[Al1]

It's interesting because just about everyone I've spoken to at or around the CFPB has said the CFPB would have no authority over b2b transactions. One inherent problem with Congress delegating their law making authority to another body is that unelected officials make their own rules and are accountable to nobody. The CFPB actually can and does make its own laws.

I think Karen Mills was just taking a random swing here when she says, "In the online small business lending market, the newly created Consumer Financial Protection Bureau (CFPB) may be the most likely to oversee this market. This regulator has authority to oversee payday lenders and similar entities that loan to consumers, and is bringing greater transparency for borrowers to credit card and mortgage markets."

I've repeatedly been told that a business could not be construed as a consumer, not even a sole proprietorship. An individual or entity engaging in a commercial capacity is not a consumer and cannot be governed by consumer laws. That last line was said to me by someone at the CFPB.

Sean's correct, the CFPB has no authority to regulate business lending and I highly doubt that it would be granted any additional authority to regulate the industry. If new legislation was crafted to cover alternative lending, I would suspect it would provide bank regulators oversight responsibility. I think the argument would be that alternative lenders have become "systematically important" to the overall financial system and therefore should be under the purview of those agencies responsibility for the economy overall.

However, any legislation is years away (if ever). I think Ms. Mill's paper simply signifies the beginning of what will be a flood of academic and governmental research trying to ascertain the size and impact of alternative lending. We as an industry need to be aware of and hopefully contribute to the overall conclusions of this research as it will be these conclusions that dictate the form of any future legislation.

Basically, we need to be involved in and help shape the debate.