As we continue to roll through the first quarter of 2016, more and more people are becoming aware of the actions of the Consumer Financial Protection Bureau (CFPB.) This bureau has been doing business for nearly five years now, and has managed to gain quite a bit of notoriety too. The most recognizable name from this organization is Richard Cordray. He is the Director of the CFPB and, as one might imagine, he takes his job quite seriously. As such, Cordray has been the focus of more than a few online articles and has been the prime motivator for this bureau to enforce its mission. For better or worse, it looks like Cordray is here to introduce new regulations to various financial industries, and he may be for quite some time.
Recently, Cordray took time to address the Credit Union National Association. Some of what he had to say should be of interest to not just credit unions, but to short term lenders, title loan lending companies and to everyone who relies on any type of alternative financial service provider. Being an event targeted at Credit Union personnel, one might think that Cordray would avoid talking about other issues. That, however, was not the case.
Regarding other CFPB initiatives Cordray said, “The Consumer Bureau is also looking beyond the mortgage market to other financial services that affect consumers. For instance, we are finalizing a rule that ensures prepaid accounts have rights for error correction and dispute resolution, just like those for checking accounts. We are developing a rulemaking proposal also on small-dollar loans such as payday, vehicle title, and certain installment loans. And we are looking at how consumers are charged overdraft fees, the transparency of fees, and the opt-in process for overdraft coverage of electronic transactions.”
Many people choose to patronize payday lending companies and other alternative financial providers because they do not get the services and products they need from traditional banks and credit unions. It seems that the CFPB has big plans on the horizon to make it more manageable for the underbanked and unbanked consumers of the U.S. to get involved with the mainstream banking world.
Cordray told the crowd, “In addition, earlier this month we announced actions to enhance checking account access and the accuracy of the screening process used by banks and credit unions. About 68 million Americans are financially underserved, and nearly 10 million people have no checking or savings account at all. Maybe they were rejected when they tried to open an account; or they lost an account for not using it responsibly; or maybe they simply never considered opening a checking account or prepaid account with a bank or credit union. These consumers often rely on costly financial services that can take a big bite out of their earnings. For those who have difficulty navigating the marketplace and who often have limited resources, even small financial missteps can spell disaster.”
Cordray’s address touched on many of the things his bureau has done and plans to do in the future. Many perceive that the CFPB has, so far at least, made things very difficult on financial service providers that operate outside of the mainstream. In fact, upcoming regulations that Cordray is planning on introducing may make it impossible for some small lending companies to stay in business. If this were to happen, it seems that many people – even if they get improved access to traditional bank accounts – will be forced to choose from a smaller pool of financial service companies. And many consumers would still likely be unable to get integrated into the mainstream banking scene, and find themselves with virtually no options to choose from when they need emergency lines of credit for unexpected expenses.
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