Richard's Rapid Fire - March 22, 2019

CBA Supports White House Higher Education Act Reform Principles: CBA supports many of the reforms the Administration outlined in the release of its Higher Education Act reform principles. Placing responsible limits on federal PLUS loans will allow students to achieve their higher education goals without taking on insurmountable levels of debt. The removal of the previous cap on Parent PLUS loans and the subsequent creation of the GRAD PLUS program has helped fuel increases in college tuition and the doubling of student loan debt in the last decade alone. The Administration should be commended for addressing the root cause of the federal student loan crisis instead of simply attempting to treat the symptoms.

In addition to responsible loan limits, the Administration’s principles supported providing more information to borrowers. CBA believes federal student borrowers and their families should have access to the same plain language, Truth in Lending Disclosures already provided to private loan borrowers. Providing personalized loan terms, such as a monthly payment amount, and allowing an apples-to-apples comparison of loan options will empower students to make the best financial decisions and help set them up for success post-graduation.

Speaking of student lending… CBA conducted a poll of 1,000 registered voters this year gauging Americans’ attitudes about student loans and student debt. Among the findings, nearly 85% support placing responsible caps on federal loans to offer access to a quality education without setting up a debt trap post-graduation. The poll also found strong support for student loans carrying clear, personalized, plain-language disclosures about the loan’s total costs. Similar disclosures are already provided by private student lenders but do not exist for federal student loans.

Learn more about CBA’s student lending reform recommendations here and the poll here.

CBA Calls for Uniform National Data Security Standard: CBA late last week wrote Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) to offer feedback to the request for information on data privacy, protection and collection. CBA also called on Congress to enact a uniform national standard to ensure consumer data is protected at every step of the payment system, including non-financial institutions where the most records of personal information are exposed.

Consumers are rightly concerned about the manner in which their personal information is being collected and how this sensitive information is being both shared and protected.

Banks are on the front lines consistently monitoring for fraud and working to make consumers whole, no matter where a breach occurs. From operating advanced fraud monitoring systems to reissuing cards, CBA members spend considerable resources on preventing fraud. As a result, consumers rely on their financial institutions to communicate what to do in the event of a breach and to employ defenses to prevent fraud and identity theft.

CBA supports data security and breach notification legislation encompassing the following elements:

• A flexible, scalable standard for data protection that factors in (1) the size and complexity of an organization, (2) the cost of available tools to secure data, and (3) the sensitivity of the personal information an organization holds.
• A notification regime requiring timely notice to impacted consumers, law enforcement, and applicable regulators when there is a reasonable risk that a breach of unencrypted personal information exposes consumers to identity theft or other financial harm.
• Consistent, exclusive enforcement of the new national standard by the Federal Trade Commission (FTC), other than for entities subject to state insurance regulation or who comply with GLBA or the Health Insurance Portability and Accountability Act of 1996/HITECH Act. For entities under its jurisdiction, the FTC should have the authority to impose penalties for violations of the new law.
• Clear preemption of the existing patchwork of often conflicting and contradictory state laws.

CBA also raised concerns with efforts to change credit reporting laws, noting without a complete credit history, lenders would not be able to accurately access a borrower’s ability to repay a loan, potentially opening up safety and soundness implications.

CBA’s full letter is available here.

CFPB Update: Much to report from the CFPB this week…

• CFPB Announces Enhancement to Advisory Boards and Opens Application Process
  • The CFPB announced Thursday enhancements to its Advisory Boards, and opened up the application for the next Boards. Membership terms on the Boards will be extended to two years (up from one) with half of current serving members extending their terms by one year, and the other half rolling off in September of 2019. The focus of the Boards will expand to broader policy issues, with CFPB staff noting they are looking for experts in FDCPA, PACE, HMDA, and high-cost installment loans. The Advisory Boards will not meet three times a year in person (up from two), with new meetings beginning in September 2019 with new terms.
  • CFPB Advisory Board Liaisons held a meeting with CBA and noted that those current Advisory Board Members who plan to roll off in September are permitted to reapply for positions that would start at the same time they roll off, giving them a fresh, two-year term. The Bureau is interested to get applications from larger financial institutions, specifically noting it will consider applications from institutions that are $10 billion and above in assets.
  • The application process is currently open, with applications due May 5. The Bureau Advisory Board team will conduct interviews of candidates after the closing date, and Director Kraninger will make the final call on who to offer positions to.
• CFPB Releases Servicemembers Complaint Snapshot
  • The CFPB released Tuesday their complaint snapshot giving a national overview of servicemember, veterans, and their families’ complaints in 2018.
  • Total complaints for this group is up 12% from 2017, with a total of 33,984 complaints received in 2018.
  • The biggest issues complained about are in the fields of credit reporting, where incorrect information was found on reports; debt collection, with attempts to collect debts not owed; and troubles during the payment process of mortgages.
  • States with the highest complaint volume include Texas, California, Florida, and Georgia, with 133,591 complaints received since July of 2011.
• CFPB Collecting Comments on Terms of Credit Card Plans
  • The CFPB released  Wednesday a notice and request for comment Bureau’s data collection on credit card pricing and availability from financial institutions, as required under Form FR 2572. The Bureau requests comments on whether the collection of credit card terms is necessary and has practical utility, ways to enhance the quality of the information collected, and ways to minimize the burden of the collection.
  • Comments are due on May 20, 2019.
• CFPB Collecting Comments on ECOA
  • The CFPB released Wednesday a notice and comment on the data collection ECOA permits financial institutions to conduct for self-testing against different prohibited bases, while not allowing creditors to use that information in making credit decisions of applicants.
  • The Bureau requests comments on whether the collection of this data is necessary and has practical utility, ways to enhance the quality of the information collected, and ways to minimize the burden of the collection.
  • Comments are due on May 20, 2019.
• CFPB Releases Annual Report to Congress on FDCPA
  • The CFPB released Wednesday its annual report to Congress on its administration of the Fair Debt Collection Practices Act (FDCPA), in conjunction with theFederal Trade Commission. The report includes an industry breakdown of the types of debt held, an analysis of the consumer complaints on debt collection, reports on the various supervisory and enforcement actions the Bureau and FTChave taken on debt-collection, and a confirmation that FDCPA rulemaking is coming in the spring of 2019.
  • Consumer debt surpassed its 2008 peak in 2017, rising to a new high of $13.54 trillion in the fourth quarter of 2018.
  • Most of the growth in consumer debt has been fueled by non-housing debt such as credit cards ($36 billion increase), student loans ($79 billion increase) and auto loans ($53 billion increase)
    • However, these figures are not adjusted for population growth or inflation. In fact, consumer debt ratios have recovered to 5.6%, below pre-recession highs.
    • 90+ day delinquent credit card balances are elevated relative to previous years, and charge-off rates have also been rising.
    • The Bureau handled roughly 81,500 debt collection complaints in 2018 for both first and third party collections.
    • A majority of these complaints were for attempts to collect on a debt not owed.
    • Of the complaints sent to companies for a response, 95% were responded to.
    • The Bureau reported they expect to issue a Notice of Proposed Rulemaking on FDCPA to address communication practices and consumer disclosures in spring, 2019.