Today, the American Financial Services Association wrote to the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC), commenting on their efforts to modernize the Community Reinvestment Act (CRA). While these efforts are appreciated, the proposed inclusion of automobile loans as a mandatory part of the metrics-based Retail Lending Test would not further the CRA goal of increasing credit for low- or moderate-income (LMI) communities.
AFSA’s letter outlines the issues with the Notice of Proposed Rulemaking, including:
- Under indirect financing arrangements, banks engaged in automobile lending are dependent upon the marketing and sales strategies employed by dealers. This leaves banks with a limited ability to influence the percentage of LMI customers who decide to do business with any particular dealer.
- The auto lending market is mostly composed of nonbanks and captive finance companies that are not subject to CRA evaluation. As of the first quarter of 2022, banks have only 29.11% market share of new loans or leases. This means that banks have even less leverage to influence dealers to increase their presence in LMI communities.
- The CRA regulations would treat auto loans differently from other consumer loans for the first time. For example, credit card loans are also a means of gaining access to credit and building credit history, yet they have been excluded from the Retail Lending Test.
- The inclusion of auto lending as a mandatory part of the new Retail Lending Test would be a departure from the historical focus of CRA on wealth-building, small business, and mortgage credit needs. Although auto lending is an important consumer product, there is no indication that there are unmet auto lending credit needs, as financing is readily available for consumers.
AFSA strongly encourages the agencies to adopt a qualitative approach to evaluate auto lending because auto loans should be treated the same as other consumer loans.
Today, the American Financial Services Association wrote to the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC), commenting on their efforts to modernize the Community… Read the rest
AFSA, along with several other trade associations, submitted an amicus brief in Sessa v. TransUnion. In the case, the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) argue that the Fair Credit Reporting … Read the rest
The New York Federal Reserve released a report on Tuesday noting that credit card debt in 2022 has surged in the second quarter, up $46 billion or 5.5% as compared to the first quarter. “Americans are borrowing more, but a big part of the increased… Read the rest
AFSA’s State Government Affairs team recently released its latest White Paper. This month’s white paper is on electronic and remote online notarization. The white paper takes a deep dive on the legislative and regulatory history of electronic… Read the rest
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The featured AFSA Business Partner for August is Lightico. We asked them a few questions about the value of AFSA membership and some of the opportunities or challenges they face in 2022. Learn more at lightico.com.
What are some key initiatives… Read the rest
Join as an AFSA Business Partner by August 31st and receive a complimentary registration to the 2022 AFSA Annual Meeting at the historic Breakers Hotel in Palm Beach – a $1499 value!
Founded in 1916, AFSA is the primary trade association for … Read the rest
The House yesterday passed H.R. 3962, the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2021, also known as the SECURE Act, with a vote of 336-90. Introduced by Reps. Madeleine Dean (D-PA), Kelly Armstrong… Read the rest
We’ve got an special series of episodes for you here on the AFSA Extra Credit Podcast. Over the next three episodes or so, I’ll be joined by my colleague Philip Bohi, AFSA’s VP of Compliance Education to discuss our recent purchases of new vehicles.… Read the rest
The U.S. Census Bureau last year launched a survey on the financial health of American households. While the Census survey is new and has little historical data to draw upon, the most recent iteration of the tracking survey confirms the challenges… Read the rest
