WASHINGTON— The American Fintech Council is urging Congress and federal regulators to clarify lending laws and override what it calls a growing patchwork of state rules that threaten the stability of secondary markets for consumer credit.
In a February 2026 white paper, the industry group said consumer lending depends heavily on capital from secondary-market participants such as pension funds, insurance companies, endowments and private investors that purchase loans or asset-backed securities. Regulatory uncertainty can discourage that investment, tighten credit availability and disproportionately affect lower-income borrowers, the report said.
The paper, titled “A Call for Clarity: Removing Regulatory Barriers to Healthy Secondary Markets in Consumer Credit,” argues that long-standing federal statutes already give banks authority to originate loans and sell them, while allowing investors to rely on the enforceability of those loans.
Concerns Over State-Level Actions
The AFC said recent state legislation and enforcement trends—including licensing requirements for loan purchasers and so-called “true lender” laws aimed at bank-fintech partnerships—have created legal uncertainty for investors and lenders.
Such measures can subject passive investors to regulatory regimes designed for lenders that interact directly with consumers, raising costs and reducing the price investors are willing to pay for loans, according to the report. The group also warned that some laws attempt to recharacterize which entity is the lender in bank-fintech partnerships, potentially imposing state restrictions on products such as credit cards or deferred-payment loans that federal law otherwise permits.
Litigation Adds to Uncertainty
The report highlighted ongoing litigation tied to states’ ability to opt out of certain federal interest-rate exportation rules under the Depository Institutions Deregulation and Monetary Control Act, saying conflicting court rulings could fragment lending standards and complicate compliance for banks operating across state lines.
Role of Fintech and Secondary Markets
According to the new white paper, secondary markets are critical to maintaining lending liquidity because selling loans allows institutions to recycle capital and spread risk among multiple investors. The paper notes, for example, that fintech-originated loans have become a significant share of that ecosystem, accounting for 38% of unsecured lending originations in the second quarter of 2023, according to research cited in the report.
The council said those models can expand access to credit for consumers with limited credit histories or lower incomes.
Policy Recommendations
To address the uncertainty, the American Fintech Council is calling for:
- Federal legislation preempting state licensing requirements for passive loan purchasers
- Regulatory clarification that loans valid at origination remain enforceable when sold in secondary markets
- Additional rulemaking by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. to reaffirm banks’ authority to export interest rates and partner with third parties
- The group said clearer federal standards would help ensure “certainty” for investors and prevent disruptions that could reduce credit availability or liquidity in the banking system.
About the Organization
The American Fintech Council describes itself as a standards-based trade association representing more than 150 fintech companies and banks and advocating for responsible innovation and competition in consumer finance.
