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HOPE Provides Testimony to House Subcommittee

July 12th, 2017

On Wednesday, July 12, 2017, William Bynum, CEO of Hope Federal Credit Union/Hope Enterprise Corporation, submitted written testimony to the House Financial Services Committee Financial Institutions Consumer Credit Subcommittee. The full written testimony, “Examining Legislative Proposals to Provide Targeted Regulatory Relief to Community Financial Institutions,” is below:

Thank you for holding this hearing on proposals that would affect financial institutions like ours and, more importantly, the members that we serve. My name is William Bynum and I serve as the Chief Executive Officer of HOPE (Hope Enterprise Corporation / Hope Federal Credit Union) www.hope-ec.org and www.hopecu.org.

HOPE is a $310 million community development financial institution (CDFI), credit union and policy institute with 36,000 members and 30 locations. Over 1/3 of HOPE’s members were unbanked prior to joining. Fifty-two percent (52%) of HOPE’s members have incomes below $35,000 and one out of four used high cost financial services in the past.

Notably, HOPE’s service area, the Mid South states of AR, LA, MS and TN, is home to one fourth of the nation’s persistent poverty counties and parishes – places where the poverty rate has eclipsed 20% for three decades in a row. Roughly a third of the region’s persistent poverty counties are majority black and 35 of the 39 majority black counties within the region are persistently poor. The region also has notoriously weak consumer protection laws as documented by the Pew Charitable Trusts and our own experience working with members who have fallen into a cycle of debt when loans were made by high cost lenders without any consideration for our members’ ability to repay the loans.

For the purposes of this hearing, I will focus my comments on Sections 6-9 of the Community Lending Enhancement and Regulatory Relief Act of 2017 (CLEARR Act):

  • Section 6: Bureau Authority Over Unfair and Deceptive Acts or Practices
  • Section 7: Amendments to the Equal Credit Opportunity Act and the Fair Housing
    Act to Require Intent to Discriminate
  • Section 8: Amendments to the Home Mortgage Disclosure Act of 1975
  • Section 9: Repeal of Small Business Loan Collection Data

Underpinning all of our comments is a strong and inherent belief that the Consumer Financial Protection Bureau (CFPB) is critically important in the facilitation of equitable access to credit and financial services. Efforts to roll back its enforcement and rulemaking authority carry with them a great price that will be borne by the American people.

Section 6: Bureau Authority Over Unfair and Deceptive Acts or Practices
HOPE has grave concerns regarding the inclusion of Section 6 of the CLEARR Act which effectively eliminates the CFPB’s enforcement and rulemaking abilities around the use of unfair deceptive and abusive practices (UDAAP). In the absence of this authority, we fear that predatory lending will proliferate and go unchecked without any remedy for the consumer. HOPE’s mission is to strengthen communities, build assets, and improve lives in economically distressed parts of Arkansas, Louisiana, Mississippi, and Tennessee by providing access to affordable, responsibly-structured financial products and services. Vital to the fulfillment of this mission is the preservation of income and assets through strong consumer protections. Removing the CFPB’s enforcement and rulemaking “abusive” UDAAP authority would reduce protections for consumers, effectively negating the work done by HOPE and similar organizations. The CFPB’s ability to take action against institutions engaged in unfair, deceptive, or abusive acts or practices has been critically important in the Mid South, a region that experiences a disproportionate level of high cost lending relative to the rest of the nation.

Evidence of the importance of the CFPB is found in its enforcement actions “to end All American’s unlawful practices, obtain redress for consumers, and impose penalties.” All American Check Cashing is a check cashing and payday lending business that operated at least 50 stores in AL, LA and MS. Specifically, All American used deceptive tactics to facilitate high cost transactions and trap customers in a cycle of debt. Due to good work of CFPB, All American Cash Checking is no longer operating and subjecting consumers to deceptive financial practices. Without a strong CFPB focused on protecting consumer interests, this bad actor would continue its predatory practices on residents resident in the region.

Section 7: Amendments to the Equal Credit Opportunity Act and the Fair Housing Act to Require Intent to Discriminate
HOPE is against weakening the Fair Housing Act. The disparate impact liability has been a core component of the Fair Housing Act in addressing discrimination in housing and lending. HOPE strongly supports continuing the disparate impact doctrine to eliminate unnecessary discriminatory practices. HOPE believes that a strong Fair Housing Act is important to protecting people from discrimination when securing housing. HOPE’s commitment to a strong Fair Housing Act is affirmed by its participation in a 2015 Amicus Curiae brief with the National Fair Housing Alliance and the Center for Community Self-Help urging the Supreme Court to uphold the “disparate impact” doctrine within the application of the Fair Housing Act. The standard exists to limit the harmful effects of seemingly neutral policies on protected classes of people, which includes characteristics such as race, gender, age and disability. Maintaining the disparate impact doctrine is important in eliminating abusive, predatory practices in housing.

Section 8: Amendments to the Home Mortgage Disclosure Act of 1975
HOPE opposes raising the threshold to 1,000 closed-end mortgages or 2,000 open-end lines of credit for reporting requirements. The current reporting guidelines do not place a burden on HOPE. The current reporting requirements provide data that can help to ensure the flow of credit to qualified borrowers in underserved communities. Importantly, the data provides critical information about whether similarly situated borrowers and underserved communities are receiving equitable access to mortgage credit.

Section 9: Repeal of Small Business Loan Collection Data
HOPE opposes repealing the requirements of creditors to collect and publicly report certain loan and personal characteristic data on non-mortgage credit applications from women-owned, minority-owned, and small businesses. The data provides regulators and lenders with important insights with regard to access to small business credit, and about the capital gaps faced by historically, and continually underserved people and places.

Conclusion

The Mid South region faces some of the most severe poverty in the United States.   Strong consumer protections are vital to ensuring that all people have access to responsible, affordable financial services required to support their families, create jobs, build assets and otherwise contribute to a strong, fair economy. Thank you for the opportunity to submit these comments.

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