Transcript Slide 1

Federal Financial Reform
Implications for Texas and Consumers
Bankers CRA Roundtable Breakfast
Federal Reserve Bank of Dallas
San 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?
CPPP Roles &
Strengths:
RAISE Texas
Roles & Strengths:
•
•
•
•
•
•
•
•
Advocate
CPPP
Policy development
Research & Data Analysis /
SFAI
Communications
RAISE
Texas
Opportunity
Texas
Technical Assistance
Advisor
Grassroots Network
Convener-Collaborator
OpportunityTexas
• 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 Architecture
Director, 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
OCC
OTS
FTC
Federal Reserve Bank
FDIC
CFPB
FRB
HUD
NCUA
Consolidation of Major Federal
Consumer 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
9
CFPB: Who Is Covered?
Others as Defined
by Rule
Other Financial
Institutions
(Rulemaking Only)
Offer Private
Student Loans
Covered Persons
Very Large
Financial
Institutions
Offer Payday
Loans
Mortgage
Originators,
Brokers, and
Servicers
CFPB: What Is Covered?
Others as Defined
Stored Value
(limited)
Certain Financial
Advising (credit
counseling and
debt management
or settlement)
Covered
Financial
Products or
Services
Remittances
Check Cashing,
Check Collection,
or Check Guaranty
Credit Reporting
Debt Collection
Real Estate
Settlement
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
Acts/Practices (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.
14
Mortgage Reform & AntiPredatory 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 Building
Title 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
Center for Public Policy Priorities
900 Lydia Street
Austin, TX 78702
P 512/320-0222 F 512/320-0227