May 6, 2021

Volume XI, Number 126

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Comments to Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) Deposit Advance Proposed Guidance -- Opponents Outnumber Proponents

The Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) each published a proposed guidance on deposit advance products on April 30th, 2013.1 Deposit advance products are small dollar, short-term loans offered by a bank to its deposit account customers with recurring deposits. Deposit advance products typically have high fees and are repaid from the funds of the next direct deposit, similar to payday loans. The proposed guidance seeks to clarify the agencies’ interpretation of “safety and soundness” and consumer protection principles as applied to deposit advance products. Both agencies requested comments on their proposed guidance. 

OCC and FDIC Proposed Guidance Expresses Concern about Safety and Soundness Risks and Compliance with Consumer Protection Laws

The proposed guidance by the OCC, which regulates nationally chartered banks, and the FDIC, as the regulator of many state chartered institutions, are substantially the same. 2   Both agencies assert concern that deposit advance products may cause safety and soundness risks, including credit risk, reputation risk arising from negative public opinion, legal and compliance risk, and risk in liability for the actions of third parties. In light of such risks, the agencies propose certain supervisory expectations. 

Specifically, the agencies propose that banks underwrite deposit advance products by assessing the length of a customer’s deposit relationship with the bank, whether the customer has any classified credits and the customer’s financial capacity. The customer should have a deposit account with the bank for at least six months, and customers with delinquent or classified credits should be ineligible for deposit advance products. Banks should also analyze the inflows and outflows of a customer’s account over the preceding six months to ensure that the customer has sufficient financial capacity to not only repay the loan and associated fees, but also to meet necessary living expenses. Underwriting procedures should take place no less than every six months to determine ongoing eligibility. Additionally, banks should institute a “cooling-off period” of one month after a deposit advance loan is repaid before the bank can extend another deposit advance loan to that customer.

Many commenters submitted substantially identical comments to both the OCC and the FDIC.  The OCC received 118 comments, with 72 comments in opposition to the proposed guidance and 46 comments in favor of it. Commenters included three national banks that offer deposit advance products, two state attorney generals, financial service, consumer credit, and commerce associations, state senators and house representatives, and individuals. 

The FDIC received 98 comments, with 67 comments in opposition to the guidance and 31 comments in favor of it. Commenters included a state chartered bank that offers deposit advance products, two state attorney generals, financial service, consumer credit, and commerce associations, state senators and house representatives, and individuals. 

Comments in Opposition

Comments in opposition to the proposed guidance generally stated that the proposed guidance limits consumers’ small dollar and short-term credit options, thereby pushing consumers to unregulated or more expensive lenders. Some commenters argued that deposit advance product regulation should be consistent with regulation of other short-term credit products pursuant to the Dodd-Frank Act mandate for consistent regulation of comparable financial products. Indeed, Wells Fargo Bank and the American Bankers Association, two of the more significant commenters who opposed to the guidance, both made this argument by asserting that the proposed guidance would cause the discontinuation of deposit advance products because the underwriting rules are too onerous. As a result, they warned, consumers’ options will become more limited and consumers will be left to utilize expensive small dollar short-term loans.  Similarly, Wells Fargo Bank and the American Bankers Association also predicted that the guidance would have a chilling effect on future innovation of small dollar short-term credit products because the underwriting requirements are stricter than commensurate procedures for other loans.

A list of all comments received in opposition to the proposed guidance, as well as a general summary of the substance of such comments, is set forth at the end of this alert.

Comments in Favor

By contrast, commenters in favor of the proposed guidance, which included the AARP, the NAACP, and U.S. Senators Bill Nelson (D-FL) and Elizabeth Warren (D-MA), asserted that the proposed guidance would benefit consumers in many ways. These commenters argue that the cooling-off period proposed in the guidance, as well as the stricter underwriting procedures, will protect consumers from being caught in a “cycle of debt.”3  Specifically, they argued that the cooling-off period will prevent consumers from borrowing successive deposit advances, while the underwriting procedures will ensure that borrowers can afford both the loan and living expenses.  These concerns were particularly salient to the AARP which claimed that over a quarter of deposit advance customers are senior Americans receiving social security. According to the AARP, deposit products are harmful to these Americans because deposit advance fees deplete social security direct deposits that are earmarked for basic living expenses – concerns echoed by Senators Nelson and Warren. 

A list of all comments received in favor of the proposed guidance, as well as a general summary of the substance of such comments, is set forth at the end of this alert.

The opponents and proponents of the guidance have little, if any, common ground in their comments. Indeed, perhaps the only trait that they share is their conviction and enthusiasm regarding their respective positions. Such passions are warranted, however, as the potential ramifications of the proposed guidance and the significance of its impact on the advanced deposit industry and consumers who depend on such products cannot be overstated.

 

 

Comments Received by the FDIC

 

Comment No.

Party

Type of Party

Stance

Substance of Comment

1

Franco Mortarotti

 

Oppose

Consider when a customer gets a deposit advance in order to cover a previously written check.

2

Rep. Sandy Crawford

State Representative

Oppose

Inconsistent with other regulations.  Month long cooling off period and underwriting procedures are onerous.

3

Anonymous

 

Support

Stops cycle of debt; stops predatory lending practices.

4

Rep. Tony Dugger

State Representative

Oppose

Inconsistent with other regulations.  Month long cooling off period and underwriting procedures are onerous.

5

Robert E. Rutkowski

 

Support

Eliminates cycle of debt and stops predatory practices.

6

Rep. Frank McNulty

State Representative

Oppose

This inconsistent regulation will lead to consumers turning to less safe lenders.

7

Michael Archer

 

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

8

Rep. Woodrow Stanley

State Representative

Oppose

This inconsistent regulation leads to consumers having fewer choices.

9

Rep. Libby Szabo

State Representative

Oppose

Inconsistent regulation.

10

Rep. Frank Mautino

State Representative

Oppose

Inconsistent; doesn’t address consumer need for credit or their financial challenges.

11

Rep. Ritch Workman

State Representative

Oppose

Inconsistent; eliminates choice in the marketplace; doesn’t address the root of the problem.

12

Rep. Timothy Jones

State Representative

Oppose

Inconsistent; eliminates choice in the marketplace.

13

Rep. Jim Buchy

State Representative

Oppose

Doesn’t address the problem.

14

Rep. Joseph Souki

State Representative

Oppose

Eliminates choice in the marketplace.

15

Rep. Ken Dunkin

State Representative

Oppose

Eliminates choice in the marketplace. 

16

Rep. Oliver Robinson

State Representative

Oppose

Doesn’t address the problem; eliminates choice.

17

Rep. John Adams

State Representative

Oppose

Eliminates choice; inconsistent.

18

Rep. Charles Sargent

State Representative

Oppose

Eliminates choice; will drive consumers to predatory lenders.

19

Rep. Verschoore

State Representative

Oppose

Eliminates choice.

20

Rep. Turner

State Representative

Oppose

Eliminates choice; inconsistent.

21

Rep. Ponti

State Representative

Oppose

Eliminates choice; inconsistent.

22

Rep. Novstrup

State Representative

Oppose

Eliminates choice; CFPB should regulate this.

23

Rep. Redfern

State Representative

Oppose

Eliminates choices.

24

Rep. DeGraaf

State Representative

Oppose

Eliminates choice; inconsistent.

25

Rep. Sandifer

State Representative

Oppose

Eliminates choice; regulations are arbitrary.

26

Rep. Zalewski

State Representative

Oppose

Eliminates choices; doesn’t address the problem; will drive consumers to predators.

27

Senator Mike Gloor

State Senator

Oppose

Inconsistent regulation leads to consumers having fewer choices.

28

Senator Damon Thayer

State Senator

Oppose

Inconsistent; eliminates choice in the marketplace.

29

Senator William Coley

State Senator

Oppose

Eliminates choice in the marketplace.

30

Senator Jay Wasson

State Senator

Oppose

Inconsisten.t

31

Senator Kevin Bacon

State Senator

Oppose

Inconsistent; doesn’t address the problem.

32

Senator Tom Dempsey

State Senator

Oppose

Eliminates choice in the marketplace; pushes consumers to predatory lenders.

33

Senator Michael Watson

State Senator

Oppose

Eliminates choice; will drive consumers to predatory lenders.

34

Senator Bedford

State Senator

Oppose

Eliminates choice; drives consumers to predatory lenders.

35

Senator Trotter

State Senator

Oppose

Eliminates choice; inconsistent.

36

Senator Lightford

State Senator

Oppose

Eliminates choice.

37

Senator Lautenbaugh

State Senator

Oppose

Eliminates choice; doesn’t address the problem.

38

Senator Fitzgerald

State Senator

Oppose

Eliminates choice; inconsistent.

39

Senator Case

State Senator

Oppose

Inconsistent; eliminates choices.

40

Senator Calderon

State Senator

Oppose

Inconsistent; eliminates choice; doesn’t get to the root of the problem.

41

Prof. David Stoesz

University Professor

Oppose

This will hurt poor minority families.

42

Senators Bill Nelson and Elizabeth Warren

US Senators

Support

Deposit advances trap consumers in a circle of debt.  Gov't benefits should not be used as proof of income for this product.  Banks should list the cost as APR, just like payday lenders do.

43

Regions Bank

Bank

Oppose

Daps help consumers, improve credit; the proposed regulation increases overhead expenses; cooling off period leaders to consumers borrowing more.

44

Bretton Woods, Inc.

Corporation

Oppose

Will drive consumers to illegal lenders.

45

Ballard Spahr (two comments)

Law Firm

Oppose

(1) this usurps the CFPB's jurisdiction; even though the rules are permissive banks will have to follow them; the guidance is arbitrary and capricious; the regulations are not based on good analysis or evidence (2) on behalf of a bank client: the guidance doesn’t define what a deposit advance is; the agency should push for disclosure, not banning; the regulations will lead to banks not offering other products for fear they will be regulated as deposit advances.

46

McIntyre & Lemon

Law Firm

Oppose

No evidence for safety and soundness concerns; recitation of applicable laws has a chilling effect; supervisory expectations are micromanagement of a product; CFPB should regulate; should be regulation not guidance.

47

Syracuse Univ. Securities Arbitration and Consumer Clinic

Law School Students

Support

Underwriting and cooling off stop cycle of debt; want stronger regulation.

48

Legal Services NYC

Legal Services Provider

Oppose

Daps are horrible for SSI recipients; courts are unlikely to protect DAP victims; regulators should ban DAP for SSI recipients.

49

PA Consumer Credit Ass'n

Organization

Oppose

Inconsistent; drives consumers to predatory lenders.

50

Kentucky Deferred Deposit Ass'n

Organization

Oppose

Eliminates choice; will drive consumers to predatory lenders.

51

Tennessee Cash Advance Ass'n

Organization

Oppose

Eliminates choice.

52

California Contract Cities Ass'n

Organization

Oppose

Inconsistent; eliminates choice.

53

California Hispanic Chambers of Commerce

Organization

Oppose

Eliminates choice; doesn’t address the problem.

54

Plaza de la Raza

Organization

Oppose

Eliminates choice.

55

Colorado Financial Service Centers Ass'n

Organization

Oppose

Eliminates choice; doesn’t address the problem.

56

LA Metro Hispanic Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

57

The American Bankers' Ass'n

Organization

Oppose

Eliminates choice; pushes consumers to predators; the guidance eliminates the product; the underwriting is onerous; cooling off period promotes over borrowing; chilling effect on small loan innovation; the agency doesn’t articulate a safety and soundness reason.

58

South Bay Latino Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

59

CA Financial Service Providers Ass'n

Organization

Oppose

Eliminates choice.

60

Financial Service Centers of Mississippi

Organization

Oppose

Eliminates choice; doesn’t address the problem.

61

OK Bankers Ass'n

Organization

Oppose

The regulation doesn’t analyze safety and soundness; this seems to be targeted at consumers so the CFPB should do it; stifles product development; eliminates choices.

62

FL Bankers Ass'n

Organization

Oppose

Impact on safety and soundness is unclear; conflicts w/ state regulation; eliminates choices; should be in a regulation rule making process, not guidance.

63

Online Lenders Alliance

Organization

Oppose

Safety and soundness concerns unfounded; people don’t actually get caught in a cycle of debt; eliminates choices.

64

Community Financial Services Ass'n of America

Organization

Oppose

Inconsistent; eliminates choices; consumers are not caught in debt.

65

Consumer Bankers Ass'n, The Financial Services Roundtable, The Clearing House

Organization

Oppose

Eliminates choice; pushes consumers to predators; no evidence about safety and soundness concerns; FDIC is usurping CFPB; suggested underwriting won’t show the complete picture.

66

US Chamber of Commerce Center for Capital Markets Competitiveness

Organization

Oppose

Should issue rules instead of issuing guidance; CFPB has not yet gathered sufficient info; CFPB should regulate this.

67

Oregon Bankers Ass'n

Organization

Oppose

Underwriting is burdensome; cooling off period is arbitrary; will chill innovation; safety and soundness concerns are unfounded.

68

US Hispanic Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

69

US Black Chambers

Organization

Oppose

Eliminates choice; inconsistent.

70

National People's Action

Organization

Support

Underwriting requirements are good and deposit advances are predatory.  Want even stricter regulation.

71

Shriver National Center on Poverty Law

Organization

Support

Underwriting requirements and borrowing limits will stop cycle of debt.

72

The Center for American Progress

Organization

Support

Cooling off period and underwriting will stop debt cycle; want stronger restrictions.

73

Opportunity Fund

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

74

Kentucky Equal Justice Center

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

75

Consumer Federation of America

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

76

Nat'l Community Reinvestment Coalition

Organization

Support

Analyzing ability to repay, cooling off period stop cycle of debt.

77

Aquinas Associates

Organization

Support

Banks are churning; discriminates against minorities.

78

Center for Financial Services Innovation

Organization

Support

Encourage flexible underwriting; prevent overuse of small dollar credit; want transparent pricing; support it but want more/different regulation.

79

Corporation for Enterprise Development

Organization

Support

Underwriting, cooling off period will stop cycle of debt; products should be marketed as short term debt making customers aware of other options.

80

Cities for Financial Empowerment Coalition

Organization

Support

Underwriting, cooling off will stop cycle of debt.

81

The Pew Charitable Trusts

Organization

Support

Underwriting will stop cycle of debt; compares it to cash advances at an ATM and encourages the agency to regulate this; our research shows that borrowers do not choose b/w credit products but rather they do not turn to other lenders if payday loans are not there.

82

Chicago Community Loan Fund

Organization

Support

Underwriting and cooling off will stop cycle of debt; want stronger regulation.

83

Woodstock Institute

Organization

Support

Underwriting, cooling off will stop cycle of debt; prevent automatic mandatory repayment; lots of other suggestions.

84

Service Employees Int'l Union, et al.

Organization

Support

Cooling off and limitations on number of loans will prevent cycle of debt; marketing practices are bad.

85

CA Reinvestment Coalition

Organization

Support

Should have eligibility and underwriting requirements; should have cooling off period.

86

Southern Poverty Law Center

Organization

Support

Underwriting and cooling off will stop cycle of debt; should have a lower APR.

87

National People's Action et al.

Organization

Support

Underwriting, cooling off will stop cycle of debt.

88

New Yorkers for Responsible Lending

Organization

Support

Should underwrite; cooling off period; eliminate automatic repayment; limit fees.

89

Appleseed

Organization

Support

DAPS are discriminatory and predatory.

90

Americans for Financial Reform

Organization

Support

Harms consumers; discriminatory; proposed guidance will stop the cycle of debt.

91

AARP, Center for Responsible Lending, Consumer Federation of America, NAACP, etc.

Organization

Support

The regulations will stop the cycle of debt; daps are discriminatory and harmful, harmful to SSI recipients; want stronger regulations.

92

Arkansans Against Abusive Payday Lending

Organization

Support

The regulations protect consumers - require underwriting, cooling off, fees, and automatic repayment.

93

Reinvestment Partners

Organization

Support

DAP regulations should protect consumers; there is risk to safety and soundness; should be required to disclose the APR.

94

CANICCOR

Organization

Support

Regulations will protect consumers; want stronger regulation; underwriting might be too onerous; the cooling off period regulation is too extreme; banks should give one month daps.

95

CNG Financial Corp

Short Term Lender

Oppose

Eliminates choice; doesn’t address the problem; inconsistent.

96

Jeremy Rollins

Small Private Payday Lender

Oppose

The rates aren’t that high and consumers need payday loans.

97

Kentucky AG

State AG

Oppose

Pushes consumers to predatory lenders; should defer to the CFPB.

98

Arkansas Attorney General

State AG

Support

Underwriting, cooling off will, limiting number of loans per year will stop cycle of debt.

 

 

Comments Received by the OCC
 

Comment No.

Party

Type of Party

Stance

Substance of Comment

1

Rep. Tony Dugger

State Representative

Oppose

Inconsistent with other regulations.  Month long cooling off period and underwriting procedures are onerous.

2

Rep. Sandy Crawford

State Representative

Oppose

Inconsistent with other regulations.  Month long cooling off period and underwriting procedures are onerous.

3

Chris Barnard

 

Support

Deposit advances are a necessary product; regulation should focus on safety and soundness; banks should analyze customer's ability to repay.

4

Rep. Libby Szabo

State Representative

Oppose

Inconsistent regulation.

5

Scott Weir

 

Support

Banks shouldn’t prey on small fry.

6

Rep. Frank McNulty

State Representative

Oppose

This inconsistent regulation will lead to consumers turning to less safe lenders.

7

Abbie Stewart

 

Support

My friends do not understand how bad payday loans are.

8

Rep. Zuber

State Representative

Oppose

States should regulate this; eliminates choice.

9

Anastasia Berta

 

Support

Underwriting and loan limits will stop cycle of debt; also want interest rate limits.

10

Rep. Woodrow Stanley

State Representative

Oppose

This inconsistent regulation leads to consumers having fewer choices.

11

Vi Finley

 

Support

Payday loans are bad.

12

Rep. Ritch Workman

State Representative

Oppose

Inconsistent; eliminates choice in the marketplace; doesn’t address the root of the problem.

13

David McGlocklin

 

Support

Payday companies are bad.

14

Rep. Frank Mautino

State Representative

Oppose

Inconsistent; doesn’t address consumer need for credit or their financial challenges.

15

Christine Jones

 

Support

Mad about title loans and payday loans.

16

Rep. Timothy Jones

State Representative

Oppose

Inconsistent; eliminates choice in the marketplace.

17

Sandra Wettergren

 

Support

Payday loans are bad.

18

Rep. Jim Buchy

State Representative

Oppose

Doesn’t address the problem.

19

Sharon D'Agostino

 

Support

Payday loans are bad and trap people in debt.

20

Rep. Oliver Robinson

State Representative

Oppose

Doesn’t address the problem; eliminates choice.

21

Martin Garon

 

Support

Banks are evil.

22

Rep. Turner

State Representative

Oppose

Eliminates choice; inconsistent.

23

Donald Webb

 

Support

Banks are evil.

24

Rep. Verschoore

State Representative

Oppose

Eliminates choice.

25

Ruth Susswein

 

Support

Traps people in debt.

26

Rep. Novstrup

State Representative

Oppose

Eliminates choice; CFPB should regulate this.

27

NPA/Chris Gebert

 

Support

These regulations will help stop the cycle of debt; wants stronger regulation.

28

Rep. Joseph Souki

State Representative

Oppose

Eliminates choice in the marketplace.

29

Marcia Flannery

 

Support

These regulations will help stop the cycle of debt; wants stronger regulation.

30

Rep. Redfern

State Representative

Oppose

Eliminates choices.

31

Maria Timoney

 

Support

These catch consumers in a cycle of debt.

32

Rep. Ponti

State Representative

Oppose

Eliminates choice; inconsistent.

33

Rep. Sandifer

State Representative

Oppose

Eliminates choice; regulations are arbitrary.

34

Rep. Zalewski

State Representative

Oppose

Eliminates choices; doesn’t address the problem; will drive consumers to predators.

35

Rep. DeGraaf

State Representative

Oppose

Eliminates choice; inconsistent.

36

Rep. Olson

State Representative

Oppose

Inconsistent; eliminates choice.

37

Senator Mike Gloor

State Senator

Oppose

Inconsistent regulation leads to consumers having fewer choices.

38

Senator Damon Thayer

State Senator

Oppose

Inconsistent; eliminates choice in the marketplace.

39

Senator Jay Wasson

State Senator

Oppose

Inconsistent.

40

Senator William Coley

State Senator

Oppose

Eliminates choice in the marketplace.

41

Senator Kevin Bacon

State Senator

Oppose

Inconsistent; doesn’t address the problem.

42

Senator Tom Dempsey

State Senator

Oppose

Eliminates choice in the marketplace; pushes consumers to predatory lenders.

43

Senator Lightford

State Senator

Oppose

Eliminates choice.

44

Senator Mike Jacobs

State Senator

Oppose

Eliminates choice.

45

Senator Fitzgerald

State Senator

Oppose

Eliminates choice; inconsistent.

46

Senator Bedford

State Senator

Oppose

Eliminates choice; drives consumers to predatory lenders.

47

Senator Trotter

State Senator

Oppose

Eliminates choice; inconsistent.

48

Senator Case

State Senator

Oppose

Inconsistent; eliminates choices.

49

Senator Calderon

State Senator

Oppose

Inconsistent; eliminates choice; doesn’t get to the root of the problem.

50

Senator Michael Watson

State Senator

Oppose

Eliminates choice; will drive consumers to predatory lenders.

51

Senator Lautenbaugh

State Senator

Oppose

Eliminates choice; doesn’t address the problem.

52

Prof. David Stoesz

University Professor

Oppose

This will hurt poor minority families.

53

Douglas A. Howard

 

Oppose

There is no evidence about daps.

54

David C. Holdridge

 

Oppose

These guidelines will eliminate this product which I use frequently.

55

US Black Chambers

Organization

Oppose

Eliminates choice; inconsistent.

56

Syracuse Univ. Securities Arbitration and Consumer Clinic

Law School Students

Support

Underwriting and cooling off stop cycle of debt; want stronger regulation.

57

National People's Action

Organization

Support

Underwriting requirements are good and deposit advances are predatory.  Want even stricter regulation.

58

The Center for American Progress

Organization

Support

Cooling off period and underwriting will stop debt cycle; want stronger restrictions.

59

Green America

Organization

Support

The regulations will stop cycle of debt; want to limit APR.

60

MI Center for Justice

Organization

Support

Daps harm consumers; need regulation.

61

Center for Financial Services Innovation

Organization

Support

Encourage flexible underwriting; prevent overuse of small dollar credit; want transparent pricing; support it but want more/different regulation.

62

Opportunity Fund

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

63

Nat'l Community Reinvestment Coalition

Organization

Support

Analyzing ability to repay, cooling off period stop cycle of debt.

64

Aquinas Associates

Organization

Support

Banks are churning; discriminates against minorities.

65

Chicago Community Loan Fund

Organization

Support

Underwriting and cooling off will stop cycle of debt; want stronger regulation.

66

New Yorkers for Responsible Lending

Organization

Support

Should underwrite; cooling off period; eliminate automatic repayment; limit fees.

67

Reinvestment Partners

Organization

Support

DAP regulations should protect consumers; there is risk to safety and soundness; should be required to disclose the APR.

68

Shriver National Center on Poverty Law

Organization

Support

Underwriting requirements and borrowing limits will stop cycle of debt.

69

CA Reinvestment Coalition

Organization

Support

Should have eligibility and underwriting requirements; should have cooling off period.

70

Americans for Financial Reform

Organization

Support

Harms consumers; discriminatory; proposed guidance will stop the cycle of debt.

71

Corporation for Enterprise Development

Organization

Support

Underwriting, cooling off period will stop cycle of debt; products should be marketed as short term debt making customers aware of other options.

72

Cities for Financial Empowerment Coalition

Organization

Support

Underwriting, cooling off will stop cycle of debt.

73

Woodstock Institute

Organization

Support

Underwriting, cooling off will stop cycle of debt; prevent automatic mandatory repayment; lots of other suggestions.

74

AARP, Center for Responsible Lending, Consumer Federation of America, NAACP, etc.

Organization

Support

The regulations will stop the cycle of debt; daps are discriminatory and harmful, harmful to SSI recipients; want stronger regulations.

75

National People's Action et al.

Organization

Support

Underwriting, cooling off will stop cycle of debt.

76

National Consumer Law Center

Organization

Support

Concerned about daps on prepaid cards; credit should be kept separate from prepaid cards.

77

Consumer Federation of America

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

78

Kentucky Equal Justice Center

Organization

Support

Underwriting and cooling off period stop cycle of debt; want stronger regulation.

79

Appleseed

Organization

Support

DAPS are discriminatory and predatory.

80

CANICCOR

Organization

Support

Regulations will protect consumers; want stronger regulation; underwriting might be too onerous; the cooling off period regulation is too extreme; banks should give one month daps.

81

The Pew Charitable Trusts

Organization

Support

Underwriting will stop cycle of debt; compares it to cash advances at an ATM and encourages the agency to regulate this; our research shows that borrowers do not choose b/w credit products but rather they do not turn to other lenders if payday loans are not there.

82

Southern Poverty Law Center

Organization

Support

Underwriting and cooling off will stop cycle of debt; should have a lower APR.

83

Service Employees Int'l Union, et al.

Organization

Support

Cooling off and limitations on number of loans will prevent cycle of debt; marketing practices are bad.

84

Arkansans Against Abusive Payday Lending

Organization

Support

The regulations protect consumers - require underwriting, cooling off, fees, automatic repayment.

85

Regions Bank

Bank

Oppose

Daps help consumers, improve credit; the proposed regulation increases overhead expenses; cooling off period leaders to consumers borrowing more.

86

BOK Financial

Bank

Oppose

Request for clarification; request for extra time before requirements go into effect.

87

Wells Fargo Bank

Bank

Oppose

Cooling off will encourage customers to take out the maximum amount; we don’t want to underwrite because the product is intended for people who can't access traditional credit products; we give customers the option to pay back over time; we don’t let customers use it for over 6 months in a row; the proposal will limit innovation and access to credit.

88

US Bank

Bank

Oppose

Under the new guidelines our customers will not be eligible and will have to go outside the bank for these products; this will hinder development of new products; further research is needed; customers need time to transition to other products after the OCC shuts DAP down.

89

Bretton Woods, Inc.

Corporation

Oppose

Will drive consumers to illegal lenders.

90

US Chamber of Commerce Center for Capital Markets Competitiveness

Governmental Organization

Oppose

Should issue rules instead of issuing guidance; CFPB has not yet gathered sufficient info; CFPB should regulate this.

91

Ballard Spahr (two comments)

Law Firm

Oppose

(1) this usurps the CFPB's jurisdiction; even though the rules are permissive banks will have to follow them; the guidance is arbitrary and capricious; the regulations are not based on good analysis or evidence (2) on behalf of a bank client: the guidance doesn’t define what a deposit advance is; the agency should push for disclosure, not banning; the regulations will lead to banks not offering other products for fear they will be regulated as deposit advances.

92

McIntyre & Lemon

Law Firm

Oppose

No evidence for safety and soundness concerns; recitation of applicable laws has a chilling effect; supervisory expectations are micromanagement of a product; CFPB should regulate; should be regulation not guidance.

93

Legal Services NYC

Legal Services Provider

Oppose

Daps are horrible for SSI recipients; courts are unlikely to protect DAP victims; regulators should ban DAP for SSI receipients.

94

PA Consumer Credit Ass'n

Organization

Oppose

Inconsistent; drives consumers to predatory lenders.

95

Tennessee Cash Advance Ass'n

Organization

Oppose

Eliminates choice.

96

California Hispanic Chambers of Commerce

Organization

Oppose

Eliminates chocie; doesn’t address the problem.

97

California Contract Cities Ass'n

Organization

Oppose

Inconsistent; eliminates choice.

98

CA Financial Service Providers Ass'n

Organization

Oppose

Eliminates choice.

99

Financial Service Centers of Mississippi

Organization

Oppose

Eliminates choice; doesn’t address the problem.

100

LA Metro Hispanic Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

101

The American Bankers' Ass'n

Organization

Oppose

Eliminates choice; pushes consumers to predators; the guidance eliminates the product; the underwriting is onerous; cooling off period promotes over borrowing; chilling effect on small loan innovation; the agency doesn’t articulate a safety and soundness reason.

102

OK Bankers Ass'n

Organization

Oppose

The regulation doesn’t analyze safety and soundness; this seems to be targeted at consumers so the CFPB should do it; stifles product development; eliminates choices.

103

Plaza de la Raza

Organization

Oppose

Eliminates choice.

104

PA Consumer Credit Ass'n

Organization

Oppose

Inconsistent; drives consumers to predatory lenders.

105

Colorado Financial Service Centers Ass'n

Organization

Oppose

Eliminates choice; doesn’t address the problem.

106

South Bay Latino Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

107

Online Lenders Alliance

Organization

Oppose

Safety and soundness concerns unfounded; people don’t actually get caught in a cycle of debt; eliminates choices.

108

Oregon Bankers Ass'n

Organization

Oppose

Underwriting is burdensome; cooling off period is arbitrary; will chill innovation; safety and soundness concerns are unfounded.

109

Consumer Bankers Ass'n, The Financial Services Roundtable, The Clearing House

Organization

Oppose

Eliminates choice; pushes consumers to predators; no evidence about safety and soundness concerns; FDIC is usurping CFPB; suggested underwriting won’t show the complete picture.

110

CA Financial Service Providers Ass'n

Organization

Oppose

Eliminates choice.

111

FL Bankers Ass'n

Organization

Oppose

Impact on safety and soundness is unclear; conflicts w/ state regulation; eliminates choices; should be in a regulation rule making process, not guidance.

112

United States Automobile Association

Organization

Oppose

Want clarification; our program which provides deposit advances to gov't employees in case of gov't shutdown is within the guidance.

113

Community Financial Services Ass'n of America

Organization

Oppose

Inconsistent; eliminates choices; consumers are not caught in debt.

114

US Hispanic Chamber of Commerce

Organization

Oppose

Eliminates choice; inconsistent.

115

CNG Financial Corp

Short Term Lender

Oppose

Eliminates choice; doesn’t address the problem; inconsistent.

116

Kentucky AG

State AG

Oppose

Pushes consumers to predatory lenders; should defer to the CFPB.

117

Arkansas Attorney General

State AG

Support

Underwriting, cooling off will, limiting number of loans per year will stop cycle of debt.

118

Senators Bill Nelson and Elizabeth Warren

U.S. Senators

Support

Deposit advances trap consumers in a circle of debt. Gov't benefits should not be used as proof of income for this product. Banks should list the cost as APR, just like payday lenders do.


1  See 78 Fed. Reg. 25353 (proposed Apr. 22, 2013) (OCC proposed guidance); 78 Fed. Reg. 25268 (proposed Apr. 30, 2013) (FDIC proposed guidance).&n

  Note, however, that the OCC proposed guidance withdraws its prior proposed guidance on Deposit-Related Consumer Credit Products, published on June 8, 2011 (76 Fed. Reg. 33409).  

 3  A cycle of debt occurs when a borrower is unable to afford both living expenses and loan and fee repayment, and consequently borrows a deposit advance each direct deposit cycle.   

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©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume III, Number 198
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Thomas J. McKee, Greenberg Traurig Law Firm, Northern Virginia, Bankruptcy Litigation Attorney
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Tom counsels and represents businesses and executives in connection with a wide variety of business disputes, including breaches of contract, breaches of fiduciary duty, misappropriation of trade secrets, employment matters, construction disputes, class action defense, and government investigations.  His practice regularly focuses on assisting emerging growth technology companies and start-ups with respect to disputes they frequently encounter, including intellectual property and “works for hire” disputes, founder and partnership disputes, non-disclosure issues, stock...

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Gil Rudolph, Greenberg Traurig Law Firm, Washington DC, Phoenix, Finance Law Attorney
Shareholder

Gil Rudolph is Co-Chair of the firm's Financial Regulatory and Compliance Practice. Gil focuses his practice on the representation of finance companies, banks, mortgage originators and servicers, education lenders, title insurance companies and other consumer financial service providers in regulatory and litigation matters.

Gil also represents various alternative financial service providers, including small dollar/short term lenders, check cashers, pawn and auto title lenders. He additionally represents various participants in the credit, debit...

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