Regulators Restrict Bank Payday Lending Practices

CRA & Banking, In the News

 

On 4/25/2013 the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of Currency (OCC) both released a new proposed supervisory guidance on deposit advance products offered by some banks. Comptroller of Currency Thomas J. Curry states, “The guidance today is an important step toward better protecting consumers and enhancing the safety and soundness of national banks and federal savings associations that may be offering similar products.”  The proposed guidance would implement new safeguards to prevent consumers from falling into high-cost debt traps.

 

Deposit Advance products are short-term, small dollar loans that banks make available to customers with recurring direct deposits with the bank.  A recent study by the Consumer Financial Protection Bureau (CFPB) found that deposit advance products and payday loans trap many consumers in a debt spiral because their ability to repay is not taken into consideration. Many consumer advocates say that the deposit advance is nothing more than a payday loan in disguise.  According to Dory Rand, President of Woodstock Institute, “Bank payday loans are predatory products cloaked in the credibility of a mainstream financial institution. While it’s high time for bank payday loans to disappear, the OCC and the FDIC’s proposed guidance takes major steps towards reducing the consumer harm caused by these pernicious products.”

 

The proposed guidance would:

  • Require the bank to assess a borrower’s ability to repay the payday loan while covering living expenses.
  • Limit the number of bank payday loans offered to a consumer to six per year.
  • End Automatic credit limit increases.
  • Investigate whether banks’ payday loans violate any existing consumer protection, federal, or state laws.
  • Outline the safety and soundness risks bank payday products may pose to banks.

 

SLEHCRA, along with many other consumer advocacy groups, had recently submitted CRA public comment letters to the OCC voicing concern about Wells Fargo’s deposit advance product.  The new guidance also has implications for the St. Louis region as Regions Bank, which has branches in the St. Louis region, offers a payday loan product called Regions Ready Advance.  Therefore, SLEHCRA welcomes this proposed guidance from the FDIC and OCC as a way to significantly increase consumer protection both locally and nationally for bank payday products.

FDICs Press Release

OCCs Press Release

Editorial: CRA should not be ‘a thorn in the side’ of any banker

SLEHCRA

The St. Louis Business Journal printed an editorial on February 8th by SLEHCRA member setting the record straight about the Community Reinvestment Act.

In the January 11 issue of the St. Louis Business Journal, an article titled “Banks Pressed to Make More Low-Income Loans” was published. Because of SLEHCRA’s objection to the apparent misunderstanding and misrepresentation of CRA in this article, we decided to respond. Elisabeth Risch, Education and Research Coordinator at the Metropolitan St. Louis Equal Housing Opportunity Council, wrote a response on behalf of SLEHCRA, which was subsequently published in the St. Louis Business Journal on February 8.

Read Elisabeth’s editorial here.

The original article in the St. Louis Business Journal can be found here.

Midwest BankCentre Nov. 17 Grand Opening

CRA & Banking, SLEHCRA

Midwest BankCentre will be opening its first branch in Pagedale, MO on November 17 2012. The branch will be at the Rosie Shields Manor, a senior living facility constructed by Beyond Housing as part of the organization’s 24:1 Initiative. The branch will be the first full-service bank in Pagedale, a milestone in financial inclusion for the community. Midwest will also offer monthly financial education workshops on budgeting, credit management, and identity theft. The grand opening ceremony will be from 10:00 AM to 2:00 PM on Saturday, November 17, and it will include food, games, and other family activities.

The new branch is one of the major steps Midwest BankCentre has made to strengthen its commitment to community reinvestment in St. Louis. Last year SLEHCRA had applauded Midwest BankCentre’s commitments to the community. Today, we applaud the bank for carrying through this important commitment.

St. Louis American’s coverage of the story

Community Members Protest at Business Bank of St. Louis

In the News, SLEHCRA

On Monday, October 22, SLEHCRA member organization Missourians Organized for Reform and Empowerment (MORE) protested at Business Bank of St. Louis for opposing St. Louis County’s foreclosure mediation ordinance. The advocacy group held a protest outside of Business Bank’s office after city police denied them the opportunity to hold a meeting with Business Bank CEO Larry Kirby.

Read the story covered by CBS St. Louis as well as SLEHCRA’s press release on Business Bank.

SLEHCRA has also issued a Public Comment Letter to the FDIC on Business Bank’s CRA performance.

SLEHCRA Mentioned in St. Louis Post-Dispatch

In the News, SLEHCRA

SLEHCRA was recently referenced in a St. Louis Post Dispatch news story on the state of the unbanked and underbanked in the St. Louis area. The article, which came out on September 13 2012, quoted four SLEHCRA members: Jacqueline Hutchinson of Community Action Agency of St. Louis County, Rance Thomas of North County Churches United for Racial Harmony and Justice, Elisabeth Risch of Equal Housing Opportunity Council (EHOC), and Rose Eichelberger of Ready, Aim, Advocate.

SLEHCRA members discussed the current situation with the unbanked and underbanked in St. Louis, the challenges facing the community, and the progress that has been made in bridging the gap and creating more financial inclusion.  The article also mentioned the opening of three new bank branches  in St. Louis county as a result of SLEHCRA’s effort.  The new bank branches mentioned are in Pagedale, Jennings, and Olivette, and they are operated by Midwest BankCentre, First National Bank of St. Louis, and Enterprise Bank and Trust respectively.

Read the full article here.

Report to the Community

SLEHCRA

September 13, 2012 – Today, SLEHCRA releases our first Report to the Community.  This report is a compilation of significant contributions our work has brought to community reinvestment in St. Louis.

Since our formation in 2009, SLEHCRA has influenced change among banks, regulators, and community organizations in how the Community Reinvestment Act works in our community.  The increased accountability for CRA and fair lending has brought new investments to low- and moderate- income communities and minority communities, including new bank branches, new products designed to meet the needs of underserved families, increased regulatory oversight for community reinvestment, and more.

Learn more about SLEHCRA’s work, what we’ve accomplished, and how you can get involved as we move forward towards creating stronger communities.

Download the full report and executive summary here:

SLEHCRA Report to the Community (September 2012) [PDF]

Executive Summary [PDF]

SLEHCRA Reports to the Community

SLEHCRA

Join us on September 13, 2012 for SLEHCRA’s first report to the community.

Come learn about the Community Reinvestment Act (CRA), hear how SLEHCRA has helped increase financial inclusion in St. Louis, and find out how you can be involved.

Thursday, September 13, 2012, 6 PM – 7 PM

CU Excel Center, 95 North Oaks Plaza, St. Louis, MO 63121

Stella Adams to Present Community Investment Workshop

SLEHCRA

SLEHCRA presents…

Community Investment Workshop

How to collaboratively use the Community Reinvestment Act, Section 3, and Affirmatively Furthering Fair Housing requirements to increase community resources.

Wednesday, May 23, 2012
9:00 AM – 11:00 AM
Mt. Bethel MB Church
1600 Belt Ave., St. Louis MO 63112

FREE

please register online at www.acteva.com/go/ehoc

Come hear from renowned social and economic justice advocate, Stella Adams, about increasing investment in low-income and minority communities. Through the collaborative use of the Community Reinvestment Act, Section 3, and the Fair Housing Act, community organizations will learn how to work together to increase access to financial services, economic opportunities, and strong diverse communities. By working together and using these public leverage tools, we can effectively transform our under-served communities.

Stella Adams is the Director of the Patricia Roberts Harris National Fair Housing Training Academy and a Senior Program Manager at the Graduate School USA. Ms. Adams is also the founder and CEO of S J Adams Consulting which performs research and policy development in the areas of fair housing, fair lending, and civil rights. Ms. Adams is a sought after speaker and has been the keynote speaker at numerous fair housing and fair lending conferences across the country. She has presented at national and regional conferences sponsored by HUD, Federal Reserve Banks, NAACP, Mortgage Bankers Association, and others.

Ms. Adams is a nationally recognized expert on the Fair Housing Act and its implementing regulations. She is also one of the leading authorities on predatory lending and mortgage fraud investigative techniques in the country. Over $60,000,000 was recovered by the NC Attorney General based on predatory lending investigations conducted by the North Carolina Fair Housing Center which she led from 1994-2007.

Flyer – Community Investment Workshop May 23

SLEHCRA Announces Agreement with Reliance Bank

Press Releases, SLEHCRA

Reliance Bank and SLEHCRA announce Community Reinvestment Partnership

to broaden services for low-income and minority individuals, businesses and families

(Nov. 29, 2011) — Reliance Bank and the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) today announce a Community Investment Partnership to provide financial education and new financial services and products to low-income and moderate-income individuals, families and businesses.

With the Community Reinvestment Partnership, Reliance Bank and SLEHCRA member organizations are working together to broaden the delivery of mainstream financial services and help more people gain access to banking products.

Through the Partnership, Reliance will broaden its offerings of financial products for low- and moderate-income individuals and families and for minority-owned businesses. These new products will include a small business lending program, expanded mortgage products and services and new checking and savings account offerings.

The initiative also includes an outreach effort to provide targeted financial literacy for businesses and individuals, with community-based classes that will provide advice on budgeting, savings, home-buying and financial planning.

To achieve these goals, Reliance will expand its marketing to include African-American and Hispanic media outlets.

“Reliance is committed to delivering sound financial products that will support business and community growth,” said Reliance President and Chief Executive Officer Allan D. Ivie, IV. “This Partnership honors the goals of the Community Reinvestment Act and fair lending laws and provides a road map to increasing financial opportunities for families and business owners.”

Will Jordan of the Metropolitan St. Louis Equal Housing Opportunity Council, a SLEHCRA member organization, said the Partnership will help meet a critical need. “Our coalition worked closely with Reliance Bank to create this plan for better banking services and resources for our community. Too many people in our community do not have access to quality and affordable financial services. Institutions need to be doing a better job at meeting these needs. We are happy that Reliance Bank is making a difference, and we look forward to working with them to meet the goals of this Partnership.”

About the Partners

Reliance Bank, headquartered in St. Louis, MO, is a wholly owned subsidiary of Reliance Bancshares, Inc., a publicly held Missouri bank holding company that provides a full range of banking services to individual and corporate customers. It operates 20 branches in the St. Louis Metropolitan area. The company’s website can be found at www.reliancebankstl.com.

The St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) is a coalition of non-profit and community organizations that works to increase investment in low-income and minority communities. SLEHCRA regularly works with banks to ensure they are meeting obligations under the Community Reinvestment Act and fair housing laws. Learn more at our website: www.slehcra.org

Press Release [PDF]