WASHINGTON (6/7/12)--The Consumer Financial Protection Bureau (CFPB) is continuing its review of the impact that ability-to-pay rules imposed by the Credit Card Accountability Responsibility and Disclosure (CARD) Act are having on the ability of some consumers to obtain credit, and could address these credit access issues as soon as this summer, CFPB Associate Director Gail Hillebrand said.
Hillbrand testified before a Wednesday House subcommittee on financial institutions and consumer credit hearing entitled "An Examination of the Federal Reserve's Final Rule on the CARD Act's 'Ability to Repay' Requirement."
The ability-to-pay rules, which are now part of Regulation Z, require a card issuer to consider a consumer's independent ability to make required payments on a credit card account before opening a new card account or increasing the credit limit on an existing account. Outside of community property states, a card issuer may not rely solely on household income provided by an applicant on a credit card application, but will need to obtain additional information about the applicants independent income. Information concerning the applicant's income or salary, however, may be relied on in order to determine whether the applicant has the ability to make the required payments.
The CFPB last December reached out for public comment on any issues that the ability-to-pay rules were creating for lenders and borrowers, and the comment period ended on June 4. The agency is reading through those comments at this time, Hillebrand said.
Legislators last year contacted the CFPB, noting that the ability-to-repay rules were in some cases limiting the ability of stay-at-home spouses to secure new lines of credit and asking the CFPB to investigate the issue. The Credit Union National Association (CUNA) backed the call for a CARD Act study.
In prepared testimony delivered on Wednesday, Hillebrand said the agency is examining how it can "mitigate the risk that stay at home spouses might be denied credit that they can, in fact, afford to repay," and is considering how CFPB guidance could address this and other issues created by the ability-to-repay rules.
She noted that household income that is deposited into joint accounts "is legally available to both account holders, and may be considered in determining the ability of either one of them to repay a loan." However, the ability-to-repay rule, as currently written, does not currently specifically address joint accounts or checking accounts, instead only advising card issuers to "take into account assets such as savings accounts" when it determines an individual's creditworthiness.
For more on the hearing, use the resource link.