Federal Register Citations
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
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.
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
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.
FDIC NEEDS TO HEAR FROM THESE ORGANIZATIONS
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
Stanley A. Hirtle
Attorney for Edgemont Neighborhood Coalition
Advocates for Basic Legal Equality, Dayton Office
333 W. First St. #500
Dayton, OH 45402