Today, the CFPB published a notice indicating that it will review bundled financial products and services. The CFPB is seeking comments on its plans to survey “low-income, underserved consumers” about their savings, credit score, and size of their debt to income ratio for the purpose of understanding whether such bundled products and services have an impact on asset building and financial capability. The CFPB is accepting comments on the planned survey through September 30, 2013.
On October 11, the New York Bankers Association filed a complaint in the U.S. District Court for the Southern District of New York to block a local ordinance that requires banks doing business with the city to report certain information about their banking and lending activities. In May 2012, the New York City Council approved, over the Mayor’s veto, an ordinance that establishes a Community Investment Advisory Board (CIAB) with authority to collect certain information from deposit banks. The information the CIAB is directed to collect relates to each deposit bank’s efforts to, among other things, (i) meet small business credit needs, (ii) conduct consumer outreach and other steps to provide mortgage assistance and foreclosure prevention, and (iii) offer financial products for low and moderate-income individuals throughout the city. The ordinance also directs the CIAB to (i) perform an assessment on whether such deposit banks are meeting the credit, financial, and banking services needs throughout the city, and (ii) publish the assessment and the information collected from each deposit bank. The results of these evaluations may be considered to determine whether a deposit bank is eligible to receive some of the city’s more than $6 billion worth of deposits.
The New York Bankers Association argues that in allowing the CIAB to collect information to assess the banking needs of certain residents and businesses, the ordinance grants the CIAB regulatory powers that are not relevant to the quality and pricing of the services that banks provide to the city. The Association argues that the ordinance converts the city from a market participant to an examiner and regulator of banks. As such, the ordinance conflicts with and is preempted by federal and state laws that exclusively regulate federal and state chartered depository institutions. The complaint asks the court to declare the ordinance invalid and preempted by state and federal law, and to enjoin the city from implementing the ordinance.
On May 15, the cities of New York and Los Angeles adopted ordinances that will require banks doing business with those cities to report certain information about their banking and lending activities. In New York, the City Council adopted a Local Law that, once approved by the mayor or passed over the mayor’s veto, will establish a community investment advisory board comprised of city officials, banking industry representatives, community development or consumer protection groups, and small business owners. The board will assess the banking needs of the city and evaluate the performance of the city’s depository banks in meeting those needs. To conduct the assessment and evaluation, the board will collect from depository banks information regarding each institution’s efforts to, among other things, (i) meet small business credit needs, (ii) conduct consumer outreach and other steps to provide mortgage assistance and foreclosure prevention, and (iii) offer financial products for low and moderate income individuals throughout the city. The board will be required to publish the information collected and prepare an annual report, which city officials can consider in deciding with which institutions the city will place its deposits. The ordinance adopted by the Los Angeles City Council establishes a monitoring program headed by the City Treasurer. Under the program, a depository bank doing business with the city or wishing to do so will be required to report each year information regarding its small business, mortgage, and community development lending, as well as information about its participation in foreclosure prevention and principal reduction programs. Investment banks will be required to file a statement describing their corporate citizenship in areas such as participation in charitable programs or scholarships and internal policies regarding the utilization of subcontractors designated as women-owned, minority-owned, or disadvantaged businesses. The disclosures will be posted online for public viewing within 30 days of the beginning of each new fiscal year. The cities of Cleveland, Pittsburgh, Philadelphia, and San Diego already have laws in place designed for the same general purposes, and other cities are considering similar laws.