September 2014 – September 2015

Annual report of the 

Consumer Advisory 

Board
1 CONSUMER FINANCIAL PROTECTION BUREAU 

Letter to the Director from 

Consumer Advisory Board 

Chair and Vice Chair

Richard Cordray, Director 

Consumer Financial Protection Bureau 

1700 G Street, NW

Washington, D.C. 20552

Dear Director Cordray, 

On behalf of the Consumer Advisory Board (CAB or Board), we are honored to present our 

annual report, which details the activities and progress made during the past reporting year. 

During this year, the CAB continued to focus on ensuring that the Bureau had the benefit of our 

best advice on a variety of consumer financial issues and emerging market trends as it carries 

out its mission to protect consumers and make consumer financial markets work for consumers. 

The CAB met three times this year: twice in Washington, D.C. and once in Omaha, Nebraska. 

Having engagements in the field where consumers live and work, like the one we did in June 

2015 in Omaha, continues to add significant value to our work. While in Omaha, we had the 

opportunity to hear from local advocates, industry leaders, and members of the community and 

learned about a wide range of issues impacting consumers in Nebraska. 

As in prior years, in addition to our full Board meetings, the CAB worked through its three 

committees: Cards, Payments and Deposit Markets; Consumer Lending; and Mortgages. 

Through these committees, the CAB has continued to engage meaningfully among its members 

and with Bureau staff through in-person meetings and conference calls, providing our collective 

and individual perspectives on the ongoing work of the CFPB. Our committees focused on 

identifying key observations and principles for regulation on a range of topics, such as small 

dollar lending (payday), consumer reporting, alternative data, mortgage origination and 

servicing, faster payment principles, prepaid cards, and innovation in financial technology. 
2 CONSUMER FINANCIAL PROTECTION BUREAU 

This annual report provides greater detail about these committee discussions. Meetings of the 

full CAB were open to the public and are reflected in summaries posted to consumerfinance.gov. 

Thank you for the opportunity to serve consumers through the CAB. We look forward to what 

next year brings and continuing to fulfill our shared mission of protecting consumers in the 

financial marketplace. 

Sincerely, 

 

William J. Bynum, Chair Maeve Elise Brown, Vice Chair
3 CONSUMER FINANCIAL PROTECTION BUREAU 

Table of contents

Letter to Director from CAB Chair and Vice Chair ................................................1

Table of contents.................................................................................................. 3

1. Executive Summary.............................................................................................................. 4

2. Role of the Consumer Advisory Board ................................................................................. 6

3. Committees............................................................................................................................7

4. Conclusion ......................................................................................................14

Appendix A: ........................................................................................................15

Consumer Advisory Board Biographies ..................................................................... 15

Appendix B: ....................................................................................................... 22

Consumer Advisory Board written statements ..................................................... ....22

Appendix C:.............................................................................................................................. 23

CAB Consumer Lending Committee’s summary document.... ................................. 23
4 CONSUMER FINANCIAL PROTECTION BUREAU 

1. Executive summary 

The Consumer Financial Protection Bureau (CFPB or Bureau) is the nation’s first federal agency 

focused solely on consumer financial protection.1The Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act) created the CFPB to protect consumers of financial 

products and services and to encourage the fair and competitive operation of consumer financial 

markets. The Bureau’s mission is to help consumer finance markets work by making rules more 

effective, by consistently and fairly enforcing those rules, and by empowering consumers to take 

more control over their economic lives.

The CFPB’s Consumer Advisory Board is authorized by §1014(a) of the Dodd-Frank Act. The 

Consumer Financial Protection Bureau’s Consumer Advisory Board (CAB or Board) was 

chartered and established in September 2012. The statutory purpose of the CAB is “to advise 

and consult with the Bureau in the exercise of its functions under the Federal consumer 

financial laws, and to provide information on emerging practices in the consumer financial 

products or services industry, including regional trends, concerns, and other relevant 

information.”2

In fulfillment of its responsibility as articulated in Section 14 of the CAB Charter and of the 

CFPB’s commitment to transparency, the CFPB’s Consumer Advisory Board is pleased to 

present its Annual Report to the Director. This report primarily summarizes the activities and 

progress of the Board’s committee meetings held over the last reporting year, September 2014 to 

September 2015. The discussion portion of the report is divided into sections aligned with the 

CAB’s statutory responsibilities, and the report also includes, in Appendix B, separate written 

statements submitted by Board members relating to the report. 

In this last reportingyear, the Consumer Advisory Board:

• Held three meetings – September 2014 in Washington, D.C., February 2015 in 

Washington, D.C., and June 2015 in Omaha, NE. 

 

1 Previously, seven different federal agencies were responsible for rulemaking, supervision, and enforcement relating 

to consumer financial protection. The agencies which previously administered statutes transferred to the Bureau are 

the Board of Governors of the Federal Reserve System (Federal Reserve, Federal Reserve Board, or Federal Reserve 

Board System), Department of Housing and Urban Development (HUD), Federal Deposit Insurance Corporation 

(FDIC), Federal Trade Commission (FTC), National Credit Union Administration (NCUA), Office of the Comptroller 

of the Currency (OCC), and Office of Thrift Supervision (OTS). 

2 Dodd-Frank Act, Pub. L. No. 111-203, § 1014(a). 
5 CONSUMER FINANCIAL PROTECTION BUREAU 

• Organized three policy committees, which have each met approximately twenty times: 

o Cards, Payments, and Deposits Committee;

o Consumer Lending Committee; and

o Mortgages Committee.

• Examined and discussed a variety of topics and issues including:

o Trends and themes in financial services;

o Home Mortgage Disclosure Act Database and rulemaking;

o Know Before You Owe (TILA-RESPA Intergrated Disclosures);

o Mortgage Settlement booklet;

o Marketing services agreements;

o Arbitration;

o Overdraft;

o Marketplace lending;

o Limited English Proficiency issues;

o Financial Education;

o FOIA and ethics review;

o Credit invisible consumers;

o Small dollar lending; 

o Innovation in financial technology;

o Alternative data;

o Debt collection; 

o Student lending;

o Virtual currencies; 

o Prepaid cards; and

o Consumer complaint operations.

Detailed summaries of the above topics discussed during full Board meetings can be found at 

consumerfinance.gov/advisorygroups.

This report fulfills the Consumer Advisory Board charter requirement to submit an annual 

report to the Director.

Members of the community shared their views at the June 2015 Consumer Advisory Board meeting in 

Omaha, NE. 
6 CONSUMER FINANCIAL PROTECTION BUREAU 

2. Role of the Consumer 

Advisory Board 

Section 1014(a) of the Dodd-Frank Act states: 

The Director shall establish a Consumer Advisory Board to advise and consult with the Bureau 

in the exercise of its functions under the Federal consumer financial laws, and to provide 

information on emerging practices in the consumer financial products or services industry, 

including regional trends, concerns, and other relevant information.3

The Consumer Advisory Board provides feedback on a range of topics, including consumer 

engagement, policy development, and research, from a range of external stakeholders including 

academics, industry participants, community members, and consumer advocates. The CAB

consults on a variety of cross-cutting topics, reports on meetings, and provides minutes and/or 

summaries of their meetings. Members of the Bureau’s Board serve for limited, specified terms. 

 

3 Dodd-Frank Act, Pub. L. No. 111-203, § 1014(a).

Consumer Advisory Board member, Gene Spencer speaking at a CAB meeting on Thursday, February 9, 

2015 in Washington, D.C. 
7 CONSUMER FINANCIAL PROTECTION BUREAU 

3. Committees 

Based on the success of the 2013 CAB Committees, the CAB again organized committees as 

authorized by section 13 of its charter, which allows the Board to establish and dissolve 

committees in consultation with the Bureau. As provided in the charter, committees report to 

the Board (not directly to the Bureau) and may include participants who are members of the 

Board and/or staff of the Bureau. Committees may, from time to time, call on individuals who 

are not members of the Board or staff of the Bureau, for the sole purpose of providing specific 

domain expertise and knowledge.

The charter directs that each committee will be led by a committee Chairperson who shall be 

appointed and may be removed by the Chairperson of the Board. Meetings of the Board’s 

committees will be called by the committee Chairperson and shall be conducted via 

teleconference unless the Bureau’s staff and committee Chairperson determine that an inperson meeting is necessary.

Following the process outlined in the CAB charter and bylaws, members of like expertise and 

backgrounds are organized into three committees: Card, Payments, and Deposit Markets; 

Consumer Lending; and Mortgages. The schedule of CAB committee meetings follows below.

Consumer Advisory Board Committee Meetings

[This table includes in-person meetings]

Cards, Payments, and 

Deposit Markets Consumer Lending Mortgages

November 20, 2014 November 13, 2014 November 6, 2014

January 28, 2015 January 29, 2015 February 5, 2015

February 18, 2015 February 18, 2015 February 18, 2015

June 17, 2015 April 1, 2015 April 23, 2015

August 3, 2015 April 29, 2015 June 17, 2015

May 26, 2015 September 17, 2015

June 17, 215

August 20, 2015

September 22, 2015
8 CONSUMER FINANCIAL PROTECTION BUREAU 

In January 2015, each committee chair led a process to identify committee priorities, including 

issues about which committee members wished to learn more, to identify and highlight trends, 

and to raise issues with Bureau staff members. The reporting year’s priorities are outlined 

below.

• Cards, Payments, and Deposit Markets

The Cards, Payments, and Deposit Markets Committee focused on work relating to 

prepaid cards, mandatory arbitration and class action waivers, third party payments,

financial industry data breaches, financial technology, and virtual currencies.

• Consumer Lending

The Consumer Lending Committee focused on work relating to the consumer lending 

lifecycle, fromorigination to collection. Specific issue areas included student loan 

servicing, alternative data, and small dollar lending. 

• Mortgages

The Mortgages Committee focused on work relating to Title XIV mortgage reforms,

collaborated and provided feedback during the design of the Your Home Loan Tookit

and the Spanish translation, discussed the effects of GSE down payment revisions and 

mortgage insurance reductions, marketing services agreements and their impact to 

consumers and real estate markets, access to credit issues, Know Before You Owe,

foreclosure and servicing issues post recent RESPA regulations, as well as analyzing the 

impact of CFPB enforcement actions in the mortgage markets more generally.

Over the course of the year, all of the committees made progress on their agendas. What follows 

are summaries of the reporting year’s CAB Committees’ work. 

Cards, Payments, and Deposit Markets Committee

The Card, Payments and Deposits Committee met five times between September 2014 and 

September 2015, twice in person as part of CAB meetings and three times by phone. Committee 

membership changed in January 2015. The final meeting of 2014 was a discussion with 

Professor Dan Ariely of Duke University, which focused on the manner in which consumer

behavior with respect to financial products—especially spending and saving—is influenced by 

both environmental factors and structures built into financial products.
9 CONSUMER FINANCIAL PROTECTION BUREAU 

The 2015 meetings covered the Bureau’s regulatory proposal on prepaid products, the upcoming 

Credit Card study and the published Arbitration study, the Guiding Principles for Faster 

Payment Networks published by the Bureau in July, improving the financial products 

experience of the elderly, and the implications of innovation in financial services and the 

Bureau’s options to encourage positive innovation and discourage innovation that could harm 

consumers. In connection with the latter, the Committee engaged in an on-line conversation 

with Jake Fuentes, CEO of Level Money.

The unifying theme of much of the Committee’s work was the impact the Bureau is having and 

can have on a fast-changing financial services environment, and in particular how the Bureau 

can ensure that consumers are well served. With respect to the Arbitration Report, for example, 

the Committee considered the extent to which the Bureau’s existence, its rulemaking and 

supervisory actions, and the consumer complaint handling system impact the efficacy of and 

need for class actions (in contrast to arbitration) to protect consumers. The Committee will 

continue to work with the Bureau on this topic as it considers proceeding to rulemaking.

With respect to the elderly, the Committee’s focus has been on helping the Bureau best 

understand how to effectively reach the elderly (for example, to prevent elder financial abuse) 

and also the pitfalls that innovation and technology could present for older users of financial 

services. For example, will those whose fingerprints have faded be able to use fingerprint 

identification technology, will the print on mobile screens be large and clear enough for older 

eyes to read, and will faster payment technology limit the ability to prevent scams aimed at the 

elderly? 

Most broadly, the Committee has been advising the Bureau on strategies to ensure that there are 

positive synergies between innovation and consumer protection. These include embedding 

incentives into liability structures so that, for example, the creators and operators of new and 

faster payment systems maximize protection against fraud; working with other regulators and 

the industry to make sure that consumer voices are heard as systems, operating agreements and 

regulations are being developed, rather than coming in after the fact; focusing attention on data 

security and privacy; paying attention to the channel effects of innovation and the impact on 

consumers of changing channels for financial services delivery (including in particular the role 

of mobile and of non-depositories); and better understanding consumer behavior and how 

consumers understand, use and interact with technology.
10 CONSUMER FINANCIAL PROTECTION BUREAU 

Consumer Lending Committee

The Consumer Lending Committee met nine times between September 2014 and September

2015, twice in person as part of CAB meetings and seven times by phone. Committee 

membership changed in January 2015 to account for newly appointed members. During this 

timeframe, the committee discussed important topics in the consumer financial marketplace 

such as student loan servicing, alternative data, and small dollar lending. A majority of the 

committee’s time was spent on small dollar lending given the CFPB’s March 2015 

announcement that it would be considering proposals to regulate small dollar loans. 

In November and December 2014, the committee spent two meetings focused primarily on the 

student lending marketplace, particularly on servicing. An expert in the student lending and 

servicing field briefed the committee during this timeframe.4 Committee members received an 

overview about the expert’s company, which provides private student loans to the higher 

education industry. The committee discussed ways in which private student lending could be 

done in a responsible manner by providing frequent disclosures of the amounts borrowed and 

by providing flexible repayment plans if the student encounters financial difficulties. 

Then in January and February 2015, the committee focused on preparing for 2015 and 

deliberated on which topics in the consumer lending marketplace would be discussed. The 

committee began with its attention on alternative data. Committee members reviewed how this 

data is being used today and how it might be used in the future for consumer loan underwriting, 

with a particular focus on small dollar lending. 

In March 2015, after the CFPB announced that it was considering proposals for small dollar 

lending through the Small Business Regulatory Enforcement Fairness Act (SBREFA) process, 

the committee focused on this issue. Robust committee discussions on this topic occurred over 

several meetings, which led to an outline of principles and considerations. These principles and 

considerations were presented and discussed during the Consumer Lending Committee session 

of the June 2015 Consumer Advisory Board meeting in Omaha, Nebraska. Details of this 

 

4During the CAB Consumer Lending Committee call on December 5, 2015, Joe DePaulo, CEO of College Ave Student 

Loans, was the expert in student lending and servicing. 
11 CONSUMER FINANCIAL PROTECTION BUREAU 

discussion are outlined in the June 2015 meeting summary. The committee has also included 

the summary document that was used by the committee for the meeting as an appendix to this 

report. 5 The input and feedback discussed during the Consumer Advisory Board at the June 

2015 meeting spanned four areas: consumer impact, areas where there is still potential for 

consumer harm, the proposal’s impact on the small dollar lending industry, and the future of the 

small dollar lending marketplace. Input from the Consumer Advisory Board has been 

incorporated as well. 

In September 2015, the committee met for the last time during this reporting period and 

received a briefing by CFPB staff on the Department of Defense’s final rule relating to the 

Military Lending Act. Committee members also shared their thoughts about the year’s work and 

ended the meeting with appreciations for the service of those committee members with expiring

CAB terms.

Mortgages Committee

The Mortgages Committee met six times between September 2014 and September 2015, twice in 

person and four times by phone. This year the CAB’s Mortgages Committee focused on (1) work 

related to new education materials for potential home buyers, (2) continuation of Title XIV 

mortgage reform implementation, (3) policy changes relating to down payment requirements,

and (4) marketing services agreements (MSAs) in relation to RESPA Section 8 prohibitions. 

Summaries of the discussions in each of these areas are below. Observations on servicing issues 

and differences in the recovery of particular segments of the housing market were common 

themes during the committee discussions.

(1) New educational materials for potential home buyers:

• Committee members had the opportunity to review an early draft and 

provided feedback to CFPB staff on the “Your home loan toolkit,” a step-bystep guide. The toolkit was created to help potential home buyers make 

better choices along their path to owning a home. The toolkit helps home 

 

5 See Appendix C for the CAB Consumer Lending’s summary document on small dollar lending. Please note that the 

summary document does not reflect consensus views of the committee or the CAB. Additionally, it does not 

represent the views of the CFPB. 
12 CONSUMER FINANCIAL PROTECTION BUREAU 

buyers know the most important steps that need to be taken to get the best 

mortgage for their situation. The goal is that potential home buyers who read 

the toolkit will be better able to understand the costs of financing a home

purchase. The toolkit includes a description of the five-page Closing 

Disclosure which sums up the terms of the loan and what the borrower will 

pay at closing, making it is easier for a borrower to confirm the details of the 

loan. 

• Members also discussed and provided feedback for the Spanish-language 

version of of the “Your home loan toolkit,” and discussed the possibility of the 

creation of materials and disclosures in langagues other than English. 

(2) Implementation of the Title XIV mortgage rules:

• Committee members shared their observations about industry 

implementation of the new regulations and training sessions. 

• Committee Members raised concerns about the availability of smaller loans 

and the cost of smaller loans. 

• Members discussed concerns about the prospect of allowing safe harbor 

treatment for loans that are held on balance sheets by any lender of any size, 

rather than those made by non-profit agencies. 

(3) Policy changes relating to down payments:

• Committee members discussed changes in policy including the Fannie Mae 

and Freddie Mac announcement in late 2014 on expanding the availability of 

certain loans with a maximum loan-to-value (LTV) ratio of 97%. The Federal 

Housing Administration (FHA) followed with an announcement in the 

beginning of January of 2015 to reduce annual mortgage insurance premiums 

(MIPs) by 0.5% on new loans. These changes were made to expand access to 

mortgage credit and make monthly mortgages more affordable to qualified 

and creditworthy borrowers. Committee members discussed access to credit 

and particular challenges that low-income households have experienced in 

achieving homeownership.

(4) Marketing services agreements (MSAs):

• Committee members discussed MSA practices and loopholes in the RESPA 

Section 8 prohibition on kickbacks and referral fees. Some members express 

an interest in eliminating the MSA practice completely. Additionally, 

members discussed adding requirements, such as disclosure, to create more 

transparency to the consumer. 

• Servicing:

• Committee members discussed the disproportionate cost of servicing lowbalance loans, and urged CFPB staff to research and determine the average 
13 CONSUMER FINANCIAL PROTECTION BUREAU 

cost of servicing low-balance loans and best practices to reduce the cost of 

servicing.

• Access to Credit:

• Committee members discussed differences between markets relating to 

apprisls and the possibility that appraisers may have over corrected. Access to 

credit for consumers with Limited English Proficiency (LEP) continues to be a 

concern for committee members. 

• Some committee members highlighted that consumers with LEP issues may 

be less likely to have established credit relationships than English speakers.
14 CONSUMER FINANCIAL PROTECTION BUREAU 

4. Conclusion

In closing, in its third year, the Consumer Advisory Board has continued to share vital advice, 

expertise, and technical information with the Bureau and its staff. Board members would like to 

thank the Consumer Financial Protection Bureau for the chance to help further the Bureau’s 

mission of helping to make markets for consumer financial products and services work for 

Americans. This joint report and attached individual remarks are presented in the spirit of 

cooperation and collaboration. 
15 CONSUMER FINANCIAL PROTECTION BUREAU 

APPENDIX A:

Consumer Advisory Board 

Biographies6

Chairperson Bill Bynum currently serves as CEO of Hope EnterpriseCorporation/Hope

Federal Credit Union in Jackson, MS, a position he has held since 1994. Previously,Mr. Bynum

held positions as Director of Programs for the NC Rural Economic Development Center in 

Raleigh, NC and the Associate Director of Self- Help in Durham, NC. From 2002-2012 he served

as chairman of the Treasury Department’s Community Development Advisory Board.

Vice Chairperson Maeve Brown currently serves as ExecutiveDirector of the Housing and 

Economic Rights Advocates, an organization that she co-founded in 2005. She has over 25

years as a public interest attorney, in varies organization in Southern and Northern California.

She has published articles on affordable housing issues and authored a chapter in the American

Bar Association's Legal Guide to Affordable Housing Development (first edition and updated),

is bilingual in Spanish and French and conversant in Japanese, Farsi, Italian and German.

Gary Acosta currently serves as the CEO and co-founder of the National Association of Hispanic

Real Estate Professionals (NAHREP). NAHREP is the nation’s largest minority real estate trade

association. In 2012, Mr. Acosta received the Investing in Communities Award from the Mortgage

Bankers Association and was recognized as one of the 100 most influential Hispanics in America

by Hispanic Business Magazine. He currently sits on the Diversity Committee of the MBA and

the Board of Governors for the National Housing Conference.

Ann Baddour is state director of financial access programs at Texas Appleseed, a public

interest law center, where she has overseen projects aimed at bringing low-income and 

 

6 Consumer Advisory Board biographies reflect the membership of the CAB between September 2014 and September 

2015. 
16 CONSUMER FINANCIAL PROTECTION BUREAU 

immigrant consumers into the financial mainstream since 1999. She is actively involved in

reform of regulations governing payday and auto title lending in Texas to build greater

consumer protection into these transactions. Her work in the areas of immigrant financial 

education and improving consumer disclosure and protection in remittance transactions has

been instrumental in laying the groundwork for national oversight of remittances. She has

presented at economic and asset building conferences across the United States and in Benin,

Mexico, and the European Union. She has been recognized for her work by the FDIC and the 

El Paso Invest in the American Dream Initiative. Prior to working for Texas Appleseed, she

was a research analyst with the Texas Legislative Council.

Jo Ann Barefoot is CEO of Jo Ann Barefoot Group LLC in Washington, DC. She previously 

was Co-chair of Treliant Risk Advisors, Partner and Managing Director at KPMG Consulting 

and CEO of Barefoot Marrinan & Associates. Ms. Barefoot also served as staff member at the 

U.S. Senate Banking Committee’s Subcommittee on Housing and Urban Affairs. In 1978, Ms. 

Barefoot became the first woman Deputy Comptroller of the Currency, leading the OCC’s 

newly-formed consumer protection unit. Ms. Barefoot serves on the Board of the Center for 

Financial Services Innovation (CFSI). Beginning in July 2015, Jo Ann will also be a Senior 

Fellow at the Mossavar-Rehmani Center for Business & Government at Harvard University’s 

John F. Kennedy School of Government. In that role she is writing a book on consumer 

protection regulation and innovation, in addition to her other writing and consulting.

Don Baylor, Jr. currentlyserves as aSeniorAssociateattheUrbanInstitute,whereheco-leads their

State&LocalPolicy AdvisoryGroup. Hepreviouslyworkedat the Austin-based Center for Public

Policy Priorities as a lobbyist, policy analyst, and Director of OpportunityTexas. Mr. Baylor’s

prior positions include LegislativeDirector for the New York, Association of Community

Organizations for Reform Now (NY ACORN) and Senior Consultant for KPMG Public Sector

Consulting Practice in Sacramento,CA.

Steve Carlson is the co-founder and CEOofAscend Consumer Finance, and currently advises a

number offin-tech start-ups. Prior toAscend,he was atIntuit wherehe ledMarketing andBusiness

Developmentfor Mint.comand Quicken. Additionally,Mr.Carlson has held senior executive roles at

HSBCand Washington Mutual, and has advised a range offinancial services firms, as the co-founder

of SungCarlsonAssociates.

Laura Castro de Cortés currently serves as Director of Business Product Development for

Meta Payment Systems. She was President of Latino Banking Solutions (LBS), whose clientele

has included Wells Fargo Bank, Allied Insurance Group, Principal Financial Group, Brotherhood

Bank and Trust, Liberty Bank and many more banks throughout the Midwest. Prior to Latino

Banking Solutions, Castro de Cortés was Vice President of Emerging Markets with Centris

Federal Credit Union. Laura was also director of Latino Banking for Commercial Federal Bank, a

$13.3 billion dollar federal savings bank in Omaha, NE.

Elizabeth Costle currently serves as Senior Advisor at the AARP Public Policy Institute

where she specializes in age-friendly banking and other consumer issues. Previously,Ms. 

Costle served as Vermont Commissioner of Banking,Insurance, Securities and Health Care
17 CONSUMER FINANCIAL PROTECTION BUREAU 

Administration. Ms. Costle has also worked as a Senior Consultantfor Health Insurance

Policy in the Office of Policy and Representationat Blue Cross Blue Shield Association; as

Assistant General Counsel at Fannie Mae; as General Attorney at Satellite BusinessSystems;

and as an Associate at Arnold & Porter.

Prentiss Cox is currently an Associate Professor of Law at the University of Minnesota Law

School, where he has taught since 2005 and directs the Consumer Protection Clinic.

Previously, Mr. Cox served as the Manager of the ConsumerEnforcement Division for the

Minnesota Attorney General’s Office. He has also served as a Judicial Clerk for the

Honorable P.H. Marshall at the United States District Court for the Northern District of

Illinois. Mr. Cox is the author of a number of publications on a range of financial topics, 

including fraud, deceptive practices, and foreclosures.

Patricia Garcia Duarte has served as President and CEO for Trellis (formerly 

Neighborhood Housing Services of Phoenix) since 2006. Previously, she worked as the 

Arizona Manager for the Community Partnerships Office at JPMorgan Chase/Bank One. 

She has held various housing and economic development responsibilities with Mercy 

Housing South-West; Neighborhood Housing Services of Phoenix; and Chicanos Por La 

Causa, Inc.

Julie Gugin currently serves as the Executive Director of the Minnesota Homeownership

Center, a position she has held since 2007. She has over 20 years of non-profit leadership 

experience; previous positions include Vice President of Operations for Twin Cities

Habitat for Humanity and Director of Supportive Housing at the Wilder Foundation. She

is a co-founder of the Framework Homeownership, LLC, a non-profit technology start-up 

company for homebuyer education. She co-chaired the statewide Minnesota Foreclosure

Partners Council and currently serves on the National Industry Standards (for 

homeownership education and counseling) committee.

Patricia Hasson currently serves as President of Clarifi, a community based non-profit

financial counseling & education agency that has promoted lifelong financial literacy since 1998.

Her prior experience includes more than 12 years as a banking executive with diverse consumer

and commercial lending background. She currently serves on a number of local and national

bank & community advisory boards and has been appointed to the oversight board for the

Philadelphia Mayor's Office of Community Empowerment & Opportunity.

Adam Levitin is a Professor of Law at the Georgetown University Law Center. Professor

Levitin has also served as special counsel for the Congressional Oversight Panel for the

Troubled Asset Relief Program; as the Robert Zinman Scholar in Residence at the American

Bankruptcy Institute; and as the Bruce W. Nichols Visiting Professor of Law at Harvard.

Brian Longe currently serves as the CEO of the Wolters Kluwer’s Financial & Compliance

Services division, which specializes in providing solutions and services to help financial 
18 CONSUMER FINANCIAL PROTECTION BUREAU 

organizations of all sizes manage risk and maintain compliance with regulations at a local, 

national and global level. Prior to joining Wolters Kluwer in

2005, Brian held numerous leadership positions in companies that specialize in developing 

information technology and solutions. Brian also serves on the national board of directors for

Operation HOPE, a non- profit organization dedicated to financial literacy and empowerment.

James (Jim) McCarthy currently serves as President and CEO of Miami Valley Fair Housing

Center, Inc. in Dayton, OH, a position he has held since 1998. Previously,he was a paralegal for

Noel W. Vaughn, Attorney at Law. Since 2006, Mr. McCarthy has served as the chair for the

National Fair Housing Alliance in Washington, DC and is actively involved with the Affordable

Housing Options Committee of Montgomery County, OH, the Dayton CommunityReinvestment

Institute, and the Dayton Fund for Home Rehabilitation, among others. Mr. McCarthy is

currently helming the rollout and implementation of the Miami Valley Inclusive Community

Fund, an innovative program used to reclaim neighborhoods blighted by REO neglect, by

reinvesting in neighborhoods of color to counteract the devastating damage resulting from 

the foreclosure crisis and its aftermath.

Jennifer Mishory currently serves as the ExecutiveDirector for Young Invincibles. Ms.

Mishory's prior experience includes testifying before Congress about private studentloans

and about federal financial aid; authoring publications on topics such as consumer awareness

about studentloan decisions and the impact of student debt on buying a house; representing

young consumers in numerous capacities, including as a consumer advocacy negotiator in the

2012 negotiated rulemaking around federal studentloans and as a consumer representative to

the National Association of Insurance Commissioners.

Joann Needleman Joann Needleman is leader of Clark Hill’s Consumer Financial Services 

Regulatory & Compliance group. Joann has extensive litigation experience in state and federal 

courts, successfully defending creditors against claims brought under the Fair Debt Collection 

Practices Act and Fair Credit Reporting Act as well as state statutes. She provides counsel, 

consultation and litigation services to financial institutions, law firms and debt buyers throughout 

the country. Joann is the current President of the Board of Directors of the National Association of 

Retail Collection Attorneys (NARCA).

William Nelson currently serves as Associate Director for Military Programs at the

University of North Georgia, where he manages a team responsible for overseas deployments

for over 1,000 ROTC cadets annually. Mr. Nelson recently served as the executive director for

USA Cares in Kentucky, a position he had held since 2008. Mr. Nelson also worked as a

military family financial planner in New England and Kentucky. Mr. Nelson served on active

duty for twenty years in the U.S. Navy, retiring in the rank of Commander in 1992.

J. Patrick O’Shaughnessy is currently the President and CEO of Advance America, Inc., a

provider of consumer financial services with offices in 29 states. Prior to joining Advance

America, Patrick worked in the investment banking industry. He spent most of his investment 
19 CONSUMER FINANCIAL PROTECTION BUREAU 

banking career at Donaldson, Lufkin & Jenrette (DLJ) and with Credit Suisse, after its

acquisition of DLJ. He also worked for Kidder, Peabody and Thomas Weisel Partners. Patrick 

is the Chairman of the Board of the Community Financial Services Association of America, an 

industry trade group that advocates for consumer access to regulated financial services, and a

member of the Board of Trustees of Converse College.

Jose Quiñonez currently serves as Executive Director of the Mission Asset Fund in San 

Francisco, California, a position he has held since 2007. Mr. Quiñonez’s previous positions

include: Policy Director for the Asset Policy Initiative of California (San Francisco) and

California Outreach Director for the Center for Responsible Lending (Oakland). He also

worked in Washington, DC at the Center for Community Change, Bread for the World, and on 

Capitol Hill.

Dory Rand currently serves as President of the Woodstock Institute, a leading nonprofit 

research and policy organization for the areas of fair lending, wealth creation, and financial 

systems reform. Previously, she held attorney positions with the Sargent Shriver National 

Center on Poverty Law, LAF, a private law firm, and the ACLU of Illinois. Ms. Rand serves on 

the State Banking Board of Illinois and the Board of the National Community Reinvestment

Coalition. Previously she served on the Federal Reserve Board’s Consumer Advisory Council 

and the board of the CDFI Coalition, among other public, private, and nonprofit boards and 

professional associations.

Honorable Judge Annette Rizzo was appointed to the Court of Common Pleas bench in 

Philadelphia in 1998. Since that time, she has served in the Trial Division in both the Criminal

and Civil Programs and now sits in the Civil Major Trial Program. Since the spring of 2008,

Judge Rizzo has been involved with the development and oversight of the First Judicial District’s

Residential Mortgage Foreclosure Diversion Pilot Program. The conferences bring together

homeowners, lenders’ counsel, pro bono attorneys and housing counselors in an effort to keep

City residents in their homes.

Ellen Seidman is a Senior Fellow at the Urban Institute and a Visiting Scholar in the

Community Development Department at the Federal Reserve Bank of San Francisco. She is

also a Research Fellow at the Filene Research Institute and the 2013-2014 NYU Stern-Citi 

Leadership & Ethics Distinguished Fellow. Ellen Chairs the Board of Aeris (formerly the CDFI

Assessment and Ratings Service), and serves on the boards of directors of: the Center for

Financial Services Innovation, City First Bank of DC, and Coastal Enterprises, Inc. Ellen’s

prior positions include: the Executive Vice President for National Policy & Partnership

Development and for Mission and Strategy for the ShoreBank Corporation; Senior Managing 

Director/National Practice at Shore Bank Advisory Services; Director for Financial Services

Policy and Senior Research Fellow at the New America Foundation; and Director of the Office

of Thrift Supervision (OTS) from 1997 to 2001.

Josh Silverman currently serves as President for Consumer Products & Services at American

Express, a position he has held since 2011. Previously,he served as: an Executive in
20 CONSUMER FINANCIAL PROTECTION BUREAU 

Residence at Greylock; CEO at Skype; CEO at Shopping.com (an eBay company); a Managing

Director at Markplaats.nl & eBay NL at eBay, Inc.; the GM for International Expansion at

eBay,Inc.; was the co-founder and CEO at Evite,Inc.; was VP and GM for Regional Field

Service Business at ADAC Laboratories; a ManagementConsultant at BoozAllen & Hamilton;

and a Legislative Correspondentfor US Senator Bill Bradley.

Gene Spencer currently serves as the senior vice president for stakeholder engagement, policy 

and research at the Homeownership Preservation Foundation (HPF), in Washington, DC, a

position he has held since 2010. HPF operates the Homeowner’s Hope Hotline, which provides 

financial education and foreclosure prevention counseling to consumers nationwide and is the 

national call to action for the US government’s Making Home Affordable Program. Previously,

Mr. Spencer served as a public affairs director at Burson-Marsteller and in several positions

at Fannie Mae during a 28-year career, including executive positions in investor relations and 

mortgage securitization.

Robert Stoll is the founder of Stoll Berne, LLC, a law firm for which he was chairman from 1977 

to 2008. His law practice focused on securities fraud, consumer class action, and other complex 

litigation. From 1996-2008, he also was Oregon Special Assistant Attorney General for Securities

Litigation. Mr. Stoll also founded and is chairman of Albina Opportunities Corporation, a

community development financial institution which loans money and provides business advisory

services on a non-profit basis to minority and women small businesses in Portland, Oregon.

Donna Tanoue currently serves as Vice Chair of the Bank of Hawaii Corporation/Bank of

Hawaii and President of Bank of Hawaii Foundation. She is also a member of the Bank of

Hawaii’s Board of Directors. Ms. Tanoue is the former Chairman of the Federal Deposit

Insurance Corporation (FDIC). She was a partner in the Hawaii law firm of Good Sill 

Anderson Quinn & Stifel. Ms. Tanoue also served as Commissioner of Financial Institutions

for the State of Hawaii.

Jane Thompson is the CEO of Jane J. Thompson Financial Services LLC, a company she

founded in 2011 to advise businesses that serve the financial services needs of mass-market 

consumers. Previously, she was the founder and president of Walmart Financial Services and 

led the team for nine years to become the leader and innovator serving the mass-market 

customer in America, with special focus on basic money services, prepaid and credit cards. Ms. 

Thompson is an independent director of The Fresh Market and an advisor to Mitek as well as

other financial service start-ups.

James (Jim) Van Dyke Jim Van Dyke is the CEO of Javelin Strategy & Research, a 

Greenwich Associates LLC company. He is a research-based futurist on how digitization of 

money changes consumer and business opportunities, including mobile, payments and 

security. He has worked in electronic commerce and innovation since 1984, and advises 

leaders in both startup and established organizations.
21 CONSUMER FINANCIAL PROTECTION BUREAU 

Jonathan Zinman is a professor of Economics at Dartmouth College, a position he has held

since 2005. He is also the co-founder and lead researcher of the U.S. Household Finance

Initiative of Innovations for Poverty Action, a nonprofit research and development 

organization. Previously, Mr. Zinman was an economist at the Federal Reserve Bank of New

York and a loan fund manager and strategy analyst at the Massachusetts Community

Development Finance Corporation.
22 CONSUMER FINANCIAL PROTECTION BUREAU 

APPENDIX B:

Consumer Advisory Board 

written statements

The following statements were submitted by CAB members per section 9 (c) of 

the CAB Charter: 
September 15, 2015

Honorable Richard Cordray

Director, Consumer Financial Protection Bureau

1700 G Street, NW

Washington, D.C. 20552

Dear Director Cordray:

I’m pleased to offer my thoughts to you and the Bureau as I approach the end of my term as a 

member of the Consumer Advisory Board.

I have served on the CAB since its inception in 2012. The experience has been thoughtprovoking and rewarding for me, and I believe the CAB makes an invaluable contribution to the 

CFPB’s work.

My parting advice, for both the CAB and the Bureau, is the following.

Regarding the CAB, I think the key challenge is to continue to cultivate candor and free 

exchange of ideas in its work. This can be difficult with any kind of advisory board, and 

especially so when the group’s deliberations are conducted in public. The public spotlight can 

chill candor and also works against the group forming positive personal relationships and 

cohesion. Such situations can (and often do) devolve into the participants mostly articulating the 

“talking points” of whatever constituency they represent, formally or informally. That, in turn, 

leads to people essentially talking past each other. 

In creating the CAB, the CFPB has been very effective in avoiding these problems and fostering 

a really rich dialogue in which people with very disparate views have been able actually to 

brainstorm with each other. I think the result has been invaluable to everyone and especially to 

the Bureau’s thinking on complex issues that involve highly varied impacts and opinions. It has 

helped make the CAB’s deliberations distinctly more valuable that other dialogue on the same 

topics. I encourage you to work explicitly to keep this culture thriving.
My second thought on the CAB is to caution against the temptation to try to reach formal CAB 

consensus on controversial topics. Early on, we agreed that the main function of the CAB is to 

discuss critical issues among our members and the CFPB staff – that the “product” is the 

discussion itself. However, advisory bodies tend over time to try to formalize and adopt positions 

and recommendations on key issues. While there may be situations where this has merit, I think 

it generally is counter-productive. The statutory mandate to create the CAB is clearly designed to 

assure that it represents a wide variety of viewpoints. Trying to get participants to reach 

agreement on written outputs consumes time that can be better spent in dialogue, and tends to 

water down the written product, undermining its value. These efforts also can create a culture of 

discomfort in the group, forcing people to decide whether to sign onto language they do not fully 

support. 

My third and most important suggestion on the CAB is to continue to enhance its focus on 

technology change. As you know from my own vocal participation, I think technology-driven

innovation and industry disruption are the most important issues facing financial consumers and 

will bring both tremendous benefits mixed with serious new risks. I hope it will be at the center 

of the CAB’s agenda.

That point leads to my primary recommendation for the Bureau as a whole. I urge you to make 

innovation and technology central to the CFPB’s work, building on the agency’s early decision 

to try to be “consumer-centric,” rather than industry- or product-centric. Technology is in the 

process of breaking up existing industry business and product models. The CFPB is wellpositioned, in terms of mandate, powers, and culture, to take the lead in understanding and 

addressing this transformative change, and has taken important steps to do so through its Project 

Catalyst. I urge you to continue and expand these efforts.

I believe the disruption of consumer financial services will inevitably disrupt the financial 

regulatory framework as well, due to the intensive and complex regulation focused on this arena. 

It will be a tremendous challenge for public policy to help pro-consumer innovation flourish 

while also blocking harms that will be intertwined with positive change. 

As I think you know, I am researching and writing a book on this topic through a senior 

fellowship at Harvard this year. I am increasingly convinced there is a historic opportunity, and 

unprecedented set of risks, facing financial consumers.

Some of the key steps, in my view, are for the CFPB to build methodical consideration of 

innovation impacts into all decision-making, including rule-writing, research, consumer 

education and enforcement; to recruit and empower experts in technology and innovation; to 

formalize robust interaction with the fintech community; and to foster intra- and inter-agency 

learning, collaboration, and decision-making that can produce clear and consistent regulatory 

guidance, with enough timeliness to keep pace with change.
It has been a privilege to serve on the Consumer Advisory Board for these three years, to come 

to know so many of the Bureau’s talented and dedicated leaders, and to try to help shape the 

early direction of this important agency. I wish all the best to you and your colleagues in taking 

on the many challenges ahead.

Sincerely,

Jo Ann S. Barefoot

CEO, Jo Ann Barefoot Group LLC

Senior Fellow, M-RCBG, Harvard University

_________________________________________________

100 Pier 4, #1806, Boston MA 02210

Jo@jbarefoot.com / www.jsbarefoot.com / 202-315-8284



The Honorable Richard Cordray, Director

Consumer Financial Protection Bureau

1700 G Street, NW

Washington DC

Dear Director Cordray,

In looking back on my first year on the Consumer Advisory Board, I feel 

deeply honored to serve as an advisor to the Consumer Financial 

Protection Bureau. I come to the agency with focus only the ways of digital 

commerce and financial technology, in an industry still significantly shaped 

by the global financial crisis, yet have found both the board and agency to 

be incredibly open to questions, ideas and challenges. 

I consider myself to be both historian and futurist in the realm of payments 

and financial services, and from that perspective I view the industry as one 

that is at the earliest stages of revolution. With the recent deep recession 

not many years behind us, banks are facing increasingly negative 

consumer sentiment. Individuals are often more likely to pay a premium for 

a coffee drink than willingly incur even the most basic of bank fees, and 

meanwhile non-traditional service providers with fresh brands are 

experiencing booming business growth. Yet with so many consumers 

continuing to make sub-optimal choices in the face of everyday and longterm financial services options, one must worry about the lasting harm that 

could occur if the realm of traditional retail financial services fails to be 

consumers’ preferred source of trust and value in the future. 

I’m fundamentally optimistic about how digital and financial technology can 

improve the lot of all participants in consumer financial services, and yet 

I’m concerned about the path to such a revolutionary future. As consumers 

increasingly use technology to monitor and manage offers and services to 

improve their lives, innovators have more opportunity than ever to 

strengthen the financial condition of individuals. Yet with the U.S. having 

an extremely high ratio of providers to consumers and smaller institutions 

both struggling to profitably meet the digital-first needs of millennials, I 

foresee a fallout of the smaller community banks and credit unions that 

currently invest most strongly in customer service and local communities. 

I’d like to commend the CFPB of using primary research data that primarily 

focuses on the end-user to assess markets and solutions, thereby avoiding 

the pitfall of relying on insular research methods that mostly only consider 

providers’ data and perspectives. By using this consumer-first approach, I 

believe the agency has been able to set its sights on fresh approaches
with greater accuracy, while avoiding the myopic approach of only hearing 

traditionalists’ point of view. 

My one area of surprise has been the industry perspective of the CFPB, 

and to be fully transparent I’m still trying to make sense of it. I have many 

trusted friends at both financial institutions and industry service or 

technology firms, and I frequently hear the refrain “regulation is antiinnovation”. Yet despite my many individual or public requests for specific 

examples, I’m frustrated that I have been wholly unsuccessful at being 

presented with a specific or factual example of what the CFPB should do 

differently to encourage industry innovation. Perhaps this dichotomy 

suggests that industry and regulation are being outshined by simple postrecovery consumer enmity, with angry sentiment that eclipses all other 

factors. In any event, no one can fulfill their potential until retail financial 

services and payments sector meets with more consumer support for 

newly-sustainable business models. Millennials in particular just seem to 

have no interest in trusting their bank, and rather just seek “perfect 

financial partners” who bring the best always-on, real-time, transparent and 

safe methods for managing personal finances in the digital era.

In closing, I’d like to restate my appreciation for the work of the agency 

with optimism for how we can help the industry improve the lives of 

everyday Americans through innovation. These are exciting times, and are 

made more so as we draw on both history and the power of unfolding 

technology to improve the vital realm of consumer financial services. 

Thank you for your important work, and for allowing me the privilege to be 

of service.

Sincerely,

Jim Van Dyke

CEO and Founder, Javelin Strategy & Research

Member, Consumer Advisory Board
23 CONSUMER FINANCIAL PROTECTION BUREAU 

APPENDIX C:

CAB Consumer Lending 

Committee’s summary 

document on small dollar 

lending

The following summary document is submitted by the CAB Consumer Lending 

Committee and reflects their range of varying views on the CFPB’s small dollar lending 

SBREFA proposals. The summary document does not reflect the views of the CFPB. 
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

1

June 2015

Consumer Advisory Board

Consumer Lending Committee

June 2015

Committee input on the Consumer Financial Protection Bureau’s (CFPB) small dollar lending 

Small Business Regulatory Enforcement Fairness Act (SBREFA) proposal

Overview

On March 26, 2015, the Consumer Financial Protection Bureau (CFPB) announced that it is 

considering proposing rules for the small dollar lending marketplace through the release of its 

Small Business Regulatory Enforcement Fairness Act (SBREFA) proposal.1Since the release of 

the CFPB’s proposal, the Consumer Advisory Board (CAB) Consumer Lending committee has 

met to discuss the proposal and provide input. The purpose of this document is to summarize 

committee conversations on the proposal. This document is organized into four key issue topics: 

Consumer impact, Areas where there is still potential for consumer harm, Impact on the small 

dollar lending industry, and the Future of the small dollar lending marketplace post proposal. 

This document does not reflect consensus by committee members, but simply demonstrates the 

various member views and opinions. This summary document does not reflect the views of the 

CFPB. 

Consumer impact 

 Consumer benefit: 

o Some of the proposal’s biggest benefits for consumers are the Ability to Repay 

standards, protection from excessive fees, and requirements for reasonable debt 

collection practices i.e. notification before payment is withdrawn requirement.

o Consumers will benefit from consistent minimum standards that cover both online 

and storefront lending.

o Having an ability to repay standard in this market space could increase borrower 

access to lower-cost loan options. When borrowers are caught up in unaffordable 

loans, it makes them higher-risk borrowers and reduces the likelihood that lowercost lenders can serve them.

o Consumers want to see more regulation in this marketspace. Though different 

surveys and polls from various organizations have different findings regarding 

which policies borrowers favor the most, three seem to rise to the top: 

1. Capping fees;

2

2. Capping loan amounts;

3

and

3. More affordable payments and amortizing loans.

4

 The first may be 

outside the scope of the CFPB, but the second two relate back to the 

basic standard of the rulemaking—ensuring ability to repay the loan.

 

1

http://www.consumerfinance.gov/newsroom/cfpb-considers-proposal-to-end-payday-debt-traps/

2 Elliehausen & Lawrence, 2001

3 CFSA, 2013

4

Pew, 2013
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

2

June 2015

o Addressing the payday lending marketplace will have a significant positive 

impact for our military service members who sometimes lose their security 

clearance due to severe debt issues with these types of loans. 

 Consumer harm:

o May ration credit to consumers as well as limit consumer choice and may lock 

consumers out of access to their preferred credit products based on behavior.

o Does nothing to address demand for credit, but instead could shift demand to 

other more expensive or less desirable credit sources, such as late payments, 

overdraft credit, courtesy pay, etc.

o The proposal may not fully consider unintended (or intended) consequences.

o May cause delays in accessing credit (i.e., customers will not be able to get 

money as fast as they need it due to new compliance requirements); and it may

undermine an important value of these products – quick and reliable access to 

money.

o The proposal could negatively impact consumers who use automatic withdrawal 

as a convenience because it is an easy way to make timely payments, therefore 

removing consumer worry. Additionally, the lender benefits because they are 

assured to receive monthly payments that are on time. 

o Consumers who utilize 3 consecutive loans and repay them in a responsible 

manner may be unfairly denied access to credit given the 60 days cooling off 

period in the proposal. This may be unfair to consumers who can demonstrate

repayment of the debt and are penalized only because of timing.

Areas where there is still potential for consumer harm

 Alternatives within the proposal need additional attention; e.g., capping the monthly 

payment to 5% of a consumer’s income could still be too high for very low income 

consumers who would still not be able to afford a 5% monthly payment.

 The proposal does not include disclosure requirements.

 The proposal does not address hidden fees or transparency concerns.

o Does not help consumers understand relative costs of their alternate credit choices 

(pawn, payday, late payment, overdraft, extending credit card payments, etc.).

 The proposal may not level the regulatory playing field in the small dollar credit market.

o Excludes longer-term loans if paid by the consumer with cash, which are included 

if paid electronically from bank account (a distinction without a difference).

o Specifically excludes pawn lending, overdraft credit, revolving credit if issued on 

a card, (including late payments on credit cards), all of which are substitute 

products for the consumer, and would otherwise meet description of included 

products.

o Fails to differentiate or address unlicensed or unregulated lenders, who may 

benefit from the proposed rule.

o There is no clear indication of how the rules relate to existing or forthcoming state 

regulation, including preemption.

 Loopholes in the proposal
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

3

June 2015

o A car title lender could change the collateral to another personal asset to avoid the 

rule.

o Revolving credit is included in the proposal, unless it is issued on a card. A 

lender using a bank-issued card as delivery method could evade rule.

o A lender can evade the longer-term loan proposal by having the consumer opt of 

automatic payments. The lender could also only accept payment in cash. 

o States with strong payday lending protections may be impacted because payday 

lenders could use the CFPB’s proposal to weaken standards or allow payday loans 

in states where it may currently be unlawful. 

o Why did the Bureau make the distinction between making the payment on the 

loan in cash vs debit? 

 The harm to the consumer is having the ability to take away the 

consumer’s choice of payment.

 Consumers should be able to easily opt out of automatic payments by just 

contacting the lender. 

Proposal’s impact on the small dollar lending industry

 General

o The demand for short-term and small-dollar credit marketplace is served by a 

diverse group of suppliers. It includes late payments to vendors, payday and pawn 

lending, installment and title loans, as well as bank overdraft credit and deposit 

advance, credit union courtesy pay and lines of credit. Consumers weigh all of 

these options when making credit decisions.5

o The proposal only affects a small portion of the providers of small dollar credit –

payday loans, car title loans, and some installment loans.

o The proposal estimates that loan volume from these providers will decline by 

55%-62% and revenue to the providers included in the proposal would decline by 

71%-76% other sources have since confirmed this.6

o Such a reduction would severely limit consumer access to credit options, which is 

viewed as a positive by most committee members.

 Ability to Repay (ATR) requirement

o ATR requirement would be difficult to calculate in a cost effective and timely 

manner. Generally it takes some companies 2 to 3 days to underwrite a loan.

o The Ability to Repay requirement is “a good business practice” and the “concept 

ensures consumers are not receiving loans they cannot afford.” 

o The proposal provides a great business opportunity for the private sector to create 

its own version of a national payday lending database.

o Since consumers are already bringing income verification documentation to 

lenders, it doesn’t seem like a significant increase in consumer burden for the 

 

5 Harris Interactive, Payday Loans and the Borrower Experience, December 2013

6 CFPB’s Small Business Advisory Review Panel for Potential Rulemakings for Payday, Vehicle Title, and Similar 

Loans, March 26, 2015
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

4

June 2015

consumer to bring in 6 months of account history/data until an online system that 

can easily track this information is available. 

o The Bureau should provide guidance relating to the ATR calculation of household 

income vs individual income. 

 This could lead to ATR manipulation as a married couple could each take 

out small dollar loans at the same time. If the lender were to use 

household income but later shift to individual income, the ATR 

calculation would be skewed. 

o Good companies already do ATR calculations, with many using significantly 

more data sources than traditional credit scores. 

o It is to the company’s competitive advantage to do an ATR calculation so that it 

can ensure the loans they are writing will be paid back. However, achieving an 

industry wide ATR standard would be much harder to achieve. 

o If suddenly the ATR requirement made the timeframe for lending a 2 to 3 day 

process, it would become a competitive advantage to companies who chose the 

alternative to the ATR rule, as they could make these loans much quicker.

o The proposal caps the number of roll overs to 3 total loans, which may cause 

issues with consumer attempting to refinance these loans. The development of a 

national payday lending database may need to be created to be able to monitor 

these loans. 

o The proposal may inhibit lenders ability to provide loans quickly to consumers in 

need of quick financing.

o The proposal does not address need and it only serves to pick winners and losers 

in the small dollar credit market. The volume of credit issued from all sources will 

not change.

o Most licensed payday and car title pawn lenders may go out of business. Pawn 

lenders (other than title), overdraft and courtesy pay providers, subprime credit 

card issuers, lenders that deal exclusively in cash, as well as unregulated or illegal 

lenders will benefit from the Bureau’s proposal. 

o As observed in states that have limited access to small dollar credit, late fees, 

overdraft fees will rise as will consumer complaints. 7

 Types of alternative data sources that could be used to calculate ATR

o Companies like Yodlee and Intuit’s Mint provide lenders with the ability to view 

up to three months of a consumer’s checking account history, which may be 

beneficial alternative data sources.

o The OCC/FDIC rules require banks to look back over six months for deposit 

advance products. Yodlee and Intuit’s Mint are limited by financial institutions to 

just three months of data, which might not be enough to accurately gauge ATR 

through alternative data means. 

o The CFPB and other regulators encourage banks to provide at least 6 more 

months of data to companies like Yodlee and Intuit’s Mint. 

o Most consumers who use payday loans are banked, meaning they have some type 

of checking account. 

 

7 The Washington State Department of Financial Institutions, 2013 Payday Lending Report
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

5

June 2015

o Good types of alternative data could be rental income, utility payments, cell 

phone payments, etc. 

 Reporting requirements to credit bureaus/CRAs

o Some states require the lender to review gross or net income. Currently, there are 

few states that require credit report files to be pulled.

o Many consumers use short term loans because the risk of consequences from 

default is relatively low. Existing obligations are reported to the CRAs and many 

consumers use payday loans to pay the monthly payment on their existing 

obligations. That is why there is a belief that you will continue to see consumers 

credit scores improve over time as they use payday loans8. Additionally, few 

payday lenders will actually report a consumer’s default to the CRAs. 

o In Texas, there are very few state regulations over payday loans, but some 

municipalities have begun to get involved.9

o The Bureau’s recent Credit Invisibles report10 found that 26 million consumers 

are credit invisible and the Bureau should be considering ways to use the small 

dollar lending marketplace to build credit files for these consumers.

o The Bureau should further explore how CRAs would interpret small dollar loans 

on a consumer’s credit report; would it would negatively or positively impact the 

consumer’s score. 

o Using credit profiles seem to be an important tool for the Bureau’s proposal. One 

major problem is that CRAs do not report in real-time making it difficult to track 

borrowers.

Future of the Small Dollar Lending Marketplace Post Proposal

 The Bureau’s proposal may reduce the number of small dollar and short-term credit

products in the marketplace and thus decrease the number of consumers falling into debt 

traps;

 There is a possibility that the total number of lenders will be reduced or consolidated into 

larger lenders who can comply with the regulations. 

 There may be an expansion of credit union payday alternative products. 

 A 2014 Pew study about Colorado’s lessons learned suggests that by “requiring 

affordable installments for all loans successfully aligned lenders’ profitability with 

borrowers’ ability to repay and led to a viable business model for lenders while delivering 

better outcomes for consumers, with virtually no reduction in access to credit”11.

 

8

Payday Loan Rollovers and Consumer Welfare by Jennifer Lewis Priestley, Kennesaw State University

9

http://www.texastribune.org/2012/05/03/faced-city-ordinances-payday-lobbies-reappear/

10 CFPB Data point: Credit invisibles

11 http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2014/12/trial-error-and-success-in-coloradospayday-lending-reforms
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

6

June 2015

 Demand for short-term credit may remain high; while the regulated supply of short-term 

credit may contract.

 Excluded small dollar credit products will expand to meet the demand and there is a 

possibility of continued and significant growth in unregulated lending.

 Longer term installment lending

o Today, some members are seeing many more installment type loans in the 

marketplace. If the Bureau was to only address payday loans and not auto title 

loans, then the consumer harm will continue. 

o In Virginia, strict payday loan rules were established12and a member saw a shift in 

the marketplace to many more auto title loans. 

o An observation was raised that when there is inconsistent rule making, lenders 

will shift to accommodate market demands. The Bureau’s proposal provides for 

safe harbor to some products.

o There was disagreement that the Bureau’s proposal provides for safe harbor to 

some products. Others stated that they believe the proposal has done a good job 

in covering the various products that have the most consumer harm.

Committee Membership

 Judge Annette Rizzo, Co-Chair

 Patricia Hasson, Co-Chair

 Adam Levitin

 Ann Baddour

 Bill Nelson

 Bill Bynum, CAB Chair

 Dory Rand

 J. Patrick O’Shaughnessy

 Jennifer Mishory

 Joann Needleman

 Jose A. Quinonez

 Steve Carlson

Feedback Received from the Consumer Advisory Board

On June 17, 2015 during the Consumer Advisory Board (CAB) meeting in Omaha, Nebraska the 

Consumer Lending committee discussed and presented their work on the Bureau’s Small Dollar 

Lending SBREFA materials to the CAB membership. The Co-Chair opened the discussion with 

a brief overview of the committee’s work on this issue. Then, committee members presented on 

different aspects of the SBREFA proposal. One member discussed benefits of the proposal; 

another member highlighted areas of the proposal that could harm consumers; then a member

shared thoughts on where consumer harm could still occur; a member discussed the impact of the 

proposal on industry; and another member presented on the future of the small dollar lending 

marketplace post-rule implementation. After the committee’s presentation, members of the CAB 

were offered the opportunity to ask questions or share their own observations on the Bureau’s 

 

12 https://www.scc.virginia.gov/bfi/files/pay_guide.pdf
Appendix C: CAB Consumer Lending Committee’s summary document on small dollar lending

7

June 2015

SBREFA proposal. The takeaways identified below reflect the CAB discussion after the 

committee discussion and presentation. 

 CAB members provided feedback to the Consumer Lending committee thanking them for 

their time and work on this issue. 

 The committee was asked a clarifying question about the debt trap protection 

requirements, specifically what would be the normal payment for a consumer if their 

payment was capped at 5% gross monthly income? 

 There was a question about the overall assumption that every consumer should have 

access to credit; unsure if it is great public policy to assume that every low income 

consumer should borrow these types of loans. 

 A statement was made that the member doesn’t believe the Bureau’s SBREFA proposal 

as written is enforceable. The proposal reads defensively and the member suggested 

removing all of the alternatives, except the 5% monthly repayment requirement. The 

member continued and stated that the rule should expressly state that the Bureau intends 

to set a floor with this proposal and not impact state law where there are stronger 

provisions already in place. 

 A belief was shared that the Bureau should put its efforts into building a national payday 

lender registry. Additionally, the member added that determining how the marketplace 

for small dollar lending will look post-rule will be extremely important for the rules 

success. 

 Suggestions were offered that there needs to be consensus between all the other 

regulatory agencies on how to regulate the small dollar lending marketplace before larger 

financial institutions will be willing to offer small dollar loans. 

 A differing view was expressed and belief was provided that most financial institutions 

do not want to be in the small dollar lending marketplace due to the level of risk 

associated with this type of lending.