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dgemont Neighborhood Coalition
From: Hirtle Stanley
Sent: Monday, May 09, 2005 11:47 AM

Subject: Please permit the Consumer Federation of America, National Consumer Law Center and the Center for Responsible Lending to make oral presentations at the May 24 public hearing on the Financial Services Roundtable petition to preempt State laws.

May 9, 2005

Mr. Robert E. Feldman
Executive Secretary
550 17th Street, N.W.
Washington, DC 20429

RE: Public Hearing concerning Petition for Rulemaking to Preempt Certain State Laws

Dear Mr. Feldman:

The Edgemont Neighborhood Coalition requests that the FDIC permit the Consumer Federation of America, National Consumer Law Center and the Center for Responsible Lending to make oral presentations at the scheduled May 24 public hearing on the petition from the Financial Services Roundtable (Petitioner) for FDIC rulemaking that would preempt certain state laws.


Edgemont Neighborhood Coalition, Inc. is a nonprofit community organization located at 919 Miami Chapel Road, in Dayton, Montgomery County, Ohio. The group consists of residents of the Edgemont neighborhood, a low-income African American neighborhood in Dayton, who have associated in order to foster pride in their neighborhood and address the issues of crime, youth and adult joblessness, inadequacy of educational opportunities, affordability of utilities, and business and community development.

One issue of importance of the Edgemont Neighborhood Coalition, Inc. has been the availability of affordable financial services in the community. Edgemont has been active in Community Reinvestment Act activities in order that residents have access to mainstream financial services at mainstream prices, and not be relegated to high-cost “fringe lenders” such as payday lenders, “subprime” mortgage lenders, rent-to-own vendors, refund anticipation lenders, and pawnshops.

In furtherance of these goals, Edgemont has commented on proposed regulations by federal agencies and has appeared as amicus curiae in court cases involving payday lending and predatory mortgage lending. Edgemont has been a party in proceedings in the Public Utilities Commission of Ohio, and has also cosponsored conferences concerning payday lenders and their effects on the community. Edgemont supports the work of the National Community Reinvestment Coalition and of the Community Reinvestment Institute Alumni Association here in Dayton.

In addition to being a community organization, Edgemont Neighborhood Coalition, Inc. functions as a small business, operating an office, community garden and community computer center.


Edgemont Neighborhood Coalition is concerned that the Financial Services Roundtable has requested that the FDIC preempt State consumer protection laws. Consumer protection has traditionally been mostly a state function. Most states, including Ohio, have consumer protection statutes that prevent unfair and deceptive practices by car dealers, home repair contractors, merchants and other business entities. However, comprehensive consumer protections for lending transactions do not exist at the federal level.

The development of abuses in lending similar to those found in other sectors of the economy is a relatively recent development. This has been a challenge to regulatory agencies charged with protecting depositors and institutions, but who have not necessarily thought as much about protecting borrowers. Unfortunately in many ways the federal role has been harmful to efforts to prevent abuses. In particular, Federal regulatory agencies that have intervened to preempt state consumer protection laws have contributed to an epidemic of exploitative lending practices that exist in all segments of the market, including payday lending, finance company lending, credit card lending and mortgage lending. This is contrary to the intent of Congress that preemption outside the area of interest rates be limited to situations when it is warranted by federal policy interests.1 It also creates a competitive dynamic where financial institutions may look for regulators who provide the least consumer protection. Lending abuses are contrary to federal policy interests. However when one class of lenders get special protection, others seek to “level the playing field.” Thus efforts by regulators to create uniformity or a “level playing field” for various classes of lenders have the effect of eliminating protections for consumers.

The three organizations we recommend have exceptional experience and understanding of consumer protection as it applies to the lending industry.

Consumer Federation of America is a national non-profit organization comprised of 300 pro-consumer organizations established to promote consumer interests through public education, research, and advocacy.

The National Consumer Law Center is a non-profit organization founded in 1969 and specializing in low-income economic issues, with an emphasis on consumer credit. NCLC's staff has written and advocated extensively on consumer credit issues and provided extensive oral and written testimony to numerous Congressional committees and regulatory agencies on topics related to the application of federal and state laws to banks and other financial institutions.

The Center for Responsible Lending is a non-profit, nonpartisan research and policy organization dedicated to protecting family wealth by working to eliminate abusive financial practices. Staff of this organization have written extensively and testified before federal and state legislative and regulatory bodies on consumer credit and preemption related topics.

These organizations have enormous amounts of expertise on the legal and public policy issues that pertain to the pending Petition and also provide practical, hands-on knowledge and expertise about the application of consumer protections to banks and other financial institutions. We urge, therefore, that all three organizations be afforded the opportunity to make oral presentations.

Edgemont wishes to reserve the possibility of submitting our own written testimony in advance of the May 24 hearing.

Respectfully submitted,

Stanley A. Hirtle
Attorney for Edgemont Neighborhood Coalition
Advocates for Basic Legal Equality, Dayton Office
333 W. First St. #500
Dayton, OH 45402


 1 See the legislative history of IBBEA, HR Conf. Rep 651, 103d Cong 2d Session 53-55 (1994)


Last Updated 05/25/2005

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