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Remarks of Associate Director Karen Andre at Combined Community Bank Advisory Council and Credit Union Advisory Council Meeting

Good afternoon, and thank you, Manny, for the introduction. Welcome, everyone, to our Community Bank and Credit Union Advisory Councils meeting.

Let me first extend a special thank you to the chairs of our councils:

- The CBAC’s John Buhrmaster and

- The CUAC’s Jose Iregui.

We greatly appreciate your willingness to take on these leadership roles and effectively steer these advisory councils.

When Congress created the CFPB, it entrusted it with carefully monitoring financial markets to spot risks, ensure compliance with existing laws, educate consumers, and promote fairness and competitiveness. To help it meet its statutory requirements and understand financial markets better, the Bureau created one advisory council for community banks and another for credit unions. Their intimate knowledge of local communities holds vital information for the CFPB to help local economies thrive and individuals and families to pursue the American Dream. The founding members of the Bureau also understood that the success of community banks and credit unions translates into thriving communities and families, so understanding your needs, concerns, and challenges is also of paramount importance. Today, the Community Bank and Credit Union Advisory Councils provide unique insight into the needs of consumers and communities as well as the impact Bureau policies have on community banks and credit unions.

Your intimate knowledge of the struggles and the successes of communities, credit unions, and local banks are always important, and, in our current environment, they are vital. We need your expertise as we are at a critical crossroads for consumers and the American economy. The pandemic laid bare racial and economic inequities throughout our society. For example, millions of families still face the threat of foreclosure or eviction. As Director Chopra stated in his remarks to Congress last week, the Bureau is carefully monitoring conditions in the mortgage market and is taking steps to minimize avoidable foreclosures and to get homeowners into repayment plans they can afford. We are keen on understanding how homeowners from different segments of the population are faring, including communities of color, military-connected families, older Americans, first-time homeowners, and family farmers. Your position and relationship to homeowners is essential both in terms of minimizing avoidable foreclosures and understanding how different segments of the population are faring as they seek to stay in their homes.

Consumers deserve nothing less than the CFPB working with its partners, which include all of you, to tackle the problem of housing and other pressing challenges that families face in their financial lives during this critical moment for our country. Not only are consumers recovering from the devastating financial effects of the pandemic and associated recession, they must also prepare themselves to face future challenges and risks.

It is our job to anticipate those risks and challenges and figure out how to mitigate or eliminate them, so consumers are best positioned to participate in the economy and its markets. We do that through multiple avenues, including through our own research and analyses as well as listening to consumers directly through our complaint system. We know one of the main risks currently emerging is that of Big Tech’s entry into consumer markets, including banking and payments. For example, Big Tech has sought greater control over the flow of money and data in our economy. We need to better understand how these giants harvest, track, and monitor data on their platforms, and ensure that the payments landscape aligns with fair competition, consumer protection, and our national interests.

It is not Big Tech, but rather relationship and community banking that strengthens the nation’s resilience and a recovery that benefits all consumers and families. Your ongoing engagement will ensure we better understand the challenges and risks for community banks and credit unions, local businesses, and families during these critical times.

Today’s economy looks very different than a year ago. Businesses have reopened and are growing, and employers are adding millions of new jobs. While there are many positive signs for our overall economy, our recovery remains uneven for many small businesses. Accordingly, our first discussion today will focus on the recently published Section 1071 NPRM - our proposed rulemaking.

As you know well, thriving small businesses fuel our local communities and economies. Our rule, if finalized, will help ensure all communities can benefit from successful small businesses. The NPRM is comprehensive in scope, which is consistent with what Congress intended, and, if finalized, will equip us with the necessary data to give all small business owners the ability to seek and obtain credit on an even playing field. At the same time, we understand the regulatory burden that smaller financial institutions can face when implementing new rules, so we have worked hard to mitigate the burden by aligning our proposed rule to current business practices to the extent possible. The proposed rule also contains other provisions to try to lower the regulatory burden, including not requiring financial institutions to publish their own data, not requiring financial institutions to verify data provided by applicants, providing straightforward definitions of key terms, and creating a sample data-collection form. Given the request of stakeholders to use a simple definition of small business, we have proposed a reporting threshold based on annual business revenues. We will also use lessons learned from the implementation of an earlier rule, HMDA reporting, to facilitate the integration of the Section 1071 rule’s final data collection and reporting requirements into your business processes.

In commenting on the NPRM, I encourage you to consider the value of the 1071 database both for your own institutions and the small businesses as well as the communities you serve. Under the proposed rule, the data you report will reflect how you serve your customers, including pricing information on the loans you make, so small businesses will be able to see your commitment to them. Additionally, the data may help us identify unfair and predatory competition faced by all the institutions that play by the rules. We welcome your comments and expertise to ensure the final rule reflects the needs of both community banks and credit unions along with the local businesses and entrepreneurs you’re serving. I also encourage you to let us know what we got right because that helps us know what we should not change.

Following this first discussion, we will hear from the Bureau’s Office for Older Americans on age-friendly banking. In a constantly evolving banking and financial environment, we cannot forget that the needs of older adults may differ from those of younger consumers. For example, when older adults are connected with a bank or credit union, age-friendly interventions can help prevent fraud and elder financial exploitation. Older adults, particularly those from underserved racial and ethnic groups and individuals with lower incomes, need financial services and products that are accessible, responsive, and relevant to their needs. Not only are we supporting the needs of older adults, but we are also protecting them from financial losses through exploitation and fraud because the interaction with unfamiliar technology can make victimization by nefarious actors easier.

At the same time, we need to appreciate that the digital age has created new opportunities for innovation among financial institutions to support consumers of all ages. Access to age-friendly online and mobile banking services and other types of financial technology is now essential. This has been particularly evident during the pandemic, when it has been difficult or unsafe to visit branches in person. So we will continue to monitor innovations and support banks and credit unions in enhancing their ability to serve older consumers who may be digitally disconnected.

As you can see, supporting older consumers is a balancing act between using innovative approaches to support their banking needs while not allowing nefarious actors easy access to them. During today’s discussion, I hope you all will share your insights into how we strike the right balance between emerging opportunities and emerging risks.

Finally, our last discussion will focus on our emerging generation of consumers. As we work to regain our financial footing, it’s critical that we work as a country to strengthen financial knowledge at all levels. We know that creating this foundation among children, in particular, leads to greater financial well-being and stability as they become adults. The CFPB engages school leaders, families, and community organizations across the country, but currently, less than half of U.S. children receive any form of financial education through their schools. Community-based partnerships between local financial institutions and school systems has led to greater financial engagement, and we hope to better understand some of the programs and innovative initiatives you participate in, or would like to, that build the capabilities and financial skills among our youth.

All families and consumers face challenges to achieving their American Dreams. Some of these families and consumers are struggling because they are at a structural disadvantage. We must be intentional about creating opportunities that fit the needs of specific communities, families, and individual consumers. I expect that today and in future meetings all of you can help us develop ways to tear down structural barriers and to create markets that are fair and competitive for everyone.

And in closing, thank you for your service and time today. While I wish I could participate in today’s discussions, I will be leaving today’s meeting at 1:30pm for previously scheduled commitments. I want to assure you that members of CFPB’s staff will remain throughout today’s sessions and will share with me your perspectives on our critical action items and our next steps forward.

Thank you.