Last week, I had the opportunity to testify before the Alaska Senate Finance Committee on the dangers of Senate Bill 39, a proposal to impose a 36% APR cap on consumer credit. Additional testimony was submitted to the Senate Labor and Commerce Committee before the bill was advanced to the Senate Finance Committee. This legislation mirrors New Mexico’s failed experiment with rate caps—a policy that has restricted credit access, increased borrowing costs, and pushed consumers toward worse financial alternatives.
The Southwest Public Policy Institute (SPPI) has conducted extensive research on the aftermath of New Mexico’s rate cap, detailed in our reports No Loan For You! and No Loan For You, Too!. Our real-world consumer emulation studies reveal that traditional banks and credit unions have failed to provide the financial lifeline lawmakers assumed they would.
The Wells Fargo Flex Loan: A Case Study in Failure
During my testimony, I challenged lawmakers: Has anyone in this room actually tried to apply for a Wells Fargo small-dollar loan? I have, and the results were shocking.
Has anyone in this room actually tried to apply for a Wells Fargo small-dollar loan?
To even qualify for Wells Fargo’s Flex Loan, consumers must:
- Open a checking account, which requires an upfront deposit.
- Be a customer in good standing for at least one year.
- Maintain recurring direct deposits before eligibility is even considered.
Even after meeting these conditions, I found no guarantee of approval. My experience was even more troubling—after opening an account and depositing, Wells Fargo suddenly closed my account without warning. My deposit disappeared, and I was left without access to credit.
Credit Unions: No Better Alternative
Rate cap advocates argue that credit unions will fill the void. But our research proves otherwise. I applied for small-dollar loans at 15 credit unions in New Mexico. The results:
- 86% denied membership or lacked small-dollar loan programs.
- The remaining institutions imposed high barriers to access, including lengthy membership requirements.
- Hard credit inquiries were required for every application, causing my credit score to drop over 100 points and making future borrowing more expensive.
These obstacles make small-dollar loans virtually inaccessible for consumers in a financial emergency.
Why Senate Bill 39 Will Hurt Alaskans
New Mexico is a warning, not a model. If Alaska passes SB 39, consumers will face fewer credit options, higher costs, and increased financial hardship. The belief that banks and credit unions will step up to meet demand is not just optimistic—it’s demonstrably false.
Alaska needs policies that encourage financial innovation and consumer choice rather than limiting access to credit. Rate caps don’t protect borrowers—they push them into more expensive, less regulated alternatives.
SPPI will continue to fight against misguided policies like SB 39, advocating for real consumer protection solutions that preserve access to safe, regulated credit.
For more on our research, see our complete reports:
📄 No Loan For You! → southwestpolicy.com/sppi02
📄 No Loan For You, Too! → southwestpolicy.com/sppi04