#fairlending

I want to thank everyone here for your continued work to make a difference in the financial lives of consumers. As we recognize America Saves Week and Military Saves Week, it is notable that the Commission is gathered here today to discuss youth savings accounts. The release of this guidance will help young people all across the country to become more actively engaged in their own financial lives.

One of the cornerstones of the Consumer Bureau’s mission is the work we are doing to study and improve financial education for people of all ages. Like our colleagues here today, we are focused diligently on what is working and what can be more effective in our financial education efforts.

Last year, through a pilot with four cities around the country, the Bureau took an in-depth look at ways to improve the financial capability of youth who are participating in summer employment programs. Whether lifeguarding at the local pool or mowing lawns for the city, summer jobs are often a young person’s first small taste of financial freedom and greater responsibility. We made an effort to use this period when young people are receiving their first paychecks to reach them with valuable financial messages. We believe that if we can help instill good saving habits at this early stage, we can help young people lay the proper groundwork for their financial futures.

So how can we encourage more youth to start saving? Through the youth summer employment pilot program, we were able to gain some valuable insights. First off, and this may surprise some of you with teenagers of your own, most young people are quite eager to save their hard-earned money. One problem is that many of them faced challenges accessing financial products that would enable them to do so. On the other side of the fence, financial institutions were interested in engaging to help these potential new customers meet their goals. Yet they told us they have often been hesitant to offer savings accounts, due to a lack of clarity around youth savings programs and issues of account ownership.

That is why we are encouraged by the guidance being issued by our regulatory partners. From our own work, we have seen a willingness from both consumers and financial institutions to seek out ways to make savings an attainable goal for young people. We hope this guidance will spur financial institutions and community groups to develop and implement new programs in their communities. We need to ensure that our young people have access to safe financial products that will allow them to start saving for their futures.

In the course of our research on youth financial capability, we have consistently found that one of the best ways for young people to develop effective money management skills is through hands-on learning, where they actually get to do things and not merely to learn information. We also strongly encourage parents and guardians to get more involved in discussing these topics at home to help young people make progress toward greater financial capability.

I also want to call your attention to a report that the Consumer Bureau recently put out on the topic of financial well-being, which has also been provided to members of the Commission. Our report helps provide a framework for defining and measuring success in financial education. It presents results from one-on-one interviews with consumers – research that undertook to define the concept of financial well-being along with insights into the factors that can help contribute to it. The report concludes that four key elements of financial well-being are control over your day-to day and month-to month finances; the capacity to cope financially with an unexpected turn of events; financial freedom to make choices that allow you to enjoy life; and being on track to meet your financial goals.

Starting from these elements of financial well-being, the natural next step is to examine what types of behaviors support financial well-being. The research supporting our report suggests that people attain higher levels of financial well-being when they specifically engage in an approach that we call “Ask, Plan, Act” and they consciously take care to live within their means. That means doing your homework, setting goals and making sound and reasonable financial plans to achieve them, and then diligently carrying out those plans. And it means steadily putting money aside to save toward a specific purpose, whether it is an emergency fund, college tuition, or a new house.

To achieve these goals, consumers need access to financial products such as safe, affordable savings accounts and ways to make automatic deposits from their paychecks. The guidance issued today will help ensure that young people have the means available and have the kind of financial partners they need to help them develop good saving habits that will serve them well for the rest of their lives.

As mentioned earlier, we are also marking America Saves Week and Military Saves Week. These occasions add visibility for financial education efforts and provide an annual opportunity for organizations to promote the healthy financial habits that lead to greater financial health. The Bureau right now is deeply engaged in our tax time saving initiatives, both with volunteer income tax preparation sites and through a joint effort with leading tax preparation companies to distribute our materials on helping people save some portion of their tax refunds.

Finally, the Bureau is fortunate to be able to continue a close partnership with the Departments of Defense, Labor and Veterans Affairs to help servicemembers and their families achieve their financial goals. We are participating in military financial education fairs this week at Fort George G. Meade in Maryland and at the Pentagon, which will reach over 4,500 members of the military community with the message of financial well-being. Assistant Director Holly Petraeus is on the road right now, headlining ten military financial education events at military installations across the Pacific Northwest. We are also underway with our financial coaching initiative for servicemembers who are transitioning to civilian life, and we continue to support the inter-agency group that is assisting the Department of Defense as it works toward issuing a final rule in connection with its proposal to update its regulations under the Military Lending Act.

I look forward to hearing from the panel on how we can further advance youth savings programs.

Feb. 18, 2015 /PRNewswire-USNewswire/ — A coalition representing many of the nation’s largest auto finance sources urged the Consumer Financial Protection Bureau (CFPB) today to address the bias and error found in the method it uses to determine whether unintentional disparate impact exists in an indirect auto lender’s portfolio. The Bureau has used – and continues to use – this methodology to support allegations of discrimination, despite its flaws.

Since 2013, the CFPB has urged financial institutions to change how they compensate auto dealers for arranging financing, based on the Bureau’s allegation that dealer reserve poses a risk of disparate impact. However, a November 2014 study by Charles River Associates (CRA) found that the CFPB’s analysis overstates the impact on minorities, and cast doubt on many of the Bureau’s findings.

In light of these findings, the coalition called on the CFPB in a letter to revisit its enforcement approach. “The Associations request that the Bureau conduct a thorough review of the CRA study, provide a public response to its findings and recommendations, and correct any bias in its testing methodology, before pursuing further dealer mark-up discrimination claims through supervisory or enforcement action.”

Signatories of the letter include the American Financial Services Association, American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, and US Chamber of Commerce.

By law, auto lenders are prohibited from inquiring into or considering a consumer’s race or ethnicity. In order to estimate the background of consumers for pricing comparison purposes, the CFPB uses a proxy that is based on a statistical analysis of the consumer’s last name and residence. The CFPB’s own study of its proxy methodology revealed that it is subject to significant error.

The CRA study, based on 8.2 million vehicle contracts originated in 2012 and 2013, showed that the CFPB’s method overestimates minorities by as much as 41% – further calling into question the reliability of the CFPB’s testing method. The CFPB has not indicated that it has made any corrections for these error rates.

“We share the Bureau’s commitment to combating illegal discriminatory treatment in the vehicle finance market,” the letter stated. “This common goal is best achieved when fair lending standards are evidence-based, applied using analytically sound and transparent methods and predicated on accepted legal foundations.”

Based in Washington, D.C., AFSA (www.afsaonline.org) is the national trade association for the consumer credit industry, protecting access to credit and consumer choice. Its 350 members include consumer and commercial finance companies, vehicle finance/leasing companies, mortgage lenders, credit card issuers, industrial banks and industry suppliers.

SOURCE American Financial Services Association

Washington, DC /Financial Services Roundtable / –Today, the Financial Services Roundtable (FSR) and the Consumer Financial Protection Bureau (CFPB) announced a public-private initiative to join forces to promote effective financial education across the country.

CFPB, through its Office of Financial Education, and FSR will work together to facilitate the gathering and sharing of information about effective financial education strategies, to encourage adoption of financial education initiatives, especially in K-12 schools and in the workplace, and to protect older Americans from financial exploitation.

CFPB and FSR will host a series of working groups and listening sessions at various locations throughout the country to determine best practices and a path forward.

Details on the initiative can be found here.

Today’s announcement also featured a panel of financial services CEOs, who discussed “The Business Case for Financial Education. The panel included Kelly King, Chairman & CEO of BB&T, David Nelms, Chairman & CEO of Discover, Tim Arnold, President & CEO of Colonial Life and Alan Colberg, President & CEO of Assurant, Inc.

You can watch the panel here.

For more information, contact Alison Hawkins at [email protected]

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