The Independent Community Bankers of America® (ICBA) urged the Consumer Financial Protection Bureau (CFPB) to recognize the significant differences between community banks and other lenders by exempting community banks from any rule governing payday, vehicle title and certain high-cost installment loans. In a letter to the CFPB, ICBA wrote that any final rule must provide a clear path for community banks to continue making personal loans without new and undue regulatory burdens.

“ICBA’s message is clear: Do not fix what is not broken. Community banks are an important source of safe and sustainable small-dollar credit for the consumers who need it most,” ICBA wrote. “It would be extremely detrimental to consumers if community banks are forced from the small-dollar loan marketplace by an onerous and unworkable new rule.”

ICBA also highlighted that CFPB cites no evidence in its proposal that community bank small-dollar loans harm consumers. In fact, CFPB Director Richard Cordray’s remarks on June 2 recognized that community banks and their customers have a mutual stake in one another’s success. He also said that in drafting a rule the Bureau wanted to encourage other lenders to follow the small-dollar lending model of community banks and other responsible lenders.

While ICBA believes that exempting community banks outright from this proposal would be best for consumers, if the Bureau chooses not to adopt such an approach, ICBA strongly urges the CFPB to exempt any lenders that make 2,500 or fewer covered loans per year and derive 10 percent or less of their revenue from those loans.

Small-dollar loans are not a profit center for community banks, which make these loans to serve customers in their local communities who need access to credit.

“If the rule is finalized without an exemption for community banks, ICBA is very concerned about the options consumers will be left with, which could include unregulated and unlicensed predatory lenders,” ICBA wrote.
 
The Independent Community Bankers of America®, the nation’s voice for nearly 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.