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Public Statement fromLisa McGreevy, President and CEOOnline Lenders AllianceConsumer Financial Protection Bureau Hearing on Payday LendingRichmond, VirginiaMarch 26, 2015Good afternoon. I’m Lisa McGreevy and I’m pleased to be here today on behalf of the Online Lenders Alliance, the center for financial technology companies who offer consumers access to short-term credit over the Internet.It’s fitting that we’re here in the Commonwealth of Virginia which is a hub for technology and innovation—two principles OLA companies have brought to short-term lending in order to provide increased access to credit. As a nation we increasingly live our lives on the go. I venture to guess that most everyone in this room has their smartphone with them today. We use the internet to manage our day to day activities, our children’s school assignments, paying our bills, as well as being in constant communication. People shop for credit the same way. I suggest 3 principles to consider:First, any rule must allow for innovation and changes in technology. The rules need to ensure that consumers will be able to access credit from the convenience and safety of their homes. Secondly, the new rule must preserve consumer convenience. Consumers must continue to be able to authorize recurring payments over the Internet for online loans, just as they do for other products. Millions of consumers use the convenience of recurring payments to provide them with the peace of mind that their bills are being paid on time. Lastly, determining the ability to repay must be consistent with Internet technology. Standards should not be rigid and overly prescriptive. Members of the Online Lenders Alliance (OLA) also support strong protections for consumers, many of which are already contained in OLA’s best practices. We believe it is necessary to ensure loan terms are clear and flexible, and that consumers understand how the loans work and their responsibilities for repayment.Thank you for the opportunity to participate.QUESTION: What role might a lender’s determination of a borrower’s ability to repay play in the payday loan market? Everyone here wants the borrower to succeed in repaying the loan. We all lose if the borrower defaults. A belief that a loan will be repaid is a basic tenet of lending. Over the past ten years, OLA members have invested significant resources in developing technology, analytics, and procedures that use data to underwrite loans. We consider income, debt payments, and recent consumer financial behavior. Our members have developed innovations that deliver the convenience and privacy borrowers want. I am concerned that the prescriptive nature of some proposals that rely on old fashioned and outdated methods like faxing documents, will make it harder on the very people that we are all trying to help. Who uses a fax machine these days? The data revolution has brought about the democratization of credit. We are now able to know more about borrowers than ever before to make the informed decisions about who to loan to. In fact, there are more people getting credit today than ever before because of our innovations. Just this week, the Urban Institute reported that there was a significant increase of middle and upper income people using these kinds of nonbank credit products. Good borrower assessments using statistical calculations and the growing data that is available about individual consumers, as well reporting of loans to specialty Credit bureaus help ensure borrowers can manage the debt obligations they incur and eliminate the need for government to dictate when consumers will be allowed to take out loans. ................
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