Consumer Credit Access, Innovation, and Modernization Act - Directs the Comptroller of the Currency to charter creditors which shall become Internet consumer credit corporations (Internet creditors) to offer financial products or services primarily to underserved consumers and small businesses.
Requires an applicant for a federal charter to submit an application which includes: (1) a business plan for at least a three-year period with its primary business activities serving underserved consumers and small businesses for credit and related financial services through the Internet and electronic devices and not through brick-and-mortar locations, (2) a marketing plan that describes the types of financial products or services such creditor intends to offer, (3) a plan to promptly address complaints from underserved consumers and small businesses, and (4) an adequate capital structure.
Requires the Comptroller to approve or deny applications expeditiously.
Prohibits an Internet creditor from being owned or controlled by any person unless that person meets certain criteria.
Directs the Comptroller to ensure that Internet creditors only provide loans and other financial products or services through the Internet and electronic devices, and primarily focus their business operations on providing underserved consumers a variety of affordable financial products or services that are commercially viable for such creditors, including facilitation of personal savings and enhancement of such consumers' credit record.
Requires the Comptroller also to: (1) supervise and examine the activities of Internet creditors, and (2) adopt safeguards to ensure appropriate privacy and confidentiality protections regarding individually identifiable personal data and proprietary corporate data.
Instructs the Director of the Consumer Financial Protection Bureau (CFPB) to: (1) regulate the offering and provision of consumer financial products or services by Internet creditors pursuant to its authorities under federal consumer financial laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; and (2) coordinate with the Comptroller and other federal and state regulatory agencies to promote much greater availability of innovative, affordable, commercially viable credit for underserved consumers and small businesses, as well as consistent regulatory treatment of consumer and small business financial products or services.
Requires Internet creditors to make available to each consumer to whom a financial product or service is being offered: (1) information on how the consumer may obtain financial counseling services, the benefits of following a regular personal savings program, and how consumers can improve their credit ratings; (2) disclose clearly and conspicuously in the loan agreement the true cost of a loan, including all interest, fees, and loan related charges; and (3) offer a free extended repayment plan at least once yearly to an underserved consumer who is unable to repay an extension of credit with a loan repayment term of less than 120 days.
Subjects an Internet creditor to the enforcement authorities of the Comptroller, the Director, any other federal agency, and state attorneys general.
Makes a conforming amendment to the Truth in Lending Act.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1566 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 1566
To create a Federal charter for Internet consumer credit corporations,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 15, 2013
Mr. Luetkemeyer (for himself and Mr. Meeks) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To create a Federal charter for Internet consumer credit corporations,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Consumer Credit Access, Innovation,
and Modernization Act''.
SEC. 2. FINDINGS; PURPOSE; AND INTENT.
(a) Findings.--Congress finds the following:
(1) Studies by the Federal Deposit Insurance Corporation
(FDIC), National Bureau of Economic Research, FINRA Investor
Education Foundation, and other credible parties have shown
that roughly half of all American families, including not only
lower and moderate income families but also a large segment of
middle and higher income families who have poor credit scores
and limited disposable incomes, are literally living paycheck-
to-paycheck, lacking adequate savings and other resources to
cover unplanned expenses that frequently arise in every
household.
(2) These consumers (in this Act referred to as
``underserved consumers'') include those who are ``unbanked'',
having neither a checking or savings account at a depository
institution, and those who are ``underbanked'', having such an
account and frequently having higher incomes but credit
impairments, while nonetheless needing to rely on nondepository
financial institutions for short-term, small loans and other
credit products and financial services they desperately need,
but generally cannot obtain from traditional banking
institutions.
(3) Credit alternatives for underserved consumers generally
are limited and often not well suited to their particular needs
and in some instances lack any statutory consumer protections.
(4) Programs by the FDIC and other parties to expand access
to small loans and other financial products or services for
underserved consumers through banking institutions have had
very limited success because banks, which typically have
relatively high operating costs, generally have been unable to
make affordable small personal loans on a widespread,
commercially viable basis to these higher risk consumers, most
of whom may not even qualify for a loan under the high-credit
standards regulators necessarily require insured depositories
to maintain.
(5) To the extent that depository institutions offer
underserved consumers affordable small loans and other
financial products or services on a commercially viable basis,
they should be encouraged to do so, but it must be recognized
that overcoming the practical business obstacles for
depositories to offer such products or services appears to be
quite difficult at best for most depositories, and given the
massive scope of the short-term credit needs of such consumers,
depositories most likely will be unable to provide affordable
small loans and other financial products or services for a
significant number of them.
(6) Efforts of governmental, nonprofit, and private sector
institutions to help underserved consumers manage their
personal finances more effectively through financial education
and counseling programs also are important and must continue,
but given the tremendous number of consumers who face
significant ongoing financial challenges, most such underserved
consumers are likely to be unable to overcome their financial
difficulties through such efforts.
(7) Nondepository creditors historically have been
primarily State-regulated, are not federally insured, generally
pose little or no systemic or taxpayer risk, typically have
lower operating costs and can employ less restrictive credit
standards than depositories, and are a major source of small
loans and financial products or services for underserved
consumers, providing such consumers annually with billions of
dollars in credit.
(8) A number of nondepository creditors have developed
advanced proprietary loan underwriting and servicing procedures
and cutting-edge technologies allowing them to offer credit to
more underserved consumers, but such creditors lack the
authority available to national banks to operate on a
multistate or nationwide basis using a single lending charter
and subject to strong, uniform Federal regulation that would
enable them to maximize their capacities to operate more
innovatively and efficiently.
(9) Nondepository creditors are instead subject to widely
differing State licensing laws that impose substantial cost and
compliance burdens, and, more significantly, laws that severely
limit the types of financial products or services that may be
offered, prevent loans from being provided on a commercially
viable basis, stifle innovation, reduce competition, and leave
underserved consumers with a limited choice of products or
services that in many cases are not well suited to their
personal needs and cost significantly more because of these
conflicting and outdated restrictive State laws.
(10) It is in the national interest and will greatly
benefit the millions of underserved consumers who have pressing
needs for additional credit alternatives for Congress to adopt
legislation to authorize creditors the option of receiving a
Federal charter under which they can provide such consumers
loans and other financial products and services through the
Internet and electronic devices and not traditional brick-and-
mortar storefront locations, allowing them to operate more
innovatively and efficiently on a nationwide basis.
(11) An Internet consumer credit corporation chartered
under this Act will be adequately regulated under Federal laws
and regulations prescribed by the Comptroller of the Currency
and the Director of the Consumer Financial Protection Bureau,
and such laws and regulations shall be enforced in accordance
with this Act without such corporation being subjected to
duplicative and conflicting State laws that in many cases
severely and unnecessarily restrict product innovation and
choice and raise the cost of the limited credit choices now
available to underserved consumers.
(12) Allowing such federally regulated lending by Internet
creditors as authorized by this Act through the Internet and by
electronic devices, but not through traditional storefront,
brick-and-mortar locations, on a nationwide basis, is
consistent with the fact that consumers' borrowing habits are
shifting rapidly to seeking more financial product and service
choices with the convenience, ease of credit access, and more
alternatives provided by computers, mobile phones, and other
electronic devices, and millions of underserved consumers will
be able to secure credit from Internet consumer credit
corporations that are subject to applicable State and Federal
laws.
(13) Small businesses, which are vital to job creation and
the health of the Nation's economy, also have a continuing need
for additional credit alternatives, and allowing Internet
consumer credit corporations to offer certain financial
products and services to small businesses through the Internet
and by electronic devices will be in the national interest.
(b) Purpose and Intent.--The purpose and intent of this Act is to--
(1) provide underserved consumers greater access to
innovative, affordable, commercially viable, and better suited
financial products and services;
(2) create a Federal charter for creditors that offer
financial products or services through the Internet and
electronic devices and not traditional brick-and-mortar
storefront locations and focus their business primarily on
meeting the credit needs of underserved consumers and small
businesses, enabling such Internet creditors to provide more
innovative, affordable, and appropriate credit options, subject
to uniform Federal lending standards rather than operating
under the widely varying, often conflicting, overly
restrictive, and unnecessarily costly system of State lending
laws that currently prevent nondepository creditors from
offering underserved consumers and small businesses the credit
options they need;
(3) clarify that Congress understands that even with the
more innovative and efficient lending authorized by this Act
and reasonable pricing by Internet consumer credit
corporations, the cost of commercially viable, short-term,
small-dollar credit for higher risk underserved consumers
typically will be considerably higher than the cost for other
consumers who have no credit impairments and that when the cost
of such credit is expressed in terms of an annual percentage
rate, in most cases such rate will be much higher than such
rate for larger, longer term loans, especially those made to
consumers with unimpaired credit records, and therefore it
should not be presumed or necessarily concluded that such
credit extensions to underserved consumers are unfair or
abusive, provided full disclosure of the cost of such credit is
made as required by this Act and such corporation has a
reasonable basis for determining that an underserved consumer
can repay, therefore indicating that the credit is affordable;
(4) require that the Comptroller exercise his or her
authorities to administer, enforce, and implement the
provisions of this Act and regulations prescribed pursuant to
this Act to provide for ongoing prudential regulatory oversight
of Internet consumer credit corporations and to promptly adopt
reasonable and flexible policies and procedures to ensure the
approval of Federal charters for qualified applicants, while
also promoting the offering of innovative, affordable, and
commercially viable financial products or services; and
(5) require that the Director exercise his or her
authorities to administer, enforce, and implement the
provisions of Federal consumer financial laws and applicable
provisions of this Act and regulations prescribed pursuant to
this Act to ensure that underserved consumers receive effective
consumer financial protections, while also promoting the
offering of innovative, affordable, and commercially viable
financial products or services.
SEC. 3. INTERNET CONSUMER CREDIT CORPORATIONS.
(a) Federal Charter.--In accordance with the provisions of this
Act, and regulations prescribed pursuant to this Act, the Comptroller
shall charter creditors which shall become Internet consumer credit
corporations (hereinafter referred to as ``Internet creditors'') to
offer financial products or services primarily to underserved consumers
and small businesses as provided for in this Act.
(b) Application Required.--
(1) In general.--A person that desires to obtain a Federal
charter under this Act shall submit an application to the
Comptroller at such time, in such manner, and accompanied by
such information as the Comptroller may require.
(2) Expeditious determination.--The Comptroller shall make
a determination as to whether an application submitted under
paragraph (1) is approved or denied expeditiously.
(c) Requirements.--In seeking a Federal charter under this Act, an
applicant shall meet the following requirements:
(1) A business plan shall be established covering at least
the initial 3-year period of operation as a commercially viable
entity with its primary business activities being to serve the
needs of underserved consumers and small businesses for credit
and related financial services through the Internet and
electronic devices and not through brick-and-mortar locations,
and such plan shall--
(A) realistically forecast market demand, the
intended customer base, competition, economic
conditions, financial projections, and business risks;
(B) include a marketing plan that describes the
types of financial products or services such creditor
intends to offer, how it will market them, and how such
products or services are expected to be affordable for
underserved consumers and small businesses and
commercially viable for the creditor; and
(C) contain an acceptable plan for--
(i) ensuring compliance with all applicable
laws and regulations; and
(ii) for promptly addressing complaints
from underserved consumers and small
businesses.
(2) A competent and experienced management team of good
moral character with expertise in and a commitment to serving
the credit needs of underserved consumers, experience in
offering financial services products to consumers through the
Internet or electronic devices, and awareness and understanding
of applicable legal requirements shall be established.
(3) Adequate capital structure relative to the operational
and financial assumptions and business plans of the applicant,
including the cost of utilizing advanced technology and
information management systems for its operating and compliance
needs, shall be established.
(4) No Internet creditor shall be directly or indirectly
owned or controlled by any person unless--
(A) the person is an individual, a Federal- or
State-chartered depository institution, a bank holding
company (as defined in section 2(a) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(a))), a savings and
loan holding company (as defined in section 10(a)(1)(D)
of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(D))), or a nonprofit corporation; or
(B) the primary business activity of the person
involves--
(i) providing financial products or
services to consumers; or
(ii) owning or controlling persons whose
primary business activity is providing
financial products or services to consumers.
(5) Any other requirements provided for under this Act or
in regulations prescribed by the Comptroller consistent with
the purposes of this Act.
(d) Authority of Internet Creditors.--Upon receiving a Federal
charter pursuant to subsection (a), an Internet creditor shall become,
as from the date of the execution of its charter, a body corporate,
and, as such, an Internet consumer credit corporation, and in the name
designated in the charter it is authorized to--
(1) adopt and use a corporate seal;
(2) have succession from the date its charter is issued
until such time as it be dissolved by the act of its
shareholders owning two-thirds of its stock, or until its
charter is revoked by the Comptroller, or until terminated by
an Act of Congress, or until its affairs are placed in the
hands of a receiver and finally wound up by the receiver in
accordance with title 11, United States Code, or other
applicable law;
(3) borrow money, issue stock, and enter into contracts;
(4) sue and be sued and complain and defend, in any court
of law and equity of competent jurisdiction, as fully as
natural persons;
(5) elect or appoint directors, and by its board of
directors to appoint a president, vice president, and other
officers, define their duties, require bonds of them and fix
the penalty thereof, dismiss such officers or any of them at
pleasure, and appoint others to fill their places;
(6) prescribe, by its board of directors, bylaws not
inconsistent with law, regulating the manner in which its stock
shall be transferred, its directors elected or appointed, its
officers appointed, its property transferred, its general
business conducted, and the privileges granted to it by law
exercised and enjoyed;
(7) hire employees and consultants and fix their
compensation, define their duties, and give such persons
appropriate authority to carry on its business operations;
(8) enter into joint ventures and other business
partnerships with other Internet creditors, depository
institutions, State-chartered or licensed nondepository
creditors, third-party service providers and vendors, and other
parties to promote or facilitate providing as herein authorized
commercially viable financial products or services to
underserved consumers and small businesses;
(9) contribute to community funds, or to charitable,
philanthropic, or benevolent instrumentalities conducive to
public welfare, such sums as its board of directors may deem
expedient and in the interests of the Internet creditor;
(10) invest in, or buy or lease, real estate or tangible
personal property, including vehicles, equipment, furnishings
and furniture, to be used by the Internet creditor in
conducting business related operations authorized under this
Act;
(11) provide loans and other financial services only
through the Internet and electronic devices as its board of
directors or duly authorized officers or agents may determine,
in accordance with this Act and regulations prescribed pursuant
to this Act, are appropriate for providing financial products
or services to consumers, including underserved consumers, and
to small businesses in accordance with the provisions of this
Act and regulations prescribed pursuant to this Act;
(12) exercise by its board of directors or duly authorized
officers or agents, subject to law, all such incidental,
implied, or reasonably necessary powers as may be appropriate
to carry on its corporate operations and the business of
providing commercially viable financial products or services to
consumers, including underserved consumers and small businesses
in accordance with the provisions of this Act and regulations
prescribed pursuant to this Act;
(13) be affiliated with, or owned by, an insured depository
institution, nondepository creditor, nonprofit organization, or
other qualified entities unless otherwise limited by this Act
or regulations prescribed pursuant to this Act;
(14) acquire or merge with other Internet creditors; and
(15) exercise such other powers as may be reasonably
necessary or appropriate to offer financial products or
services as provided for pursuant to this Act, or provided for
through regulations prescribed by the Comptroller pursuant to
the provisions of this Act.
(e) Duties and Responsibilities.--
(1) Comptroller of the currency.--The Comptroller shall--
(A) ensure that Internet creditors only provide
loans and other financial products or services through
the Internet and electronic devices and that, to the
extent reasonably possible, such creditors primarily
focus their business operations on providing
underserved consumers a variety of affordable financial
products or services that are commercially viable for
such creditors, including certain products or services
that contain features to facilitate personal savings
and enhance the credit record of such consumers;
(B) encourage and facilitate--
(i) innovation with respect to the
financial products or services offered to
underserved consumers; and
(ii) joint ventures and other business
partnerships among Internet creditors, insured
depository institutions, other nondepository
creditors, third-party service providers and
vendors, nonprofit organizations, and other
parties in order to ensure greater credit
access for underserved consumers and small
businesses;
(C) provide, through regulations, details on how
Internet creditors should be organized, incorporated,
and operated in a prudential manner;
(D) conduct examination and supervisory activities
of Internet creditors to--
(i) access their internal controls and
management ability;
(ii) evaluate their financial condition and
risk profile;
(iii) determine if they are meeting the
needs of underserved consumers and small
businesses; and
(iv) monitor their compliance with this Act
and other applicable laws and regulations that
the Comptroller may have administrative
responsibly for, and identify areas in which
corrective action is needed;
(E) consult, cooperate and coordinate, as
appropriate, with the Director and with other Federal
and State regulatory agencies, including State bank
supervisors, to promote much greater availability of
innovative, affordable, commercially viable credit for
underserved consumers, and consistent regulatory
treatment of consumer and small business financial
products and services;
(F) help ensure that the supervisory activities,
including examination schedules, of Internet creditors
and affiliated companies are conducted in a coordinated
and efficient manner; and
(G) adopt adequate safeguards to ensure appropriate
privacy and confidentiality protections with respect to
individually identifiable personal data and proprietary
corporate data.
(2) Director of the bureau of consumer financial
protection.--The Director shall--
(A) regulate the offering and provision of consumer
financial products or services by Internet creditors
under the Federal consumer financial laws pursuant to
its authorities under the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5301 et seq.),
this Act, and regulations prescribed pursuant to this
Act;
(B) consult, cooperate, and coordinate, as
appropriate, with the Comptroller and with other
Federal and State regulatory agencies, including State
bank supervisors, to promote--
(i) much greater availability of
innovative, affordable, commercially viable
credit for underserved consumers and small
businesses; and
(ii) consistent regulatory treatment of
consumer and small business financial products
or services;
(C) help ensure that the supervisory activities,
including examination schedules, of Internet creditors
and affiliated companies are conducted in a coordinated
and efficient manner; and
(D) adopt adequate safeguards to ensure appropriate
privacy and confidentially protections with respect to
individually identifiable personal data and proprietary
corporate data.
(3) Internet creditors.--Each Internet creditor shall--
(A) make financial education information available
to each consumer it offers a financial product or
service, including information on how a consumer may
obtain financial counseling services, the benefits of
following a regular personal savings program, and how
consumers can improve their credit ratings;
(B) comply with all applicable Federal laws and
regulations, including Federal consumer financial
protection law requirements and such State laws,
regulations, and enforcement actions as are authorized
under the provisions of this Act;
(C) provide account access to its customers through
the Internet and a toll-free telephone number;
(D) provide, in accordance with regulations
prescribed pursuant to this Act, to all consumers who
are extended credit with a repayment term of 1 year or
less by the Internet creditor a clear and conspicuous
statement in the loan agreement that discloses the true
cost of the loan, including all interest, fees, and
other loan-related charges, as a dollar amount and as a
percentage of the principal amount of the loan in lieu
of the annual percentage rate disclosure that otherwise
would be required under the Truth in Lending Act (15
U.S.C. 1601 et seq.) or regulations prescribed pursuant
to such Act;
(E) report to the Comptroller or Director such data
as either may require regarding its activities,
including the types of financial products or services
provided to underserved consumers and small businesses,
and data demonstrating that its business activities are
focused primarily on serving underserved consumers and
small businesses as required by this Act;
(F) offer--
(i) an underserved consumer who is unable
to repay an extension of credit by an Internet
creditor that has a loan repayment term of less
than 120 days, an extended repayment plan, at
no cost to the consumer, at least once in a 12-
month period; and
(ii) to the extent reasonably possible,
certain financial products or services that
contain features to facilitate personal savings
that could help underserved consumers enhance
their credit records if such consumers fully
comply with the terms and conditions of such
products or services; and
(G) not--
(i) accept consumer or commercial deposits;
(ii) make commercial loans, except to the
extent allowed by the provisions of this Act
and regulations prescribed pursuant to this
Act, with respect to small businesses;
(iii) make a consumer loan with a term of
30 days or less;
(iv) make a loan that requires a consumer
to repay the loan balance in one lump-sum
payment; or
(v) extend credit to a consumer--
(I) unless the Internet creditor
has a reasonable basis for believing
that the consumer will have the ability
to repay the credit extension;
(II) if the maximum principal
amount of the credit outstanding from
all financial products or services
authorized by the Internet creditor to
such consumer, in the case of an
unsecured credit transaction, exceeds
$5,000, or in the case of a secured
credit transaction, $25,000, unless a
higher amount is authorized by
regulations prescribed by the
Comptroller; or
(III) if the loan terms include a
prepayment penalty; or
(vi) extend credit to a small business in
excess of $25,000.
(f) Additional Product or Service Offerings.--Financial products or
services that may be offered to underserved consumers pursuant to this
subsection for underserved consumers and certain small businesses may
also be offered to other consumers and businesses.
(g) Rule of Construction.--Nothing in this Act is intended to
provide the Comptroller or the Director with the authority to--
(1) regulate financial products or services that are
provided or offered by an affiliate company or another entity
that the Internet creditor has a business relationship with,
but the Internet creditor does not provide or offer to
underserved consumers or small businesses in accordance with
this Act;
(2) determine, directly or indirectly, pricing applicable
to an extension of credit offered by an Internet creditor to a
consumer or small business pursuant to this Act through a usury
limit, a cap on the rate of interest, fees, or other charges,
or otherwise;
(3) prohibit, directly or indirectly, the offering of a
financial product or service to underserved consumers or small
businesses by an Internet creditor pursuant to this Act unless
a determination is made by the Comptroller or Director, based
on a fair and reasonable determination of the facts and
circumstances regarding the financial product or service, that
offering such a product or service will seriously harm the
financial interests of underserved consumers or small
businesses; or
(4) presume or conclude that a credit extension offered to
underserved consumers by an Internet creditor under the
provisions of this Act, regulations prescribed by this Act, and
such other statutes and regulations as either may have
administrative and enforcement authority for is unfair,
abusive, or otherwise inappropriate solely on the basis that
the interest rates and other charges to such consumers, who
typically pose relatively high credit risks, are significantly
higher than those on credit extensions offered to other
consumers who do not pose such high credit risks.
(h) Internet Creditor Regulatory Fee.--Each Internet creditor shall
pay to the Comptroller an annual fee in a reasonable amount that the
Comptroller determines is sufficient, in the aggregate of all such fees
paid by Internet creditors, to offset the cost to the Comptroller of
carrying out the provisions of this Act.
(i) Charter Suspension or Revocation.--The Comptroller, pursuant to
procedures established in regulations prescribed by the Comptroller,
may suspend or revoke the charter of an Internet creditor if there has
been a material failure by the Internet creditor to comply with the
requirements set forth in the charter, provisions of this Act, or other
applicable statutes, regulations, or orders.
(j) Relationship to Other Federal and State Laws.--
(1) Federal law.--An Internet creditor is subject to--
(A) all otherwise applicable provisions of Federal
statutes and regulations, including the consumer
financial laws listed under section 1002(14) of the
Consumer Financial Protection Act of 2010 (12 U.S.C.
5481(14)), section 987 of title 10, United States Code
(relating to consumer credit extended to servicemembers
and dependents), and the provisions of this Act and
regulations established pursuant to this Act; and
(B) the administration and enforcement of such
statutes and regulations by the Comptroller, the
Director, any other Federal agency, or State attorney
general (or the equivalent thereof) having enforcement
authority.
(2) State law.--An Internet creditor, or an employee,
agent, or other business partner of an Internet creditor, shall
not be subject to--
(A) State laws that relate to office location,
licensing, education, or training that apply to the
operations of an Internet creditor, or its employees,
agents, or other business partners to the extent that
these operations relate to the exercise of its powers
or authorities under this Act and implementing
regulations to provide financial products or services
to underserved consumers and small businesses; or
(B) other State laws that--
(i) have a discriminatory effect on an
Internet creditor compared to the effect of
such laws on any other depository or
nondepository creditor chartered or licensed in
that State;
(ii) consistent with the legal standard for
preemption in the decision of the Supreme Court
of the United States in Barnett Bank of Marion
County, N.A. v. Nelson, Florida Insurance
Commissioner, et al., 517 U.S. 25 (1996),
prevent or significantly interfere with the
exercise by an Internet creditor of its powers
and authorities as set forth in this Act; or
(iii) are preempted by any provision of
Federal law.
(3) Determination of preemption.--An Internet creditor may
challenge the applicability of a State law as preventing or
significantly interfering with the exercise of such creditor's
powers under this Act, or for violating any provision of
paragraph (2), in any court of competent jurisdiction, and the
Comptroller or Director, by regulation or order, or any court
of competent jurisdiction may make a determination, on a case-
by-case basis, that a State law prevents or significantly
interferes with the exercise of an Internet creditor's powers
under this Act, or violates a provision of paragraph (2), in
accordance with applicable law.
(k) Enforcement.--
(1) In general.--The Comptroller or the Director may
enforce in any court of competent jurisdiction the provisions
of this Act, regulations prescribed pursuant to this Act
relating to their respective regulatory authority in this Act,
and their respective cease and desist or other orders or
regulatory requirements.
(2) Action by state.--The attorney general (or the
equivalent thereof) of any State shall have the power to
investigate violations of this Act and may bring a civil
enforcement action in the name of such State against an
Internet creditor in any district court of the United States or
in State court that has jurisdiction over the Internet creditor
and to secure civil penalties and such other remedies under
provisions of this Act or otherwise provided under other
applicable law.
(3) Consultation required.--
(A) Notice.--
(i) In general.--When initiating any action
in a court or other administrative or
regulatory proceeding against any Internet
creditor as authorized by this Act to enforce
any provision of this Act, including any
regulation pursuant to this Act, a copy of the
complete complaint filed or to be filed and
written notice describing such action or
proceeding shall be provided to the Comptroller
and the Director by the State attorney general
(or the equivalent thereof) prior to or
immediately upon instituting the action or
proceeding.
(ii) Contents of notice.--The notification
required under this paragraph shall, at a
minimum, describe--
(I) the identity of the parties;
(II) the alleged facts underlying
the proceeding; and
(III) whether there may be a need
to coordinate the prosecution of the
proceeding so as not to interfere with
any action, including any rulemaking,
undertaken by the Comptroller or the
Director.
(B) Comptroller and director response.--In any
action brought by a State attorney general (or
equivalent thereof), the Comptroller and Director may--
(i) intervene in the action as a party; and
(ii) upon intervening--
(I) remove the action to the
appropriate United States district
court, if the action was not originally
brought there;
(II) be heard on all matters
arising in the action; and
(III) appeal any order or judgment,
to the same extent as any other party
in the proceeding may.
(4) Regulations.--The Comptroller and the Director shall
jointly prescribe regulations to implement the requirements of
this subsection and, from time to time, consult with State
attorneys general (or the equivalent thereof) in order to
develop appropriate protocols to coordinate actions with the
State attorneys general and other appropriate regulators.
(5) Preservation of state authority.--No provision of this
Act shall be construed as modifying, limiting, or superseding
the operation of any provision of any Federal consumer
financial protection law or regulations prescribed pursuant to
such laws that relates to the authority of a State attorney
general (or the equivalent thereof) to enforce such Federal law
and regulations.
(l) Penalties for Violations.--The relief available for violations
of provisions of this Act, regulations prescribed pursuant to this Act,
or orders or supervisory mandates, including cease and desist orders,
with respect to proceedings involving Internet creditors by the
Comptroller, the Director, or State attorneys general (or the
equivalent thereof) shall be the same as or equivalent to that provided
with respect to actions by the Director in section 1055 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5565).
(m) Reports to Congress.--Not later than 180 days after the
effective date of this Act, and annually for 5 years thereafter, the
Comptroller and the Director shall submit to Congress a joint report on
their activities and progress in helping to expand access to innovative
and affordable credit for underserved consumers and small businesses,
and such reports shall include--
(1) a descriptive summary of the actions of the Comptroller
and the Director during the reporting period to carry out the
purposes of this Act;
(2) the number of charter applications received by the
Comptroller;
(3) the number of charter applications that were approved,
disapproved, conditionally approved, or are pending and a
detailed explanation of each disapproval or conditional
approval;
(4) a description of any further actions the Comptroller or
the Director believes should be undertaken to--
(A) facilitate the chartering of qualified
nondepository institutions; and
(B) increase the number of financial products that
are available to help increase competition and consumer
choice for underserved consumers; and
(5) any recommendations the Comptroller or the Director may
have regarding other legislative measures that would improve
the ability of an Internet creditor to provide additional
financial products or services to underserved consumers or
small businesses.
(n) Regulations.--The Comptroller and the Director shall consult
and prescribe joint regulations implementing the provisions of this Act
not later than 180 days after the effective date of this Act.
SEC. 4. DEFINITIONS.
In this Act:
(1) Affiliate.--The term ``affiliate'' means any person
that controls, is controlled by, or is under common control
with another person.
(2) Affordable.--The term ``affordable'' means that a
creditor has a reasonable expectation that a consumer or small
business will be able to repay an extension of credit.
(3) Commercially viable.--The term ``commercially viable''
means that a reasonable economic profit is expected to be made
when a financial product or service is provided to a consumer
or small business.
(4) Comptroller.--The term ``Comptroller'' means the
Comptroller of the Currency.
(5) Consumer.--The term ``consumer'' means an individual or
agent, trustee, or representative acting on behalf of an
individual.
(6) Control and controlled by.--The terms ``control'' and
``controlled by'' mean that--
(A) a person directly or indirectly or acting
through 1 or more other persons owns, controls, or has
power to vote 25 percent or more of any class of voting
stock of a company;
(B) a person controls in any manner the election of
a majority of the directors or trustees of a company;
or
(C) the Comptroller makes a determination, after
notice and opportunity for hearing, that a person
directly or indirectly exercises a controlling
influence over the management or policies of a company.
(7) Credit.--The term ``credit'' means the right granted by
a person to a consumer or a small business to defer payment of
a debt, incur debt and defer its payment, or purchase property
or services and defer payment for such purchase.
(8) Creditor.--The term ``creditor'' has the same meaning
as is given such term in section 103(g) of the Truth in Lending
Act (15 U.S.C. 1602(g)), and for purposes of this Act, shall
include a person who extends credit to a small business
pursuant to the provisions of this Act.
(9) Director.--The term ``Director'' means the Director of
the Bureau of Consumer Financial Protection.
(10) Electronic device.--The term ``electronic device''
means an electronic device that communicates by any transfer of
signs, signals, writing, images, sounds, data, or intelligence
of any nature transmitted in whole or in part by a wire, radio,
electromagnetic, photoelectronic, or photo-optical system that
affects interstate or foreign commerce.
(11) Extended repayment plan.--The term ``extended
repayment plan'' means an installment plan under which a
consumer who is unable to repay a credit extension on a loan
with a term of less than 120 days on the date due, and who
complies with applicable requirements established in
regulations pursuant to this Act, may repay a creditor the
outstanding balance of the loan in at least 4 substantially
equal payments without being charged any additional interest,
fees, or other charges.
(12) Federal consumer financial laws.--The term ``Federal
consumer financial laws'' has the same meaning as is given to
that term in section 1002(14) of the Consumer Financial
Protection Act of 2010 (12 U.S.C. 5481(14)).
(13) Financial product or service.--The term ``financial
product or service'' has the same meaning as is given the term
``consumer financial product or service'' in section 1002(5) of
the Consumer Financial Protection Act of 2010 (12 U.S.C.
5481(5)), and for purposes of this Act, shall also include a
financial product or service provided to a small business.
(14) Insured depository institution and depository
institution.--The terms ``insured depository institution'' and
``depository institution'' (also referred to herein as
``depositories'') have the same meanings as are given such
terms under section 3(c) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(c)), and for purposes of this Act, also
includes an ``insured credit union'' as such term is defined
under section 101(7) of the Federal Credit Union Act (12 U.S.C.
1752(7)).
(15) Internet.--The term ``Internet'' means the
international computer network of interoperable packet-switched
data networks.
(16) Nondepository creditor.--The term ``nondepository
creditor'' means an entity that is chartered or licensed by a
State and offers personal loans or other financial products or
services to consumers or small businesses, but does not accept
consumer or commercial deposits.
(17) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or
any other entity.
(18) Primary business activities.--The term ``primary
business activities'' means that the business activities of an
Internet creditor predominately involve providing financial
products and services to underserved consumers and small
businesses.
(19) Secured credit transaction.--The term ``secured credit
transaction'' means--
(A) a consumer credit transaction where the
performance of the credit obligation is secured by an
interest in property; and
(B) such transaction is recognized as secured by
State or Federal law, provided, however, a consumer's
authorization for an electronic fund transfer as a
payment on a financial product or service shall not be
considered, for purposes of this Act, as security on a
credit transaction.
(20) Small business.--The term ``small business'' means a
business entity, including a sole proprietorship, that has less
than 500 full-time employees.
(21) State.--The term ``State'' means--
(A) a State, territory, or possession of the United
States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, American Samoa, and the United States
Virgin Islands.
(22) Underserved consumer.--The term ``underserved
consumer'' means a natural person who--
(A) does not have a checking or savings account
with an insured depository institution; or
(B) has a deposit account with an insured
depository institution, but has limited or no ability
to obtain small personal loans or other nondepository
financial products or services from an insured
depository institution.
(23) Unsecured credit transaction.--The term ``unsecured
credit transaction'' means a consumer credit transaction where
the performance of the credit obligation is not secured by an
interest in property or where the security interest is not
recognized by State or Federal law.
SEC. 5. CONFORMING AMENDMENT TO TILA.
Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended
by adding at the end the following:
``(8) Credit transactions involving extensions of credit
with a term of 1 year or less in which the creditor provides
consumers in all such credit transactions with a clear and
conspicuous statement in the loan agreement that discloses the
true cost of the loan, including all interest, fees, and other
loan related charges, as a dollar amount and as a percentage of
the principal amount of the loan.''.
SEC. 6. EFFECTIVE DATE.
This Act shall be effective 180 days after the date of the
enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Committee on Banking, Housing, and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection. Hearings held.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line