attached to my statement is we

800
00:41:02.300 --> 00:41:06.100
 did a report about these buy now pay later lenders which

801
00:41:05.100 --> 00:41:08.100
 the to their credit the cfpb is doing

802
00:41:08.100 --> 00:41:11.200
 a lot to investigate and developing some good recommendations for new

803
00:41:11.200 --> 00:41:14.800
 protections. But the point is that those lenders are not licensed

804
00:41:14.800 --> 00:41:17.900
 in New York state they are licensed in California, California has

805
00:41:17.900 --> 00:41:20.600
 somewhat better day data and how they're behaving out

806
00:41:20.600 --> 00:41:23.700
 there. We've seen a number of problems with stacking

807
00:41:23.700 --> 00:41:26.300
Multiple loans by some consumers there's some concerns

808
00:41:26.300 --> 00:41:30.200
 about whether sound underwriting is taking place. There are

809
00:41:30.200 --> 00:41:33.500
 issues with respect to late fees and consumers making

810
00:41:33.500 --> 00:41:36.500
 returns and you know getting credits to

811
00:41:36.500 --> 00:41:39.300
 their account. So there's lots of

812
00:41:39.300 --> 00:41:42.400
 different fintech Enterprises and

813
00:41:42.400 --> 00:41:45.800
 startups. I agree. There's tremendous heterogeneous unity

814
00:41:45.800 --> 00:41:48.500
 and diversity in the industry and consumers are

815
00:41:48.500 --> 00:41:51.400
 well served by having more more options and

816
00:41:51.400 --> 00:41:54.200
 more tools. But I think all of these things do need

817
00:41:54.200 --> 00:41:57.700
 strong State oversight and we would support efforts

818
00:41:57.700 --> 00:42:01.100
 by the DFS and the Attorney General to

819
00:42:00.100 --> 00:42:03.300
 expand their licensing of online lending and

820
00:42:03.300 --> 00:42:06.300
 in particular the licensing of

821
00:42:06.300 --> 00:42:09.700
 crypto exchange. There's bill in California called ab39 which

822
00:42:09.700 --> 00:42:12.100
 Consumer Reports is supporting as a way of

823
00:42:12.100 --> 00:42:15.700
 getting more State accountability and my boss testified

824
00:42:15.700 --> 00:42:18.600
 in favor of creating a regular Federal regulatory

825
00:42:18.600 --> 00:42:21.300
 framework for stable coins last week and

826
00:42:21.300 --> 00:42:23.700
 I attached her testimony, so we're gonna be

827
00:42:23.800 --> 00:42:26.400
Be working at both levels on this but we

828
00:42:26.400 --> 00:42:29.700
 do want to encourage New York state to maintain its vigilance and

829
00:42:29.700 --> 00:42:32.600
 it's oversight and we do think it's paid very

830
00:42:32.600 --> 00:42:35.100
 rich rewards. Certainly. We have a long way

831
00:42:35.100 --> 00:42:39.000
 to go and in getting better Financial access for underserved

832
00:42:38.400 --> 00:42:41.300
 communities and and consumers of

833
00:42:41.300 --> 00:42:44.300
 color and we want it. We want to get on with that work, but let's

834
00:42:44.300 --> 00:42:47.500
 not let's not ease up on the oversight. That's basically our

835
00:42:47.500 --> 00:42:48.200
 point of view, Mr.

836
00:42:50.100 --> 00:42:54.200
Mr. Bell your magazine and now

837
00:42:53.200 --> 00:42:56.500
 online is held in

838
00:42:56.500 --> 00:42:59.900
 high regards throughout the nation and especially

839
00:42:59.900 --> 00:43:00.400
 in New York.

840
00:43:03.300 --> 00:43:06.400
One problem that that was brought

841
00:43:06.400 --> 00:43:10.700
 up earlier is that credit unions

842
00:43:10.700 --> 00:43:13.400
 don't lend to businesses. So

843
00:43:15.600 --> 00:43:19.300
they may not be the most effective vehicle to

844
00:43:18.300 --> 00:43:22.100
 Aid the business Community. How would

845
00:43:21.100 --> 00:43:22.700
 you address that?

846
00:43:23.400 --> 00:43:26.700
I think that I think there are other companies and

847
00:43:26.700 --> 00:43:29.400
 and fintech lenders that can fill

848
00:43:29.400 --> 00:43:32.300
 some of those gaps, but my concern is that when you

849
00:43:32.300 --> 00:43:35.700
 have high class credit people, you know businesses can

850
00:43:35.700 --> 00:43:38.300
 get in the cycle of debt repayment

851
00:43:38.300 --> 00:43:41.200
 that they may not be able to handle and that we really do

852
00:43:41.200 --> 00:43:45.300
 need to be careful about making sure that the loans are appropriately underwritten

853
00:43:44.300 --> 00:43:47.500
 and affordably priced and if

854
00:43:47.500 --> 00:43:50.600
 we're not getting that from the private market then there

855
00:43:50.600 --> 00:43:53.900
 may be a need for additional sources of credit developed by

856
00:43:53.900 --> 00:43:56.200
 the state through other, you know,

857
00:43:56.200 --> 00:43:59.900
 like Empire State development or through public banking other

858
00:43:59.900 --> 00:44:02.400
 channels, but I think we need to

859
00:44:02.400 --> 00:44:05.300
 be careful because I put in my testimony several example of

860
00:44:05.300 --> 00:44:08.300
 businesses that became very overextended on high

861
00:44:08.300 --> 00:44:11.700
 cost loans and you know, when people are desperate up

862
00:44:11.700 --> 00:44:14.300
 in the middle of the night worrying about their inventory and where the

863
00:44:14.300 --> 00:44:18.600
 cash is coming from. It's pretty easy to overlook ownerous

864
00:44:17.600 --> 00:44:20.600
 terms and there have been owners terms

865
00:44:20.600 --> 00:44:23.200
 and lots of small business loans and we can't just

866
00:44:23.400 --> 00:44:26.400
Why on the marketplace to fix that? I think there has

867
00:44:26.400 --> 00:44:29.600
 to be oversight and some real guardrails to protect the businesses from

868
00:44:29.600 --> 00:44:32.900
 predatory predatory activity before

869
00:44:32.900 --> 00:44:35.400
 I turn to Ms. Fisher.

870
00:44:35.400 --> 00:44:39.600
 I'm going to ask you one more question sir has

871
00:44:38.600 --> 00:44:41.600
 Consumer Report taken

872
00:44:41.600 --> 00:44:44.500
 a position on public Banks yet. We were

873
00:44:44.500 --> 00:44:47.300
 in support of the public banking bill. I'm going to be coming

874
00:44:47.300 --> 00:44:50.600
 back next week to join Community Equity agenda and support

875
00:44:50.600 --> 00:44:53.500
 of that. So yes, we do. We do support the New York public Bank bill.

876
00:44:53.500 --> 00:44:55.600
 So thank you for your leadership on that.

877
00:44:57.600 --> 00:45:02.600
Thank you, Ms. Fisher the issue

878
00:45:02.600 --> 00:45:03.100
 of

879
00:45:05.100 --> 00:45:09.100
The cap has been raised here. Do you

880
00:45:09.100 --> 00:45:12.200
 have a position on on I think that you spoke

881
00:45:12.200 --> 00:45:12.500
 of?

882
00:45:14.100 --> 00:45:17.400
Well, I'm not sure if it was you who spoke of

883
00:45:17.400 --> 00:45:20.400
 the lending cap of New York New York

884
00:45:20.400 --> 00:45:23.800
 State. There's the business finance

885
00:45:23.800 --> 00:45:25.600
 Coalition have a position on that.

886
00:45:27.200 --> 00:45:27.400
me that

887
00:45:28.400 --> 00:45:30.100
that and we don't have

888
00:45:30.500 --> 00:45:34.800
Position on okay, New York. She's very cap, but I

889
00:45:33.800 --> 00:45:36.200
 did if it's okay. I want

890
00:45:36.200 --> 00:45:39.300
 to comment on your question. You've had to the other panel about

891
00:45:39.300 --> 00:45:42.300
 the community reinvestment act. I it was

892
00:45:42.300 --> 00:45:45.400
 I assure you it was covering up but okay. You beat

893
00:45:45.400 --> 00:45:49.400
 me to the punch. You're a good Barrister. The community reinvestment

894
00:45:48.400 --> 00:45:51.800
 act has the goal of encouraging

895
00:45:51.800 --> 00:45:54.600
 Banks to provide Capital to Capital to

896
00:45:54.600 --> 00:45:58.200
 underserved communities and it

897
00:45:57.200 --> 00:46:01.200
 is perhaps cumbersome and

898
00:46:00.200 --> 00:46:04.300
 I think we could do something better. For example

899
00:46:03.300 --> 00:46:06.700
 in SB 1450 there

900
00:46:06.700 --> 00:46:09.600
 the concept that you've introduced about using some

901
00:46:09.600 --> 00:46:12.600
 of the licensing fees to provide grants to

902
00:46:12.600 --> 00:46:15.200
 women and minority owned businesses. And

903
00:46:15.200 --> 00:46:18.500
 that's an Innovative idea to provide Capital

904
00:46:18.500 --> 00:46:21.500
 to underserved communities and and an idea

905
00:46:21.500 --> 00:46:24.600
 that we support and we look forward to working with you on on other Concepts.

906
00:46:26.600 --> 00:46:27.300
I like it. I like it.

907
00:46:29.100 --> 00:46:32.100
broker versus in there was a question of

908
00:46:33.400 --> 00:46:34.700
who should

909
00:46:37.900 --> 00:46:40.800
get in trouble if you wish if the

910
00:46:40.800 --> 00:46:45.000
 broker is unlicensed and

911
00:46:43.300 --> 00:46:46.500
 you did not

912
00:46:46.500 --> 00:46:49.300
 want it to be the industry. You felt that

913
00:46:49.300 --> 00:46:52.900
 it should be simply the broker should bear

914
00:46:52.900 --> 00:46:53.400
 the burden.

915
00:46:54.100 --> 00:46:55.800
Am I phrasing it, right?

916
00:46:57.200 --> 00:46:58.700
there's some distinction so

917
00:47:00.300 --> 00:47:03.300
The issue that I brought up is the penalty for having

918
00:47:03.300 --> 00:47:06.600
 the underlying transaction be void and uncollectible.

919
00:47:06.600 --> 00:47:09.600
 So for example, New York's

920
00:47:09.600 --> 00:47:12.700
 criminal use recap of 25% the the

921
00:47:12.700 --> 00:47:15.200
 law in New York is that if alone exceeds that

922
00:47:15.200 --> 00:47:18.600
 criminal use recap that loan is void and uncollectible. That's

923
00:47:18.600 --> 00:47:22.000
 an appropriate penalty for violating

924
00:47:21.700 --> 00:47:25.500
 a law that has significant public

925
00:47:24.500 --> 00:47:25.900
 protection.

926
00:47:26.900 --> 00:47:29.700
In my view a licensing requirement,

927
00:47:29.700 --> 00:47:32.600
 although it's important is more of an administrative

928
00:47:32.600 --> 00:47:35.800
 issue. Right if a loan

929
00:47:35.800 --> 00:47:36.800
 is otherwise legal.

930
00:47:37.800 --> 00:47:40.200
But there is someone in the chain who

931
00:47:40.200 --> 00:47:43.700
 failed to obtain a license making the

932
00:47:43.700 --> 00:47:46.800
 penalty be that the underlying transaction

933
00:47:46.800 --> 00:47:49.500
 is void and uncollectible is not to measure

934
00:47:49.500 --> 00:47:52.500
 it with the harm the public harm. So in my

935
00:47:52.500 --> 00:47:55.400
 view would be a more appropriate penalty to

936
00:47:55.400 --> 00:47:58.200
 have a fine assessed, you know

937
00:47:58.200 --> 00:48:01.800
 a robust fine. So there is deterrence for

938
00:48:01.800 --> 00:48:05.100
 failure to have a license. So I

939
00:48:04.100 --> 00:48:06.100
 was more focused on the

940
00:48:07.500 --> 00:48:10.200
Gravity of the penalty commensurate with the

941
00:48:10.200 --> 00:48:13.300
 violation of the law. It might be

942
00:48:13.300 --> 00:48:16.500
 a good thing as you describe

943
00:48:16.500 --> 00:48:19.600
 it if the industry is moving in

944
00:48:19.600 --> 00:48:23.500
 good faith. If they are moving to ensure that

945
00:48:23.500 --> 00:48:26.400
 the person has a

946
00:48:26.400 --> 00:48:29.700
 license if they would taking some action

947
00:48:29.700 --> 00:48:32.600
 to ensure that the person had a license

948
00:48:32.600 --> 00:48:35.500
 and they moved

949
00:48:35.500 --> 00:48:38.500
 in good faith then later on if there

950
00:48:38.500 --> 00:48:41.900
 was a problem but to just say

951
00:48:43.100 --> 00:48:46.700
No action by the industry just anyone

952
00:48:46.700 --> 00:48:49.600
 coming up and saying I'm licensed I can I

953
00:48:49.600 --> 00:48:52.800
 can go perhaps there is some some

954
00:48:52.800 --> 00:48:55.400
 room for compromise perhaps if we

955
00:48:55.400 --> 00:48:59.300
 can find something that the industry is doing to to

956
00:48:58.300 --> 00:49:01.500
 screen out the Bad actors

957
00:49:01.500 --> 00:49:04.500
 again and and move forward

958
00:49:04.500 --> 00:49:07.200
 so that at least you would be able to say

959
00:49:07.200 --> 00:49:10.200
 hey, we we moved in a good manner.

960
00:49:11.400 --> 00:49:12.800
Now don't penalize us.

961
00:49:14.200 --> 00:49:15.700
Perhaps, thank you.

962
00:49:18.500 --> 00:49:19.700
Mr. Goldfeather

963
00:49:24.500 --> 00:49:28.200
Have you considered have you guys considered

964
00:49:27.200 --> 00:49:29.200
 public Banks yet?

965
00:49:30.700 --> 00:49:33.400
Is an official position we do not have an

966
00:49:33.400 --> 00:49:36.900
 official position again their studies out of Massachusetts and

967
00:49:36.900 --> 00:49:39.400
 others that have a very inclusions. We at

968
00:49:39.400 --> 00:49:41.700
 the American finta Council don't have a public position, okay.

969
00:49:43.600 --> 00:49:46.300
Public Banks may end up

970
00:49:46.300 --> 00:49:49.400
 acting as the like the Veterans

971
00:49:49.400 --> 00:49:49.900
 Administration.

972
00:49:51.500 --> 00:49:54.400
I am a vet and I can get a vet

973
00:49:54.400 --> 00:49:56.800
 loan to buy a home from the Veterans Administration.

974
00:49:57.500 --> 00:50:00.300
The Veterans Administration does not is not

975
00:50:00.300 --> 00:50:01.500
 in the business of giving money.

976
00:50:02.300 --> 00:50:05.600
They don't do that. What they do is

977
00:50:05.600 --> 00:50:08.300
 guarantee a certain

978
00:50:08.300 --> 00:50:09.800
 percentage of the law.

979
00:50:10.700 --> 00:50:14.800
And under those conditions any worthy

980
00:50:13.800 --> 00:50:16.600
 financial institution.

981
00:50:17.700 --> 00:50:19.700
May be the recipient of this.

982
00:50:22.300 --> 00:50:25.700
It need not be simply a brick and mortar the

983
00:50:25.700 --> 00:50:28.800
 the attempt by the Veterans Administration. Is

984
00:50:28.800 --> 00:50:31.500
 that the vet buys a

985
00:50:31.500 --> 00:50:31.600
 home?

986
00:50:32.400 --> 00:50:35.800
And and any worthy

987
00:50:35.800 --> 00:50:38.700
 institution may be

988
00:50:38.700 --> 00:50:39.300
 the recipient.

989
00:50:39.900 --> 00:50:42.400
Consider considered maybe

990
00:50:42.400 --> 00:50:45.200
 if you move on that,

991
00:50:45.200 --> 00:50:48.300
 I just want 10% Center. I have friends.

992
00:50:48.300 --> 00:50:52.600
 I'm joking. Okay, are you you know fintech came

993
00:50:52.600 --> 00:50:55.800
 about as traditional financial institutions exited the

994
00:50:55.800 --> 00:50:59.000
 community and what we call dearest post 2008

995
00:50:58.200 --> 00:51:01.600
 crisis traditional financial institutions sort

996
00:51:01.600 --> 00:51:04.500
 of stepped away. And that's kind of where fintech began members of

997
00:51:04.500 --> 00:51:07.600
 ours like Lending Club and prosper sort

998
00:51:07.600 --> 00:51:10.900
 of fill the void and consumer, but I want to be clear as I've said before responsible

999
00:51:10.900 --> 00:51:14.100
 thing to companies who believe in regulatory structure

1000
00:51:13.100 --> 00:51:16.900
 many of whom partner with Community Banks

1001
00:51:16.900 --> 00:51:19.200
 to provide access to credit the idea that we

1002
00:51:19.200 --> 00:51:22.200
 have to incentivize Banks to make loans to people who need them

1003
00:51:22.200 --> 00:51:25.100
 is astonishing in today's day and age

1004
00:51:25.100 --> 00:51:28.200
 and that's kind of where fintech steps in but again, I can't

1005
00:51:28.200 --> 00:51:31.300
 say this emphatically enough responsible fintech companies who

1006
00:51:31.300 --> 00:51:34.400
 recognize their responsibility not just as

1007
00:51:34.400 --> 00:51:37.700
 a business but to consumer protection and Regulatory Compliance, and

1008
00:51:37.700 --> 00:51:39.500
 those are the kind of companies that we represent.

1009
00:51:39.900 --> 00:51:42.400
Are confintech Council and those that as we

1010
00:51:42.400 --> 00:51:45.100
 continue to evolve in these nascent Industries, we don't

1011
00:51:45.100 --> 00:51:48.400
 do it blindly for profit sake but we do it with a focus on

1012
00:51:48.400 --> 00:51:51.300
 there's a consumer that needs the access to

1013
00:51:51.300 --> 00:51:51.500
 credit.

1014
00:51:52.300 --> 00:51:55.600
The question becomes and as we were talking about usury caps, how

1015
00:51:55.600 --> 00:51:56.100
 do you balance?

1016
00:51:57.500 --> 00:52:00.200
Access to credit with responsible usually limits and

1017
00:52:00.200 --> 00:52:03.200
 responsible regulatory oversight. I think that's the balance that we try to

1018
00:52:03.200 --> 00:52:03.500
 face.

1019
00:52:04.600 --> 00:52:07.000
The federal government and the military Lending Act to set that

1020
00:52:07.300 --> 00:52:10.500
 at 36% We recognize that as the

1021
00:52:10.500 --> 00:52:13.200
 standard at the federal government. We're we're I want

1022
00:52:13.200 --> 00:52:16.600
 to the American fintech Council Embraces state regulatory structures

1023
00:52:16.600 --> 00:52:19.600
 the challenge for fintech companies that operate in a

1024
00:52:19.600 --> 00:52:22.600
 Nimble fashion is trying to keep up with 50 state

1025
00:52:22.600 --> 00:52:25.100
 Patchwork of regulatory oversight and that's where it gets

1026
00:52:25.100 --> 00:52:28.300
 a little tricky for the fintech companies. But again stand at the

1027
00:52:28.300 --> 00:52:31.600
 ready to work with every state as we are here today and in Colorado

1028
00:52:31.600 --> 00:52:34.200
 and States across the country to find the right

1029
00:52:34.200 --> 00:52:37.500
 balance to create access to credit credit where traditional

1030
00:52:37.500 --> 00:52:40.700
 banks are pulling away. I mean we're Community Banks

1031
00:52:40.700 --> 00:52:43.900
 are closing at the fastest clip in history particularly in

1032
00:52:43.900 --> 00:52:46.300
 minority and Rural communities. And so that's where

1033
00:52:46.300 --> 00:52:49.300
 fintech steps up to to help those

1034
00:52:49.300 --> 00:52:52.500
 who are disproportionately being underserved by traditional institutions.

1035
00:52:53.100 --> 00:52:54.000
Mr. Bill

1036
00:52:55.900 --> 00:52:58.600
the fintech stepping up to serve in

1037
00:52:58.600 --> 00:53:01.300
 these communities. Why do you have a problem with

1038
00:53:01.300 --> 00:53:02.500
 their 36%

1039
00:53:04.100 --> 00:53:07.600
Oh well because suggested 36% Yeah,

1040
00:53:07.600 --> 00:53:10.400
 I mean, we we believe in tight user

1041
00:53:10.400 --> 00:53:13.400
 caps because we want loans to be affordably priced and

1042
00:53:13.400 --> 00:53:16.400
 when loans are aggressively priced by companies that

1043
00:53:16.400 --> 00:53:19.800
 maybe located, you know halfway across the country. They're not

1044
00:53:19.800 --> 00:53:23.000
 really operating in the interest of the New York consumer by

1045
00:53:22.500 --> 00:53:25.200
 charging those really sharp interest rates.

1046
00:53:25.200 --> 00:53:28.300
 So we believe we can develop other mechanisms to make

1047
00:53:28.300 --> 00:53:32.500
 sure that people can get credit that's affordably priced one

1048
00:53:31.500 --> 00:53:34.300
 example of something we're really concerned about

1049
00:53:34.300 --> 00:53:37.500
 is there's these earned wage payroll

1050
00:53:37.500 --> 00:53:40.900
 advance programs that are operating

1051
00:53:40.900 --> 00:53:43.900
 summer integrated with employer payroll some

1052
00:53:43.900 --> 00:53:46.300
 are third party Standalone fintech apps

1053
00:53:46.300 --> 00:53:49.900
 and some of those companies are now seeking an exception

1054
00:53:49.900 --> 00:53:52.400
 from the New York usury limit law

1055
00:53:52.400 --> 00:53:55.500
 to give payroll advances. These are

1056
00:53:55.500 --> 00:53:58.400
 very short-term loans of like five days or less than two

1057
00:53:58.400 --> 00:54:01.100
 weeks. But according to data that's just come out

1058
00:54:01.100 --> 00:54:04.000
 from the California Department of Financial Protection and innov

1059
00:54:04.100 --> 00:54:07.300
And the APR of value of the fees that

1060
00:54:07.300 --> 00:54:11.800
 are being charged is as much as 360% So

1061
00:54:10.800 --> 00:54:13.300
 that's an example of something like

1062
00:54:13.300 --> 00:54:16.000
 we don't want to see workers in New York having to pay

1063
00:54:16.600 --> 00:54:19.100
 extra fees to get access to their wages if we

1064
00:54:19.100 --> 00:54:22.700
 can accomplish having faster payments through financial

1065
00:54:22.700 --> 00:54:25.600
 technology. We're all for that but

1066
00:54:25.600 --> 00:54:28.200
 we don't want to have consumers at the end of the year paying hundreds

1067
00:54:28.200 --> 00:54:31.700
 and hundreds of dollars of fees to get access to their wages and

1068
00:54:31.700 --> 00:54:34.400
 having those programs carved out from the usury laws

1069
00:54:34.400 --> 00:54:37.500
 would set a bad precedent for other high cost lenders.

1070
00:54:37.500 --> 00:54:40.100
 So this can quickly get out of control

1071
00:54:40.100 --> 00:54:43.600
 when someone says, you know, you gave that company and exception

1072
00:54:43.600 --> 00:54:46.500
 to the use of your limits. What about us? And this is

1073
00:54:46.500 --> 00:54:50.200
 what we heard a lot in 2017 and 18 and

1074
00:54:49.200 --> 00:54:52.200
 consumers will get behind on their

1075
00:54:52.200 --> 00:54:56.100
 loans. I mean the cost of living in New York is very high. It's

1076
00:54:55.100 --> 00:54:58.500
 expensive to get child care and I

1077
00:54:58.500 --> 00:55:01.700
 don't insurance pay for car all these different things that you need. So we

1078
00:55:01.700 --> 00:55:04.000
 got to make sure that credit is affordably price.

1079
00:55:04.100 --> 00:55:07.300
Think New York has done a good job on that over the years but we can

1080
00:55:07.300 --> 00:55:10.100
 do better through things like public Banking and

1081
00:55:10.100 --> 00:55:13.700
 Community Development financial institutions, which can

1082
00:55:13.700 --> 00:55:16.100
 give soundly underwritten small business loans and

1083
00:55:16.100 --> 00:55:19.100
 work with the owners. So we want to use those, you know

1084
00:55:19.100 --> 00:55:22.900
 have kind of a mixed economy. We don't have to get rid of commercial actors

1085
00:55:22.900 --> 00:55:25.400
 all together. But like let's say let's have some options

1086
00:55:25.400 --> 00:55:28.000
 for people that are affordably priced. That's our point of view.

1087
00:55:28.700 --> 00:55:31.100
Improvement since the Senate has not

1088
00:55:31.100 --> 00:55:34.300
 been paid from April the

1089
00:55:34.300 --> 00:55:38.300
 first we all may be driven to short-term loans,

1090
00:55:37.300 --> 00:55:40.100
 since you are my last

1091
00:55:40.100 --> 00:55:43.200
 panel. I'm going to allow you 30 seconds

1092
00:55:43.200 --> 00:55:46.600
 as a summation to sum it

1093
00:55:46.600 --> 00:55:48.400
 up. And of course you're going last Mr. Bell.

1094
00:55:49.100 --> 00:55:50.100
Madam Fisher

1095
00:55:52.800 --> 00:55:55.700
Thank you. I use my come little

1096
00:55:55.700 --> 00:55:56.400
 closer. All right.

1097
00:55:58.700 --> 00:56:01.100
I use my 30 seconds to again. Thank you

1098
00:56:01.100 --> 00:56:05.200
 for this opportunity. And again, the

1099
00:56:05.200 --> 00:56:08.500
 revenue-based finance Coalition is really looking forward to working with

1100
00:56:08.500 --> 00:56:13.400
 you to discuss reasonable

1101
00:56:12.400 --> 00:56:15.800
 legislation to weed

1102
00:56:15.800 --> 00:56:19.300
 out the Bad actors set up guardrails and preserve

1103
00:56:18.300 --> 00:56:20.700
 access to capital. Thank you.

1104
00:56:21.400 --> 00:56:24.600
Thank you, sir. Thank you. Thank you Senator. And

1105
00:56:24.600 --> 00:56:27.700
 as I mentioned before, you know, responsible finta companies

1106
00:56:27.700 --> 00:56:30.500
 tend to provide those services for

1107
00:56:30.500 --> 00:56:33.300
 traditional Financial companies have stepped away. But again when acting

1108
00:56:33.300 --> 00:56:36.600
 responsibly and I think the biggest challenge for fintech

1109
00:56:36.600 --> 00:56:40.000
 companies is regulatory uncertainty, right? We don't know how to operate in

1110
00:56:39.200 --> 00:56:42.000
 which state we go to what are our limits. How do we do

1111
00:56:42.100 --> 00:56:46.000
 it and creating, you know, it's easy to say we again the

1112
00:56:45.500 --> 00:56:48.900
 patch where the 50 state Patchwork creates real

1113
00:56:48.900 --> 00:56:51.400
 challenges for our ability to offer that access to credit

1114
00:56:51.400 --> 00:56:54.200
 and that's what it comes down to when it comes on when it

1115
00:56:54.200 --> 00:56:57.500
 comes to lending is is a access to credit at

1116
00:56:57.500 --> 00:57:01.000
 a reasonable price with reasonable terms that are transparent. We're

1117
00:57:00.200 --> 00:57:03.300
 all used to the idea of if you want to say 15% today

1118
00:57:03.300 --> 00:57:06.600
 on your purchase by signing up for our credit card, right that's becoming grained in

1119
00:57:06.600 --> 00:57:09.200
 kind of us as a society, but we don't know how much

1120
00:57:09.200 --> 00:57:12.200
 you're gonna pay. We don't know what their credit terms are. Like, we don't know what

1121
00:57:12.200 --> 00:57:15.200
 the interest rates are and we all accept like, oh, I'll do that today and I'll

1122
00:57:15.200 --> 00:57:18.200
 sign up for that credit card and you look at companies like a firm which is

1123
00:57:18.200 --> 00:57:21.300
 the opposite they set up their program not to avoid

1124
00:57:21.500 --> 00:57:24.400
Regulatory structure, but they set up their four payment process to

1125
00:57:24.400 --> 00:57:27.200
 embrace that this is a loan. This is how much

1126
00:57:27.200 --> 00:57:30.100
 you're going to pay. This is what your interest rate is. And by the time

1127
00:57:30.100 --> 00:57:33.600
 you walk out of the store, you know, how many months you're gonna have to pay, you know,

1128
00:57:33.600 --> 00:57:36.200
 how much it's going to cost and you have a pathway out

1129
00:57:36.200 --> 00:57:39.200
 and the best part of that is if you take that loan and

1130
00:57:39.200 --> 00:57:42.800
 you proceed through it safely and honestly your credit's

1131
00:57:42.800 --> 00:57:45.600
 going to improve and so it actually is a pathway out

1132
00:57:45.600 --> 00:57:48.400
 of debt versus the the credit card industry, which

1133
00:57:48.400 --> 00:57:51.100
 we've accepted as sort of a recycling of debt, which

1134
00:57:51.100 --> 00:57:54.700
 has been mentioned a number of times and so that's what fintech is able to do when operating

1135
00:57:54.700 --> 00:57:57.100
 responsibly with a regulatory structure that works.

1136
00:57:58.200 --> 00:58:01.100
Well said sir, thank you. Well, I think

1137
00:58:01.100 --> 00:58:04.700
 the three Cardinal principles of financial regulation are safety

1138
00:58:04.700 --> 00:58:07.700
 soundness and consumer protection and what

1139
00:58:07.700 --> 00:58:10.300
 we've seen happening with crypto in

1140
00:58:10.300 --> 00:58:14.200
 the last year or two is highly concerning in that I

1141
00:58:13.200 --> 00:58:17.200
 believe that there is 3.27 billion

1142
00:58:16.200 --> 00:58:20.600
 in crypto scams in 2022 alone.

1143
00:58:20.600 --> 00:58:23.500
 And so consumers don't expect

1144
00:58:23.500 --> 00:58:26.300
 that level of Fraud and deception to

1145
00:58:26.300 --> 00:58:29.200
 be taking place in the economy and the safety and

1146
00:58:29.200 --> 00:58:32.500
 soundness of the financial institutions is also, you

1147
00:58:32.500 --> 00:58:35.400
 know enjoined or brought up by the recent bank

1148
00:58:35.400 --> 00:58:38.600
 failures. So safety and soundness are incredibly important.

1149
00:58:38.600 --> 00:58:41.300
 I think we all can agree on that. And so we really want

1150
00:58:41.300 --> 00:58:44.800
 to make sure that the New York DFS and the Attorney General have

1151
00:58:44.800 --> 00:58:47.900
 the resources and the authority that they need to

1152
00:58:47.900 --> 00:58:50.600
 protect New Yorkers and we at

1153
00:58:50.600 --> 00:58:53.300
 New Yorkers for responsible lending, you know one is stand by their side

1154
00:58:53.300 --> 00:58:56.500
 for that but with crypto I think we have a

1155
00:58:56.500 --> 00:58:57.900
 special challenge. It's a new

1156
00:58:58.200 --> 00:59:01.200
A new technology that's kind of a right. There's a

1157
00:59:01.200 --> 00:59:04.200
 lot of regulatory uncertainty the SEC is doing a

1158
00:59:04.200 --> 00:59:08.300
 lot but there's a lot more that we need to do to protect people against

1159
00:59:07.300 --> 00:59:10.400
 the possible and unreasonable risks. So

1160
00:59:10.400 --> 00:59:13.300
 we look forward to working with Banking Committee

1161
00:59:13.300 --> 00:59:14.800
 as those issues may come up in the future.

1162
00:59:15.800 --> 00:59:18.900
Thank you. My friends. I really appreciate everyone

1163
00:59:18.900 --> 00:59:22.100
 here and in the virtual world

1164
00:59:21.100 --> 00:59:25.200
 it that has taken their

1165
00:59:24.200 --> 00:59:27.800
 time to hear this very important

1166
00:59:27.800 --> 00:59:31.100
 issue. We are going to stay

1167
00:59:30.100 --> 00:59:33.000
 on this issue for a little bit. We're going

1168
00:59:33.300 --> 00:59:36.100
 to we we have not

1169
00:59:38.200 --> 00:59:41.800
mind the market here. Well, there's more

1170
00:59:41.800 --> 00:59:46.000
 data mining that we will have to do on cryptocurrency

1171
00:59:44.200 --> 00:59:46.700
 and others.

1172
00:59:47.600 --> 00:59:51.600
We're going to in the

1173
00:59:51.600 --> 00:59:54.900
 days to come we're going to look at the what impact

1174
00:59:54.900 --> 00:59:58.800
 did cryptocurrency have

1175
00:59:58.800 --> 01:00:01.400
 on any bank failures that

1176
01:00:01.400 --> 01:00:06.100
 have been taking place. We're going to look at that. We

1177
01:00:04.100 --> 01:00:07.800
 whole our responsibility

1178
01:00:07.800 --> 01:00:10.900
 as the chair of banking

1179
01:00:10.900 --> 01:00:14.000
 very seriously a lot has gone on in

1180
01:00:13.200 --> 01:00:17.000
 the banking world of New York state in the

1181
01:00:16.100 --> 01:00:20.100
 last six months and the last three months and we

1182
01:00:19.100 --> 01:00:22.500
 will try to find out

1183
01:00:22.500 --> 01:00:25.400
 what's going on. And where are we

1184
01:00:25.400 --> 01:00:28.800
 going with this and with that

1185
01:00:28.800 --> 01:00:32.300
 as a as a direction this

1186
01:00:31.300 --> 01:00:34.700
 these panelists have

1187
01:00:36.100 --> 01:00:39.700
Laid the foundation of the conversation they have

1188
01:00:39.700 --> 01:00:42.300
 laid down the foundation of what is

1189
01:00:42.300 --> 01:00:45.700
 cryptocurrency. What is fintech? What

1190
01:00:45.700 --> 01:00:49.200
 are these things? And so that

1191
01:00:49.200 --> 01:00:52.800
 we will have a better understanding when we when we

1192
01:00:52.800 --> 01:00:55.600
 go just a little further. I want to thank my staff

1193
01:00:55.600 --> 01:00:58.900
 for putting this together. They did

1194
01:00:58.900 --> 01:01:01.500
 the hard work and I want to thank all of my other colleagues,

1195
01:01:01.500 --> 01:01:04.600
 of course, you may remember these great

1196
01:01:04.600 --> 01:01:07.900
 days Mr. Gofetter. We this is

1197
01:01:07.900 --> 01:01:10.600
 the budget season and everyone is

1198
01:01:10.600 --> 01:01:12.900
 in different rooms huddled.

1199
01:01:15.200 --> 01:01:18.600
Around what I that fully sure, but they're huddled

1200
01:01:18.600 --> 01:01:21.400
 nonetheless and in great things

1201
01:01:21.400 --> 01:01:26.200
 will come from it. Great things will come from it. I don't

1202
01:01:25.200 --> 01:01:28.300
 know what those things are right now. I've

1203
01:01:28.300 --> 01:01:28.400
 been here.

1204
01:01:29.300 --> 01:01:32.000
But we are we're going to

1205
01:01:32.300 --> 01:01:35.400
 do I want to thank you Miss Fisher. I trust it wasn't

1206
01:01:35.400 --> 01:01:38.400
 as unpleasant. It was better than

1207
01:01:38.400 --> 01:01:39.700
 a root canal. I trust.

1208
01:01:40.500 --> 01:01:44.900
Somewhat just a little bit. Yeah, I'm

1209
01:01:44.900 --> 01:01:47.500
 in a good mood. So you get away easy today sir.

1210
01:01:47.500 --> 01:01:50.500
 And we always have to have you back Mr. Bell.

1211
01:01:50.500 --> 01:01:53.300
 You guys really are doing some

1212
01:01:53.300 --> 01:01:56.300
 great work. So to everyone here. I think

1213
01:01:56.300 --> 01:01:59.200
 I think let's see. I didn't I think the leader again.

1214
01:01:59.200 --> 01:02:02.600
 She is the one who authorized these

1215
01:02:02.600 --> 01:02:05.500
 this hearing and others my staff.

1216
01:02:06.300 --> 01:02:09.600
And to oh, yes, the audio-visual team here.

1217
01:02:09.600 --> 01:02:12.500
 I really appreciate that you you've

1218
01:02:12.500 --> 01:02:15.500
 tried very very hard and if

1219
01:02:16.200 --> 01:02:19.300
And if I didn't come across well, it's because I

1220
01:02:19.300 --> 01:02:22.200
 didn't understand which one of these to work on. So I

1221
01:02:22.200 --> 01:02:25.500
 I appreciate I'll take the weight having said

1222
01:02:25.500 --> 01:02:28.100
 that my friend we have stayed a little longer than

1223
01:02:28.100 --> 01:02:31.400
 we thought but I trust it was worth it

1224
01:02:31.400 --> 01:02:33.000
 to you. It was very much.

1225
01:02:33.900 --> 01:02:36.700
Worth it to on behalf of my colleagues.

1226
01:02:38.800 --> 01:02:41.500
Worth it to us. This hearing is now

1227
01:02:41.500 --> 01:02:43.100
 adjourned. Thank you very much.