Bank Accounts for Payday Loan, Installment Loans, Small Dollar Loans, Consumers…
The CFPB issued a “policy directive” suggesting banks and credit unions do more for consumers lacking bank accounts. This is a laudatory action. Those of us offering payday loans, installment loans, car title loans, line-of-credit, check cashing… know well how difficult this negative situation makes a consumer’s life.
BUT WHAT ABOUT SMALL BUSINESSES! How about bank accounts for lenders, check cashers, gun shops…? Who the hell creates ALL the jobs for these consumers in need of a bank account?
By now, we’re all aware of the devastation the small dollar loan industry has experienced as a result of “Operation Choke Point.” [Here’s a list of ALL the industries attacked by Operation Choke Point.] And everyone knows it wasn’t us who nearly brought down the financial system and then asked for bailouts from taxpayers.
So what’s up with Richard Cordray, head of the CFPB. Why not help consumers by helping all the small businesses who experienced “bank discontinuance?”
Here’s the CFPB’s opening salvo letter to banks and credit unions with a link to the entire letter from Richard Cordray:
February 3, 2016
[Address of financial institution]
Dear [CEO of financial institution]:
I am writing to you and your peers, as leading executives in the banking industry, to bring an important matter to your attention. This letter is not being sent in reference to any sort of regulatory requirement, but instead is simply a suggestion that I urge you to consider in serving your customers.
As you know, each year millions of Americans open new checking accounts, making them one of our most widespread financial products. Right now, much of the industry presents consumers with a binary result – either an applicant passes a standard screening process to obtain an account after identifying any credit risks posed by the applicant’s history of misuse or mishandling of some prior account, or the applicant is blocked from accessing the banking system altogether.
There is, however, a third possibility, which is to offer all applicants a lower-risk account (whether a checking account or a prepaid account) whereby the applicant cannot pose the same level of risk to the institution. Accordingly, the same applicant need not be screened out of the banking system by applying the same risk thresholds that are used to determine eligibility for a standard checking account. Millennials, in particular, seem to be expressing great interest in the availability of such lower-risk products.
This is important because an estimated ten million American households are currently “unbanked.” You know very well that having a checking account or a reloadable prepaid account enables… Here’s the link.
Need help starting or improving your lending business? Reach out to Trihouse Consulting. We’re lenders, operators, consultants and more. Selling your business? Buying a small dollar loan business? Want to learn more? Jer@TrihouseConsulting.com 702-208-6736