Federal Financial Reform Implications for Texas and Consumers Bankers CRA Roundtable Breakfast...
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Transcript of Federal Financial Reform Implications for Texas and Consumers Bankers CRA Roundtable Breakfast...
Federal Financial Reform Implications for Texas and Consumers Bankers CRA Roundtable Breakfast
Federal Reserve Bank of DallasSan Antonio, TX
September 30, 2010
Don Baylor, Jr.OpportunityTexas™
What CPPP Does
Improving public policies to better the economic and social conditions of low- and moderate-
income Texans. Creating economic opportunity to strengthen
families and grow the middle class; Increasing access to quality, affordable health
insurance; Helping families meet basic needs; Enhancing child well-being and child
protection; Ensuring effective public administration; and Securing fair and adequate taxation to pay for
critical public investments in Texas.
RAISE Texas• Statewide network working to support and
expand asset-building activities in Texas, with a focus on low- and moderate-income areas.
• Committed to building financial success of Texans through financial education, IDAs, children's savings accounts, community tax centers, and other programs that lead to increased economic security and prevent asset stripping.
What is OpportunityTexas?
RAISE Texas
Opportunity Texas
CPPP
CPPP Roles &Strengths:• Advocate• Policy development• Research & Data
Analysis / SFAI• Communications
RAISE TexasRoles &
Strengths:• Technical Assistance• Advisor• Grassroots Network• Convener-
CollaboratorOpportunityTexas• Creates a new platform for engagement on savings, college access and success• Catalyzes action & innovation • Advances and links public and private asset building efforts• Targets new audience (higher education, business and state agencies) • Expands to cover important opportunity policies not areas of focus for CPPP, RAISE Texas, or other statewide efforts• Ex.: IDA-matched savings accounts for targeted HHS populations
Dodd-Frank Wall Street Reform & Consumer Protection Act
“To promote the financial stability of the United States by improving accountability and transparency in the financial system.”
“To ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.”
Consumer Financial Protection Bureau: The New Consumer
Federal ArchitectureDirector, CFPB
Office of Fair Lending and Equal
Opportunity [OFLEO]Community Affairs
Office of Service Member Affairs Research
Office of Financial Education [OFE] Complaints
Office of Financial Protection for
Older Americans [OFPOA] Private Student Loan Ombudsman
Consumer Protection Functions Centralized
NCUA FRB
FTC FDIC
OCC
OTSFederal Reserve Bank
CFPB
HUD
Consolidation of Major Federal Consolidation of Major Federal Consumer Protection LawsConsumer Protection Laws
CFPB to implement Federal consumer financial laws, including:• Alternative Mortgage Transaction Parity Act of 1982• Consumer Leasing Act of 1976• Electronic Fund Transfer Act (except sec. 920)• Equal Credit Opportunity Act • Fair Credit Reporting Act (except sec. 615(e) and 628)• Home Owners Protection Act of 1998• Fair Debt Collection Practices Act • Federal Deposit Insurance Act (sec. 43,subsections b-f)• Gramm-Leach-Bliley Act (sec. 502-509, except sec 505 as it applies to sec.
501(b)• Home Mortgage Disclosure Act of 1975• Home Ownership and Equity Protection Act of 1994• Real Estate Settlement Procedures Act of 1974• S.A.F.E. Mortgage Licensing Act of 2008• Truth in Lending Act• Truth in Savings Act• Omnibus Appropriations Act, sec. 626• Interstate Land Sales Full Disclosure Act
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Others as Defined by
Rule
Other Financial
Institutions
(Rulemaking Only)
Very Large Financial
Institutions
Mortgage Originators,
Brokers, and
Servicers
Offer Payday Loans
Offer Private Student
Loans
Covered Persons
CFPB: Who Is Covered?
Others as Defined
Stored Value (limited)
Remittances
Real Estate
Settlement
Debt Collection
Credit Reporting
Check Cashing,
Check Collection, or
Check Guaranty
Certain Financial
Advising (credit
counseling and debt
management or
settlement)
Covered
Financial
Products or
Services
CFPB: What Is Covered?
What CFPB Does Not Include
• Auto Dealers (General)• Attorneys• Accountants• Real Estate Brokers• Tax Preparers• Insurance Companies/Agents, & • Authority to Impose Usury Limits
Prohibiting Unfair, Deceptive, Abusive Prohibiting Unfair, Deceptive, Abusive Acts/Practices Acts/Practices (sec. 1031)(sec. 1031)
• CFPB: – authorized to take action to prevent unfair, deceptive or abusive act or practice;– may write rules identifying as unlawful, unfair, deceptive, or abusive
acts/practices.• Unfairness –
– Act or practice causes/likely to cause substantial injury which is not reasonably avoidable;
– Substantial injury not outweighed by countervailing benefits to consumers or competition;
• Abusive –– Materially interferes with ability of a consumer to understand a term/condition of
product/service;– Takes unreasonable advantage of -
• lack of understanding of risks, costs, conditions of product/service;• Inability of consumer to protect the interests of the consumer in
selecting/using product/service;• Reasonable reliance to act in the interests of the consumer.
• CFPB will consult with banking and other agencies on consistency of proposed rule with the prudential, market or systemic objectives of such agencies.
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Mortgage Reform & Anti-Predatory Lending Act
• Establishes the “Qualified Mortgage”• Requires Documentation for Ability to
Repay• Resets HOEPA (high cost loan) threshold• Prohibits prepayment penalties for
“nonqualified” mortgages• Bans “Steering” Incentives• Prohibits Current Yield Spread Premiums• Gives CFPB authority to prohibit
mandatory arbitration, pending study
Enhancing Financial Capability
(Office of Financial Education)• Financial Counseling
• Better access to:– Financial coaching– Savings and credit services at FIs– Services to prepare consumers for
educational expenses, debt reduction, – Long-term savings strategies– Wealth-building and financial services
to claim EITC and federal benefits
Credit Reports and Scores• Scores are required to be collected under
HMDA, along with age and origination channel.
• Consumers are now allowed free access to scores if their scores negatively affected them in a financial transaction or hiring decision (credit score disclosure).
• CFPB authorized to conduct regular examinations of large credit bureaus to evaluate their compliance with the law, including the Fair Credit Reporting Act.
Enhanced Consumer Data Collection & Reporting
►CFPB Research Unit►Consumer Economic Behavior►Access by Underserved Communities
►HUD/CFPB Default and Foreclosure Database►Making Home Affordable Program Report ►M/W/SBE Credit Application Tracking►Federal Report/Study on Credit Scores Variation►Federal Report on Private Education Loans►Expanded Mortgage Loan Data Requirements►Annual Report on General-Use Prepaid Cards in
Federal, State, or Local Government-Administered Payment Programs
FFR & Asset BuildingTitle XII: Increasing Access to Mainstream
Financial Institutions• Affordable Access to Small-Dollar Loan
Products– Small Dollar Loan Grant Program (<$2,500)– Community Development Financial
Institutions (CDFIs) Loan-Loss Reserve Fund– CDFI Technical Assistance
• “Bank On USA” Grant Program– Enrollment in Checking, Savings &
Investment Accounts– “Wealth building” Activities
Implications for State Policy
• Texas Attorney General– Broader authority to enforce state law and CFPB
regulations vs. federal banks– Bring action vs. state-chartered banks for federal violations
• Texas Department of Housing & Community Affairs– Drive the “qualified mortgage” market– Granted larger role in homeowner counseling
• Texas Appraiser Licensing and Certification Board– New Registration Requirements – Eligible for Federal Compliance Grants
• Office of Consumer Credit Commissioner– identify and refer bad actors to CFPB– Receive and Act upon federal referrals
• State Resolutions Can Drive Federal Rulemaking (25+1)• States can be grantees/partners for “Bank On” activities
New Opportunities for Financial Institutions
• Enhancing Financial Capability = (Education + Product + Consumer Protection )
• Rebirth of New Savings Initiatives• New Partnerships with K-12 System• Enhanced Connections with Community
Tax Centers and Opportunity Centers• Expansion of Banking Outreach• Small Dollar Loans• “Race to Clarity” (Disclosures)
The Year Ahead
• CFED Assets Learning Conference, September 22-24, Washington, D.C. (www.cfed.org)
• William P. Hobby Policy Conference, September 23-24, Austin, TX (www.cppp.org)
• RAISE Texas Policy Conference, December 2010, Austin, TX (www.raisetexas.org)
• OpportunityTexas Launch, December 2010
• 82nd Legislature, January 2011 (www.cppp.org)
Use of This Presentation
The Center for Public Policy Priorities encourages you to reproduce and distribute these slides, which were developed for use in making public presentations.
If you reproduce these slides, please give appropriate credit to CPPP.
The data presented here may become outdated.
For the most recent information or to sign up for our free E-Mail Updates, visit www.cppp.org.
© CPPP
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