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A Case for Rules of the Road

A Case for Rules of the Road

Across our country, American households have faced several years of challenging economic times. Inflation, while the rate is decreasing, has taken a serious bite out of everyone’s monthly budgets for such basic goods as gas and groceries. Savings, which grew during the pandemic, are again dwindling. The Federal Reserve Bank of New York’s recent Survey of Consumer Expectations reports that the likelihood of an average household coming up with $2,000 to cover an unanticipated expense fell to a ten-year low.

In short, access to credit, whether to help consumers cover unexpected costs or to just gain a little financial breathing room for their monthly spending, has never been more important.  Policymakers in Washington should be looking for ways to ensure folks can access whatever forms of credit they chose or can qualify for. Yet the Consumer Financial Protection Bureau is doing the opposite.

That’s why today the American Financial Services Association, is launching a national education campaign to address vague, overreaching CFPB policies that are harming – not helping – consumers. We are calling for the agency to use the traditional rulemaking process when needed to set clear rules of the road for the industries the CFPB regulates. Here’s why.

Our members take pride in offering the credit products our customers need and want, but it is becoming increasingly challenging to do so under the CFPB’s oppressive and uneven oversight. For example, the CFPB is allowed to supervise companies that it decides “pose risk to consumers.” The agency for the first time recently began using this authority, except it has never attempted to define what “risk” means. Declaring a company “risky” without defining risk ahead of time is like a highway patrol running a speed trap pulling over cars for speeding without posting let alone setting the speed limit.

Part of the problem as we have often noted, is that the agency isn’t writing regulations using the rulemaking process. instead, it has used blog posts, vague guidance, and opinion letters to establish policies with no opportunity for industry players or consumers or Congress to provide input.

Even when the CFPB does attempt formal rulemaking to address an identified problem, the outcomes can be conflicting, confusing, harmful to consumers’ financial well-being, and unnecessary. For example, on one hand the Bureau proposed prohibiting medical debt from being considered when a lender is undertaking its standard ability-to-repay analysis. On the other, the agency penalized an auto lender for not considering costs like healthcare among a borrower’s debt obligations. In another example, this time on the enforcement side, the agency is punishing creditors for not asking about such costs as groceries or childcare before making a loan, while requiring in a rulemaking that certain lenders ask customers for such information as sexual orientation, and to report it to the agency.

Having our members ask these types of questions – that have little or nothing to do with the credit application – and then requiring that this information be shared with the government just doesn’t make sense. This is particularly so when the stakes are so high.

Not every household has perfect or even great credit scores. Not every consumer has savings or even a bank account. But we believe every consumer deserves access to some form of credit when they need it. With ongoing economic uncertainty and unclear regulations that might expose any company that provides credit or financial services to consumers to regulatory examination or investigation must be factored into risk analysis and just how much credit is available to consumers. The CFPB’s current approach is hindering access to some forms of credit millions of Americans may need or want because of the uncertainty the agency’s approach to policy engenders.

AFSA and its members believe Congressional oversight of the CFPB may help resolve some of these issues.  But our industry genuinely wants to work with the agency to develop regulations that protect consumers, while ensuring they have choices for their credit and provide clear and easy-to-follow guidelines to lenders.

For many years, our member companies have operated under a set of consumer credit protections, which we think can help inform the clear rules of the road when needed.  The protections include:

  1. Consumer Confidence: Consumers deserve choices in loan products they can be confident will provide benefits and meet their needs.
  2. The Right Price: Loans should be affordable and not trap borrowers in cycles of debt.
  3. Clarity and Certainty: Loan terms must be understandable, with documents that include all costs, clear terms, and conditions.
  4. Privacy and Security: Consumers must be confident that their personal information and sensitive data is protected and respected by those with whom they do business and by regulators that have access to that data.

When needed, the CFPB can and should create reasonable and clear rules of the road that protect consumers’ access to credit, which is crucial to financial stability and economic mobility. Those are worthy goals AFSA and its members seeks to promote every day and we want to work with the agency to ensure those goals are achieved.

You can find out more about AFSA’s Consumer Credit Protections and our effort at

March 6th, 2024

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