CCH Financial Reform News Center

Agencies Begin to Discuss Consumer Financial Protection Staff

This story appeared in Bank Digest.

The federal financial institution regulatory agencies have had the first meeting of the working group formed to transfer personnel and functions to the newly-created Bureau of Consumer Financial Protection. The initial meeting was attended by the Secretary of the Treasury and of the Department of Housing and Urban Development, and by the heads of the National Credit Union Administration, Federal Reserve Board, Federal Deposit Insurance Corp., Federal Trade Commission and Office of the Comptroller of the Currency.

Conferees Focus on Consumer Financial Protection Agency

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

With negotiations to forge a financial regulatory reform bill entering their final phase, House and Senate conferees have agreed to house a new consumer financial protection agency within the Federal Reserve Board. Senate conferees have also acceded to a House proposal that would exempt auto dealers from falling under the watchdog’s jurisdiction.

House Financial Services Committee Chairman Barney Frank, D-Mass, tried to assuage Republican concerns that the head of the proposed agency would have unchecked powers, noting that a group of other federal regulators could overrule some of the agency’s decisions. “This is not an individual who will be unrestrained,” Frank said.

Fed Submits Reports to Congress Required by Credit CARD Act

This story appeared in Bank Digest.

The Federal Reserve Board has submitted two reports to Congress required by the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) of 2009. The Report to the Congress on Reductions of Consumer Credit Limits Based on Certain Information as to Experience or Transactions of the Consumer examines the practices of credit card issuers regarding the types of information some creditors may consider when setting and adjusting credit terms on credit cards they issue to consumers. The Report to the Congress on the Use of Credit Cards by Small Businesses and the Credit Card Market for Small Businesses reviews the use of credit cards by businesses with no more than 50 employees and of the credit card market for small businesses.

Credit CARD Act Report Examines Financial Literacy and English Proficiency

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digestand Individual Retirement Plans Guide.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 mandated the Government Accountability Office (GAO) to examine the relationship between fluency in the English language and financial literacy. According to Census data, more than 12 million adults in the United States report they do not speak English well or at all. Proficiency in reading, writing, speaking and understanding the English language appears to be linked to multiple dimensions of adult life in the United States, including financial literacy—the ability to make informed judgments and take effective actions regarding the current and future use and management of money.

The GAO study found that a lack of proficiency in English can create significant barriers to financial literacy and to conducting everyday financial affairs. For example, service providers and consumers with limited English proficiency stated that because most financial documents are available only in English, individuals with limited English proficiency can face challenges completing account applications, understanding contracts and resolving problems, such as erroneous bills. In addition, financial education materials—such as print material, websites, broadcast media and classroom curricula—are not always available in languages other than English and, in some cases, Spanish. Further, information and documents related to financial products tend to be very complex and can use language confusing even to native English speakers. In some cases, written financial materials are provided in other languages, but the translation may not be clear if it is not written using colloquial or culturally appropriate language. Oral translation can also be of limited usefulness if the interpreter does not fully understand or is not able to explain the material, a problem exacerbated by the fact that adults with limited English proficiency often receive assistance from their minor children.

Fed Announces Online Database for Consumer Credit Card Agreements

This story appeared in Bank Digest.

The Federal Reserve Board has announced the creation of a searchable database for consumer credit card agreements. The database currently contains agreements from more than 300 credit card issuers. The agreements contain general credit terms and conditions along with pricing and fee information. The database is expected to help consumers compare credit card agreements and find a card that best suits their personal finance needs. The database will be updated quarterly.

Fannie Mae, Freddie Mac to Deploy Appraisal Complaint Process

This story appeared in Bank Digest.

Fannie Mae and Freddie Mac will deploy a complaint process for violations of the Home Valuation Code of Conduct (HVCC), according to a letter from FHFA Acting Director Edward J. DeMarco to New York Attorney General Andrew Cuomo. The letter, which outlines developments with the HVCC and related agreements, states that Fannie Mae and Freddie Mac, now in conservatorship, will not be funding the Independent Valuation Protection Institute. “As conservator of Fannie Mae and Freddie Mac, our priority is to keep the Enterprises focused on the important role they play in supporting the mortgage market,” said DeMarco. “The need for a complaint process is being addressed in a way that we believe is more practical than with the Institute.”

Senate Votes on State AG Powers

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Under a compromise amendment to financial reform legislation approved by the Senate May 18, 2010, state attorneys general would be allowed to enforce new rules issued by the proposed Consumer Financial Protection Agency.

However, state attorneys general would not be able to bring federal class action-like suits against national banks, nor would they be able to cross state lines to bring charges against a national bank.

Dodd Resists Efforts to Shield Auto Dealers

This story appeared in Bank Digest.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., has cited the problems facing some members of the military as one reason not to exempt automobile dealers from the authority of the proposed Consumer Financial Protection Bureau. Dodd noted that an amendment to the regulatory reform bill had just been adopted that would create a special office within the Bureau to protect service members and argued that it would be wrong to adopt another amendment that would reduce the usefulness of that office.

Report Says Credit CARD Act Helps Borrowers Pay Down Debt Faster

This story appeared in Bank Digest.

Senate Banking Committee Chairman Sen. Chris Dodd, D-Conn., noted that a report released by the Center for Responsible Lending (CRL) showed that the Credit Card Accountability, Responsibility, and Disclosure Act(Credit CARD Act) will allow borrowers to pay down existing debt faster than under the old rules. According to the report, under the Credit CARD Act, borrowers can pay down existing credit card debt sooner by paying less interest than under the old rules, all the while improving their credit score. Under the law, any amount that customers pay above the required minimum must be applied to the balance in their credit card account carrying the highest interest rate. The CRL analysis estimates that for each dollar above the minimum that a customer pays, he or she may save two dollars in interest.

Senator Akaka Includes Financial Literacy in All Its Elements in Senate Reform Legislation

This story appeared in Jim Hamilton's World of Securities Regulation.

The three vital components of financial literacy are education, consumer protection, and economic empowerment, and the legislation includes essential provisions in all three of these areas for consumers and investors. See remarks of Sen. Daniel Akaka, Cong. Record, Apr 30, 2010, p. S2996. With regard to education, the Senate reform legislation, S3217, requires a the SEC to conduct a financial literacy study and develop an investor financial literacy strategy intended to bring about positive behavioral change among investors. In addition, an Office of Financial Literacy is created within the new Consumer Financial Protection Bureau and is tasked with implementing initiatives to educate and empower consumers. A strategy to improve the financial literacy among consumers, that includes measurable goals and benchmarks, must be developed.