WASHINGTON (June 4, 2013) –– Today, former U. S. Rep. Joe Baca, CEO of the Financial Services Innovation Coalition, delivered a letter to Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB). Baca urged Director Cordray to extend the policy focus of the CFPB to include an assessment of affordable credit solutions for the millions of low- to middle-income consumers whose credit needs are no longer profitable to large, money center banks.
The text of Baca’s letter to Cordray reads as follows:
“After reading the CFPB’s findings in its April 24 report, “Payday Loans and Deposit Advance Products,” I must say I couldn’t agree more with what you found. For the past four years, I have been working to find a solution that bridges the gap between the short-term, or transient, credit needs of the more than 70 million unbanked consumers who seek affordable credit solutions with the business interests of those whose service models offer reasonable rates for this consumer class.
“I know congress has instructed you to review and regulate the payday loan industry and I commend your work thus far. However, I urge you to dig deeper and examine the more relevant question, “If not a payday loan, then what?” Just saying no to the payday loan industry is not enough.
“I was the first lawmaker to begin to answer this question when, in 2011, I worked to craft H.R. 1909. This was the first comprehensive legislation that offered a path forward to provide affordable credit solutions to underbanked consumers. In 2012, we adopted recommendations to strengthen this legislation and that revised bill gained increased bipartisan support. It was reintroduced, in 2012, as the “Consumer Credit Access, Innovation, and Modernization Act.” Last month, this legislation was reintroduced in the 113th Congress, again with bipartisan support, as H.R. 1566.
“Director Cordray, to your great credit, your office has done an effective job of analyzing and documenting some of the abuses of the payday loan industry and we applaud the oversight and monitoring work of the CFPB. At the same time, we think the CFPB is well positioned to shine a spotlight on the growing network of microlenders—both for profit and non-profit—who are providing affordable credit solutions that are both profitable for the lender while being careful not to trap consumers in excessive, long-term agreements that harm their family balance sheets.
“We invite you to join us to tour some of the market innovation that’s taking place in the U.S. economy on this front. If you do, we know you’ll see, first hand, what we see which is a committed network of visionary men and women who believe that every consumer deserves affordable credit solutions.
“The FSIC looks forward to working with the CFPB and other state and federal policy makers, and community leaders, to help craft solutions that meet unbanked consumers’ credit needs.”
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