Overzealous licensing requirements in Connecticut are being blamed for the termination of a home lender’s planned headquarters expansion and dozens of layoffs.
Hartford-Connecticut-based 1st Alliance Lending LLC had a plan in place to expand it headquarters in the state.
But it had one hurdle to overcome.
1st Alliance says that
the Connecticut Banking Department recently told it that any Connecticut employee who talks with a consumer must be licensed.
This contradicts federal and state law that only requires licenses when the employee takes a loan application or negotiates rates with the consumer, a news release Monday from 1st Alliance said.
“Expansion of the licensing requirement will cost employees of Connecticut lenders thousands of dollars,” the statement said. “In addition, the banking department staff has sought to impose hundreds of thousands of dollars in retroactive licensing costs and penalties on the lenders themselves.”
1st Alliance said it
had been engaged in good-faith negotiations with the regulator to have just licensed employees interact with consumers in the state, but “the banking department has nevertheless insisted on a settlement that would include both substantial financial consequences and a gag order.”
So 1st Alliance
said it has ended negotiations with the banking department. Instead it will seek review of the banking staff’s interpretation by Banking Commissioner Jorge Perez as well as take other necessary steps.
It is also terminating its planned headquarters expansion. This will result in 35 layoffs.
“The regulatory environment in Connecticut has reached a breaking point,” 1st Alliance Chief Executive Officer John DiIorio stated in the announcement.
