Recent posts by Tom Feltner
Since 1977, the Community Reinvestment Act (CRA) has been an effective tool to ensure that financial institutions live up to their community investment obligations, but many of the opportunities for public input on how a bank served the community’s needs only occur when a bank applies to merge with another bank. The past decade has seen considerable industry consolidation, resulting in fewer merger opportunities for public input. As a result of the ongoing financial and foreclosure crisis, the few large mergers that have occurred were the result of financial insolvency and have taken place on an emergency basis, with no public input for consideration of the merged institutions’ community investment commitments.
Under the American Community Investment Reform Act, a proposal to modernize the CRA introduced by Rep. Luis Gutierrez (D-4), the public would be able to more effectively hold financial institutions accountable for their community development practices and the financial products they offer.
In response to some of the recent criticism of the consumer reporting service mandated by the landmark payday loan reforms passed last spring, I would like to provide a brief history of payday loan reform in Illinois and why this database is so critical to protecting consumers.
As bank regulators take a close look at modernizing the provisions of the Community Reinvestment Act (CRA) through a series of hearings and public comment period (you have until August 31 to submit comments), we’re walking you through some key reasons why CRA must be updated. We’ve gone over how assessment areas don’t fully capture where a bank does business and why a broader scope of financial institutions must be covered by CRA. Today we’ll explain how CRA doesn’t meaningfully measure how banks are providing retail banking services to low- and moderate-income people.
As bank regulators take a close look at modernizing the Community Reinvestment Act (CRA) through a series of hearings and public comment period, we’re walking you through some key reasons why CRA must be updated. Last week, we explained how assessment areas don’t fully capture where a bank does business (see the discussion at Huffington Post). Today we’ll explain how CRA applies only to a fraction of the financial industry and why communities need a broader CRA to ensure that all financial institutions are offering safe and sustainable products where they do business.
With the passage of the Dodd-Frank Act, consumers will now have a Consumer Financial Protection Bureau to monitor and regulate potentially abusive financial products. It will be equally important, however, to ensure that all communities have equitable access to responsible and fairly priced products and to eliminate the bad ones. The Community Reinvestment Act (CRA) has been an effective tool to encourage the provision of affordable financial services, but it must be updated to reflect the realities of today’s rapidly-changing financial landscape.
Woodstock Institute applauds the passage of the Dodd-Frank financial reform bill, which represents the most dramatic and pro-consumer overhaul of the financial system in 70 years. The bill, which President Obama is expected to sign soon, will stabilize the financial system, prevent the need for future bailouts, and create a new Consumer Financial Protection Bureau (CFPB) to guard against unfair and deceptive products and practices.
The Community Reinvestment Act (CRA) should be updated give financial institutions credit for activities that support, enable, or facilitate projects carried out under the Neighborhood Stabilization Program (NSP), says a recent public comment letter submitted by Woodstock Institute.
After Le-Eunice L'Minggio paid a $1,200 down payment and got a financing plan approved for a $8,000 car from Thrifty Car Sales in Melrose Park, IL, she thought that was the end of negotiations on her loan terms. However, USA Today reports, she got a strange call a few days later. The dealership’s finance manager told her she would have to lie to the finance company about her financial situation in order to get a loan. L’Minggio refused and returned her car, but couldn’t get her down payment back. She went to court and won $13,200 in damages, but when her lawyer went to collect, the dealership was out of business.
Woodstock Institute and Americans for Financial Reform (AFR) reached out to key Senators on Tuesday to express their support for interstate lending reform, which would ensure that out-of-state lenders could no longer supersede state interest rate limits that apply to local banks, credit unions, and other lenders.
Do car dealers charge you an up-front fee before you step onto the lot? Does a real estate agent to charge you a fee before he or she shows you a home? Obviously not. But for years, debt settlement companies have gotten away with charging high fees before providing consumers with any debt relief at all. That’s about to change, however, as the Illinois General Assembly moved to ensure that debt settlement companies get paid for the work they do, not for the work they promise to do in the future, by passing the Debt Settlement Consumer Protection Act (HB4781).
Woodstock Institute president Dory Rand addressed Chicago media to discuss the savings potential of young people when they have access to children’s savings accounts and to announce the creation of a new statewide task force to investigate the issue.
It is likely that the ongoing financial and economic crisis has left a lasting, negative impact financial stability of many of Chicago’s most vulnerable populations, including communities of color. Credit scores, bankruptcy filings, and other issues have become increasingly important to long-term financial stability because they directly impact access not only to credit, but also access to basic banking and even employment.
Woodstock Institute and over 300 local and national consumer and community organizations called for immediate Congressional action on a proposal to put Americans back to work and prevent more layoffs and cuts in crucial frontline services. The proposal, the Local Jobs for America Act (H.R. 4812), would provide $100 billion over two years, creating or saving 750,000 jobs providing local services and 250,000 education jobs.
High-cost credit, extended with no consideration of a borrower's ability to pay it back, has stripped billions in wealth from Chicago region communities since the beginning of the economic crisis. While lending reform is still being debated in Washington, policymakers in Springfield have finally recognized that at least one form of high-cost credit - payday installment lending - cannot continue to operate in Illinois without a basic set of ground rules. The Monsignor John Egan Campaign for Payday Loan Reform agrees and publicly supports one proposal, Senate Bill 655, which will finally put an end to predatory payday installment loans with rates that too often top 1,000 percent.
In the current economic environment, one of the most significant challenges for a new financial institution is raising the substantial level of capital required to begin operations. Currently, a financial institution must be operating to receive certification and be eligible for funding from the Community Development Financial Institution (CDFI) Fund. A recent Woodstock Institute request to Treasury asked to change this policy and allow financial institutions planning to operate as a CDFI to qualify for funding.
Supplemental Security Income (SSI), the Social Security program designed to help the most vulnerable Americans with disabilities meet basic needs, has seen several successful efforts to encourage recipients to work, but still discourages savings, says a recent Woodstock Institute letter to Illinois lawmakers.
Safe, sustainable mortgage lending is an essential ingredient for an economic recovery, and Woodstock Institute’s Online Community Lending Fact Book answers the question on everyone’s mind: “When will lending pick up, and where?”
A coalition of community reinvestment and consumer organizations asked the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC), charged with overseeing consumer protections for national banks, to immediately implement its longstanding, but unenforced, disclosure requirements, advertising standards, and capital requirements for refund anticipation loans. The consumer organizations sent a joint letter on February 4, 2010.
Woodstock Institute recently called on policymakers to approve funds to replace substandard mobile homes with energy-efficient manufactured homes. These new efficiency standards and additional funding would build on successful but limited local efforts to replace mobile homes—often the housing option of last resort for many low-wealth people.
Woodstock Institute has appointed Geoff Smith senior vice president in charge of research and mortgage lending policy, and Tom Feltner vice president overseeing the Institute’s consumer lending policy and public affairs.