High-Cost Consumer Finance

Reinvestment Partners submitted these comments to the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) in response to their joint approval to allow their member financial institutions to use their charters to evade state anti-usury laws. The proposal, if approved, would allow banks to ignore state laws that put ceilings on interest rates. North Carolina has a strong state rule that caps interest rates at 30 percent. Under the "Rent-a-Bank" model, as it has been described, banks could partner with payday lenders to offer loans with interest rates of more than 200 percent.

Reinvestment Partners submitted this comment to the Office of the Comptroller of the Currency (OCC) on the agency’s proposal to create a special-purpose national charter for fintech companies.

In crafting this comment, Reinvestment Partners partnered with the Maryland Consumer Rights Coalition to express our common concerns that this charter could eviscerate the strong state consumer protection laws that are already in place in our respective states. Given our presumptions that the OCC may go ahead with their plans, we also responded to their specific questions on how such a regulatory scheme would enhance financial inclusion for under-served consumers.

Reinvestment Partners submitted this comment to the Consumer Financial Protection Bureau (CFPB) on November 7th, 2016. The Bureau asked for comments on how products sold in connection with payday loans, vehicle title loans, installment loans, and open-ended lines of credit might undermine consumers.

This RFI follows on the Bureau’s recent rulemaking on payday, vehicle title, and certain installment loans. Reinvestment Partners also submitted a comment on that rule-making. In this comment, Reinvestment Partners focused upon our concerns associated with credit insurance, deferred interest contracts on installment loans, and non-file insurance.

In its comment on third-party lending, Reinvestment Partners urged the FDIC to establish a strong framework for relationships between its insured institutions and non-bank lenders. We are concerned that these arrangements pose the potential to undermine state usury laws.

The FDIC has proposed a definition of these activities that will cover most of the new innovations in this space, but our comment recommends that the new approach should capture some of the related marketing approaches. Throughout, we urge the FDIC to prioritize the risk for these products to bring harm to consumers.

Reinvestment Partners submits these comments in collaboration with the Woodstock Institute (IL), the California Reinvestment Coalition, and the Maryland Consumer Rights Coalition.

Reinvestment Partners submits this comment on the CFPB’s Final Rule for Payday, Vehicle Title, and Certain Installment Loans (CFPB 2015 – 0016). Reinvestment Partners supports a strong rule with extensive underwriting of both income expense, protections against debt traps, and important protections to prevent fraud.

Our letter to the FDIC addresses our concerns with the new high-cost installment loans offered by Republic Bank of Kentucky in partnership with Elevate Credit. The letter also addresses Republic’s Refund Advance product, new tax-related refund loan.

Reinvestment Partners calls on our largest banks to move away from making loans to companies that provide high-cost low-quality loans to consumers. In 2014, Reinvestment Partners published a report that revealed lending by banks to a variety of high-cost consumer finance companies. These loans support payday loans, consumer installment loans, pawn shops, buy-here pay-here car lending, and rent-to-own stores.

In 2014, RP co-authored a report with three partner organizations on overdraft. Our research revealed that many consumers fail to understand overdraft. When we sent testers to a variety of branches, we discovered that explanations of the service varied.