Post on 25-Dec-2015
WOODSTOCK INSTITUTE | JUNE 2014
Webinar
June 18, 2014
Make your voice heard:Commenting on CFPB policies
Courtney Eccles | Policy DirectorKatie Buitrago | Senior Policy and Communications AssociateWoodstock Institute | Chicago, IllinoisP 312.368.0310 | F 312.368.0316ceccles@woodstockinst.org | kbuitrago@woodstockinst.org
@woodstockinst
WoodstockInstitute
WOODSTOCK INSTITUTE | JUNE 2014
What is the Consumer Financial Protection Bureau?
• Created by the Dodd-Frank Act in 2010• Opened its doors in July 2011• Mission:
Make markets for consumer financial products and services work for
Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.
WOODSTOCK INSTITUTE | JUNE 2014
What can the CFPB do?
• Write rules, supervise companies, and enforce federal consumer financial protection laws
• Restrict unfair, deceptive, or abusive acts or practices
• Take consumer complaints• Promote financial education• Research consumer behavior• Monitor financial markets for new risks to
consumers• Enforce laws that outlaw discrimination and other
unfair treatment in consumer financeSource: consumerfinance.gov
WOODSTOCK INSTITUTE | JUNE 2014
What can the CFPB do?
• Write rules, supervise companies, and enforce federal consumer financial protection laws
• Restrict unfair, deceptive, or abusive acts or practices
• Take consumer complaints• Promote financial education• Research consumer behavior• Monitor financial markets for new risks to
consumers• Enforce laws that outlaw discrimination and other
unfair treatment in consumer financeSource: consumerfinance.gov
WOODSTOCK INSTITUTE | JUNE 2014
How the CFPB makes policy
• Writes rules and regulations regarding implementation of consumer protection laws
• Puts them out for comment in Federal Register
• Usually open for 30-90 days• http://www.consumerfinance.gov/notice-an
d-comment/
WOODSTOCK INSTITUTE | JUNE 2014
Writing comment letters
• Respond to CFPB’s questions• Rely on the strengths of your organization’s
perspective– Data analysis? Policy/legal expertise? Client stories?
• Other options– Use template from Woodstock or another group—
personalize it!– Sign on to another letter
• Let Woodstock know when you comment/file complaints!
WOODSTOCK INSTITUTE | JUNE 2014
Issue: Prepaid cards
• What are prepaid cards?– Network-branded cards that allow users to
load a specified amount of money on them– Often used by underbanked people as an
alternative to a checking account– The industry is largely unregulated broad
variety of cards on the market
WOODSTOCK INSTITUTE | JUNE 2014
Issue: Prepaid cards
• Consumer protection issues– Require clear and comprehensive disclosures
of terms and conditions– Require fees to be reasonable– Prohibit credit on prepaid cards
• When is the proposed rule coming out?– June 2014
WOODSTOCK INSTITUTE | JUNE 2014
Issue: Payday loans
• What are payday loans?– Traditional payday loans are short-term (2-4
week) loans with balloon payments and high interest rates (in IL, up to 400% APR)
– Regulations vary by state, IL reforms created multiple loan products:
• Traditional Payday Loan• Payday Installment Loan• Small Consumer Loan
Issue: Payday loans
• CFPB has authority to regulate this industry (cannot institute a rate cap)
• Consumer protection issues– Rules need to be comprehensive (lenders will look for
loopholes)– Clear underwriting standards that consider a borrower’s
ability to repay the loan– Limit the number of loans and total period of indebtedness– Prevent balloon payments– Prevent lenders from taking payments before essential bills
are paid
• Proposed rule expected September 2014WOODSTOCK INSTITUTE | JUNE 2014
WOODSTOCK INSTITUTE | JUNE 2014
Issue: Overdraft
• An overdraft takes place when a consumer does not have sufficient funds in their account, but the financial institution allows the transaction to go through– Often fees associated with process – Banks offer overdraft protection/coverage –
lesser fee to transfer money from a savings account or use a line of credit
Issue: Overdraft
• Federal law requires customers to “opt-in” for overdraft with ATM and debit transactions
• Process for checks and auto-bill pay differs by institution
• Despite changes to opt-in vs. opt-out, financial institutions generate substantial revenue from overdraft and NSF fees
WOODSTOCK INSTITUTE | JUNE 2014
Issue: Overdraft
• Consumer protection issues– Confusion around opt-in vs. opt-out, various types of
overdraft protection, and different treatment for different transaction types
– Limit fees to amount representative of the actual cost to an institution and proportional to the size of overdraft
– Limit the number of overdraft charges to one per month or max of six per 12 months
– Prohibit institutions from reordering transactions to maximize fees
• Proposed rule expected February 2015
WOODSTOCK INSTITUTE | JUNE 2014
WOODSTOCK INSTITUTE | JUNE 2014
Webinar
June 18, 2014
Make your voice heard:Commenting on CFPB policies
Courtney Eccles | Policy DirectorKatie Buitrago | Senior Policy and Communications AssociateWoodstock Institute | Chicago, IllinoisP 312.368.0310 | F 312.368.0316ceccles@woodstockinst.org | kbuitrago@woodstockinst.org
@woodstockinst
WoodstockInstitute