WASHINGTON (2/3/16)--In conjunction with today's field hearing in Louisville, Ky., Consumer Financial Protection Bureau (CFPB) Director Richard Cordray will be sending financial institutions two communications. One suggests a new kind of checking account that could open the service to more unbanked consumers; the other addresses compliance issues associated with furnishing information to consumer reporting agencies (CRAs).
Sandy Tallarico-Gogan, of Park Community CU, Louisville, Ky., will bring the credit union perspective to the field hearing on checking account access, which starts at 11 a.m. (ET). Tallarico-Gogan is Park Community's senior vice president of branch operations, and the credit union is a Credit Union National Association (CUNA) member.
Cordray, in a letter to the CEOs of the 25 largest retail depository institutions, urges them to consider a new way to serve more consumers seeking checking accounts, which is one of the industry's most widespread financial products.
Currently, Cordray reminds, there are two options: Either consumers pass the standard screening process and become checking accountholders, or they fail because of some flaw in their history and are blocked from owning such an account.
"There is, however, a third possibility," Cordray writes, "which is to offer all applicants a lower-risk account (whether a checking account or prepaid account) whereby the applicant cannot pose the same level of risk to the institution."
The CFPB director says that "by limiting risks to financial institutions, products that are designed to help consumers avoid overdrafts also enable account providers to relax their screening criteria and accept more account applicants, thus improving consumer access to the banking system on a broader scale."
Cordray adds that the alternative account would let credit unions and banks do more to help the 10 million American households that currently are "unbanked."
CUNA Chief Advocacy Officer Ryan Donovan responded to the idea by reminding that credit unions have a long history of tailoring their products and services to the individual needs of their members.
"We hope that the CFPB will allow credit unions to continue to serve those in their communities, and not inhibit innovation and credit unions' ability to offer diverse products and services with regulatory burdens," Donovan said.
Regarding the compliance bulletin (2016-01) about consumer reporting, the CFPB writes that "supervisory experience" suggests that some financial institutions are "not compliant with their obligations under Regulation V with regard to furnishing to specialty CRAs." Reg V implements the Fair Credit Reporting Act.
Those obligations, the bulletin notes, require a furnisher to establish and implement "reasonable written policies and procedures regarding the accuracy and integrity of information relating to consumers they furnish" to CRAs.
The CFPB writes that the new bulletin does not impose any new or revised requirements but emphasizes what the obligations are.
Watch News Now Thursday for more on the CFPB field hearing.