Trump’s New Fintech Executive Order Raises Fears of Predatory Loans

President Trump’s latest push to expand fintech and crypto access is winning praise from the financial tech industry, but consumer advocates say it could make it easier for lenders to push high-cost loans and risky financial products onto Americans.

The president signed an executive order on May 19 with the stated aim of streamlining regulations and promoting innovation and collaboration between financial technology firms, financial institutions, and financial regulators.

In the order, he directs federal regulators to review regulations, guidance, practices, and application processes that could be updated to provide greater innovation and competition in financial services, according to a fact sheet from the White House.

Following these reviews, regulators were directed to take steps to encourage the growth and innovation of fintech firms.

The order asks the Federal Reserve to evaluate the legal and policy framework for giving uninsured depository institutions and nonbank financial companies access to Reserve Bank payment accounts and services.

Fintech firms provide a range of services from banking and payment processes to brokerage and securities and custodial services. These firms offer solutions that enhance low-cost and efficient access to financial markets, according to the White House. 

To better foster the public’s ability to benefit from fintech services, the federal government must update “outdated regulations” and allow the integration of digital assets and other financial technology into traditional financial services and payment services, according to the White House.

Phil Goldfeder, Chief Executive Officer of the American Fintech Council (AFC), spoke highly of the executive order.

“Prioritizing the responsible integration of financial technology and digital assets into traditional financial services will help ensure that the U.S. remains at the forefront of global financial innovation,” Goldfeder said.

The Financial Technology Association also applauded the president’s executive order directing agencies to integrate fintech firms into regulatory frameworks.   

“This executive order is a win for the millions of Americans who rely on fintech products every day to pay bills, manage their money, and access financial services,” said Penny Lee, President and Chief Executive Officer of the Financial Technology Association. 

“By directing federal agencies to find ways to expand access to financial technology tools, this Administration is taking meaningful steps to modernize our financial system and put consumers and small businesses first.”  

In a press release, the National Consumer Law Center said the president’s executive order will remove barriers for predatory rent-a-bank schemes and other risky arrangements between fintechs and banks.

Consumer advocates argue the order could make it easier for some fintech firms to seek bank charters or other federal authorizations.

“This order is an assault on consumers and on federal and state laws that protect people from high-cost loans and other risky products,” said Lauren Saunders, senior attorney at the National Consumer Law Center (NCLC).

“Today, every predatory lender calls itself a ‘fintech.’ This order promotes rent-a-bank schemes and allows predatory lenders to become national banks that offer 100%+ APR loans nationwide, despite laws prohibiting them in 45 states.”  

The executive order also encourages the integration of digital assets into the U.S. financial system.

According to the NCLC, the executive order asks the Federal Reserve to develop procedures for allowing nonbank companies and uninsured crypto banks to access Federal Reserve master accounts and payment rails. 

“This executive order dresses up deregulation as innovation.” — Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition

“Giving crypto companies and other uninsured payment apps access to Fed accounts will make it easier for companies to offer risky types of accounts, putting consumer funds — and the entire economy — at risk,” said Carla Sanchez-Adams, senior attorney at NCLC. 

“These accounts can mimic bank accounts but without clear consumer protections against fraud or deposit insurance, create confusion for consumers who may be left holding the bag when problems inevitably occur.”

Jesse Van Tol, President and Chief Executive Officer of the National Community Reinvestment Coalition (NCRC) also voiced concerns about the president’s executive order.

“This executive order dresses up deregulation as innovation. It helps powerful fintech and crypto firms push deeper into the financial system while sidestepping rules designed to protect consumers, small businesses and communities,” Van Tol said in a statement.

“For example, a company could gain faster access to payment systems or bank partnerships while facing weaker requirements to show that it lends fairly, protects consumers or invests in the communities where it does business.”

President Trump signed an executive order on May 19 with the aim of streamlining regulations and promoting collaboration between fintech firms, financial institutions, and financial regulators. The order directed federal regulators to encourage the growth of fintech firms.

Consumer advocates spoke out against the executive order saying it promotes predatory lending by eliminating barriers for rent-a-bank schemes between fintech firms and banks. They also are opposed to giving crypto banks access to Federal Reserve accounts.