[Sean Cash]

Still think I am crazy Sean?

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.

[Chambo]

yeah, and corporations aren't people with unalienable rights. We see how that has turned out, haven't we?

[Sean Cash]

yeah, and corporations aren't people with unalienable rights. We see how that has turned out, haven't we?

Chambo, if I had to describe you with a meme, this would be it:
chambo.jpg

[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.

[Sean Cash]

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.

At Lend360, a conference coming up in October that I'm participating in organizing, there will be a lot of discussion dedicated to best practices, collective self-regulating, and lobbying. Also plenty of technology showcasing and other valuable experiences. If anyone is interested in best practices or starting an early movement towards collaborating collectively, I suggest you sign up and go!

[ali10001]

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.

Ok-so here is a thought. If the owner signs as a guarantor of the "loan"/or advance made to the business he or she owns, he/she is signing the guarantee as an individual (ie. consumer). This may indeed be the window and or avenue that the CFPB uses to claim jurisdiction. Also -the whole BFS/California Lawsuit stemmed from an advance made to a sole prop and I think the argument was that the advance was indeed a consumer loan. Would absolutely love to hear how I am wrong on this! What am i missing, if anything??