The CFPB has issued its third Semi-Annual Report to the President and Congress. The report notes that it “predominately” covers the CFPB’s activities from July 1 through December 31, 2012 but, in certain sections, covers the time period January 1 through December 31, 2012. As did the CFPB’s previous Semi-Annual report, much of this report contains information that we have previously covered in blog posts and recycles information contained in other CFPB reports, such as the recently-released Consumer Response Annual Report, Snapshot of Complaints Received, and first annual report of the CFPB’s Office of Women and Minority Inclusion. Nevertheless, the report does contain a few noteworthy items:
- In a section titled “Consumer Challenges in Obtaining Financial Products and Services,” the report makes “observations” about challenges faced by consumers when shopping for short-term credit needs. The report notes that, to meet such needs, consumers are likely to choose among payday loans, overdraft signature loans from a bank or credit union, installment loans from a consumer finance company or a pawn shop. It also discusses how such products may differ in price, terms and conditions, consumer motivations for using such products instead of borrowing from friends or family, and difficulties faced by consumers in comparing such products.While the report cites to various studies and surveys, it does not indicate the context in which this information was collected by the CFPB (such as in preparation for a study of short-term credit products).
- We also found it interesting that the CFPB cited no support for its observation that some consumers need to refinance or extend a loan because, especially for payday loans, they may overestimate (or fail to give consideration to) their repayment ability. Also unsupported was the “observation” that “if consumers do not understand all their options and potential obligations, they may not fully anticipate their repayment costs, and may lose the opportunity to choose a different product that might be more appropriate to meet their needs.”
- The CFPB expects to issue a proposed rule on prepaid cards in 2013.
- A fair lending-focused component is under development for the automated system (named Compliance Analysis Solution) used by the CFPB’s examiners to conduct risk-based and targeted compliance assessments of loan portfolios. The system is now used for HOEPA, TILA and RESPA compliance assessments.
- With respect to the ECOA, the CFPB has found inadequate fair lending compliance programs at some institutions. CFPB examiners have also identified several institutions with significant error rates in HMDA data.
- The 2013 list of rules and orders the CFPB plans to propose and adopt and significant initiatives it plans to conduct do not include any items related to overdrafts, payday loans or other short-term credit products, or arbitration.