THE CONSUMER FINANCIAL PROTECTION BUREAU: FAIR LENDING AT WORK JUNE 2012 Tim Lambert Senior Counsel,...
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Transcript of THE CONSUMER FINANCIAL PROTECTION BUREAU: FAIR LENDING AT WORK JUNE 2012 Tim Lambert Senior Counsel,...
FAIR LENDING AT WORK 1
THE CONSUMER FINANCIAL PROTECTION BUREAU:FAIR LENDING AT WORK
JUNE 2012
Tim Lambert
Senior Counsel, Office of Fair Lending and Equal Opportunity
Consumer Financial Protection Bureau
Note: This document was used in support of a live discussion. As such, it does not necessarily express the entirety of that discussion nor the relative emphasis of topics.
FAIR LENDING AT WORK 2
• “fair, equitable, and nondiscriminatory access to credit for consumers.” DFA § 1002(13).
Dodd-Frank defines “Fair Lending” as:
• Provide oversight and enforcement of fair lending laws enforced by the Bureau
• Coordinate efforts with Federal agencies and State regulators
• Work with the industry, fair lending, civil rights, consumer and community advocates to promote fair lending compliance and education
• Report to Congress on the efforts of CFPB to fulfill its fair lending mandate. DFA § 1013(c).
Dodd-Frank mandates the creation of an Office of Fair Lending and Equal Opportunity with the following specified functions:
THE DODD–FRANK ACT CREATED THE OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY
FAIR LENDING AT WORK 3
CFPB’S KEY FAIR LENDING LAWS
• The ECOA prohibits creditors from discriminating in any aspect of a credit transaction against any applicant on the basis of race, color, religion, national origin, sex, marital status, age, receipt of income from any public assistance program, or exercising in good faith a right under the Consumer Credit Protection Act.
EQUAL CREDIT OPPORTUNITY
ACT
• HMDA requires lenders to report individual mortgage loan data, including data on race, ethnicity, and sex.
HOME MORTGAGE
DISCLOSURE ACT
FAIR LE NDING AT WORK 4
CFPB ADOPTS THE DISPARATE IMPACT DOCTRINE
WAYS TO PROVE DISCRIMINATION UNDER ECOA
OVERT DISCRIMINATION
DISPARATE TREATMENT
DISPARATE IMPACT
FAIR LENDING AT WORK 5
Consumer Response
Discrimination Complaint Processing Procedures
Discrimination Complaint
Analysis
Consumer Education & Engagement
Consumer Education
Special Populations
Work
Research, Markets &
Regulations
Rulemaking
The Markets Teams
Research
Supervision
Fair Lending Scoping
Fair Lending Exams
Enforcement
Fair Lending Investigations
Fair Lending Litigation
External Affairs
Industry Outreach
Civil Rights, Consumer, and
Community Group
Outreach
OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY
OFFICE OF FAIR LENDING FUNCTIONS HORIZONTALLY WITHIN CFPB
FAIR LENDING AT WORK 6
CONSUMER RESPONSE – DISCRIMINATION COMPLAINTS
Visit www.consumerfinance.gov/complaint/ to submit a complaint
Or call 1-855-411-CFPB
CFPB is receiving complaints regarding these products:
FAIR LENDING AT WORK 7
CONSUMER EDUCATION AND ENGAGEMENT
OLDER AMERICANS SERVICEMEMBERS STUDENTS
Engaging consumers and empowering them to take control of their financial lives are top priorities for the CFPB.
The Bureau aims to provide consumers with the information they need when they need it, so that they can achieve their own financial goals.
Financial Education• Provide targeted
educational content• Example: “Credit
Discrimination is Illegal” Brochure
Financial Empowerment • Enhance access to and
knowledge of financial products and services among lower-income consumers
FAIR LENDING AT WORK 9
FAIR LENDING RESEARCH
MARKETS TEAMS
• MORTGAGE & HOME EQUITY MARKETS
• CARD AND PAYMENTS MARKETS
• INSTALLMENT & LIQUIDITY LENDING
• DEPOSITS, COLLECTIONS & CREDIT INFORMATION
RESEARCH TEAM
• Create methodologies and provide analytical support for supervisory exams and enforcement actions
• Provide research support for studies such as the §1077 Student Lending Report
FAIR LENDING AT WORK 10
Amend ECOA – Reg B • Small Business Data
Collection
Amend HMDA – Reg C • Revisions to Reg C
Amend TILA – Reg Z• abusive or unfair lending practices that
promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age
FAIR LENDING REGULATIONS
FAIR LENDING AT WORK 11
FAIR LENDING SUPERVISION
NONBANK
Payday, mortgage and
private student loans
“Larger Participants” in nonbank
markets
Covered persons
that pose risks to
consumers
Banks
Thrifts
Credit Unions
BANK
CONSUMER FINANCE MARKET
FAIR LENDING AT WORK 12
RiskUnusual Criteria
Discretion
Incentives
Reliance on Third Parties
Weak Compliance
Management System
FAIR LENDING RISK FACTORS
FAIR LENDING AT WORK 13
Fair Lending Supervision & Enforcement
Mortgage Origination
Mortgage Servicing
Auto Loans Student Loans
Credit Cards
Small Business Loans
KEY AREAS FOR FAIR LENDING EXAMINATIONS
FAIR LENDING AT WORK 14
FAIR LENDING ENFORCEMENT
Independent litigation authority and referral obligation under ECOA
Coordination with the other federal enforcement agencies and state regulators• DOJ, FTC, HUD and State AGs
Civil Investigative Demands and Administrative Hearing Authority
FAIR LENDING AT WORK 15
FAIR LENDING OUTREACH
PRIVATE INDUSTRY
CONSUMER ADVOCATES
COMMUNITY ADVOCATES
CIVIL RIGHTS GROUPS
FAIR LENDING GROUPS
PROMOTING FAIR LENDING COMPLIANCE AND EDUCATION AMONG:
FAIR LENDING AT WORK 16
Tell your Story
Submit a complaint
Ask CFPB Notice and Comment
Blog
www.consumerfinance.gov
WE WANT TO HEAR FROM YOU!
CFPB AND THE OFFICE OF FAIR LENDING
WORKING FORYOU
WORKING WITHYOU