Sept. 25, 2012 – A Regulation Z rule on credit card applicants that NAFCU has long expressed opposition to is “a significant problem,” acknowledged Consumer Financial Protection Bureau Director Richard Cordray at a House Financial Services Committee hearing last week.
Cordray touched on the rule while testifying last Thursday on the CFPB’s second semiannual report of bureau activities.
The rule, which took effect last Oct. 1, was promulgated under the Credit CARD Act of 2009. It excludes household income from the factors that can be used to determine a credit card applicant’s ability to repay credit card debt, but requires that creditors take into account all household liabilities in making that determination.
NAFCU urged against adoption of the rule while the Federal Reserve was considering it and later in comments to the Consumer Financial Protection Bureau. In June, NAFCU President and CEO Fred Becker wrote a letter about the rule to the leaders of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Becker told subcommittee Chairman Shelley Moore Capito, R-W.Va., and Ranking Member Carolyn Maloney, D-N.Y., that the rule essentially punishes one-income households, and has “an especially disproportionate impact on women and spouses that do not work outside of the home.”
At Thursday’s hearing, both Capito and Maloney raised the issue of the rule with Cordray, pointing out that it could limit the ability of stay-at-home mothers to get credit and should be rewritten. Cordray agreed, noting that the CFPB has determined that “it is a significant problem…tens if not hundreds of thousands of Americans have been denied access to credit as a result of the rule.”
NAFCU will continue to communicate with the CFPB on this and other rules impacting credit unions.