Page 4 - June 20, 2024 Bulletin

BANKING
ARTICLES

CFPB Issues Rule Proposing the CFPB’s Chopra: Credit Unions
Removal of Medical Bills from Should be Subject to CRA
Credit Reports Scrutiny

The CFPB has proposed a rule to prohibit lenders from considering There should be a “level playing field” when it comes to
medical debt and remove medical bills from most credit reports. credit unions being subject to Community Reinvestment Act
The goal, the bureau said, is to increase privacy protections, increase requirements, CFPB Director Rohit Chopra said during a
credit scores and loan approvals, and prevent debt collectors from hearing of the House Financial Services Committee. The federal
using credit reporting “to coerce people to pay.” The CFPB began the government currently does not include credit unions in the CRA,
rulemaking in September last year, and it is expected that the bureau though several states impose CRA-like regulations on those
may issue additional proposals to implement other credit reporting institutions (the CFPB issued a summary of state-level CRA laws
changes the CFPB discussed at that time. last fall).
The CFPB’s proposed rule would prohibit credit reporting Chopra, who was testifying as part of the bureau’s semiannual
agencies from sharing information about medical debts with report to Congress, was asked by Rep. Emanuel Cleaver (D-Mo.)
lenders and prohibit lenders from making lending decisions about the difference in regulatory status, noting that banks have
based on medical information. In 2003, Congress restricted been “demanding” that credit unions be subject to CRA-like
lenders from obtaining or using medical information, including requirements for as long as he’s been in Congress – 20 years.
information about debts, through the Fair and Accurate Credit “We have seen many states enact CRA for certain nonbanks …
Transactions Act. Federal agencies subsequently issued a special many of those institutions that are not banks are getting a lot
regulatory exception to allow creditors to use medical debts of direct or indirect benefits, and we should really see if a more
in their credit decisions. The CFPB proposes reversing this level playing field is appropriate,” Chopra said. “The majority
policy. In support, the CFPB cited its own research claiming of mortgage lending is now outside of banks and so we should
that information about medical debt was less predictive of really look hard, whether by Congress or continue by the states.”
creditworthiness than other types of debt. Notably, that report Chopra added that while banks may not always agree with the
did not find medical debt had no predictive value.
CFPB, this is an area where “they would also agree that we should
The proposed rule would define "medical debt information" have stronger CRA requirements for other mortgage lenders that
to exclude debt owed to third-party lenders and instead apply enjoy those benefits.”
to debt the consumer owes directly to a healthcare provider,
including after such debt has been sold on the secondary market. FinCEN Releases FY 2023 Bank
As a result, the rule would not prohibit use or reporting of Secrecy Act Data
information about debts for medical care charged to credit cards,
including medical credit cards offered specifically for the payment The Financial Crimes Enforcement Network received
of medical services. approximately 4.6 million suspicious activity reports in fiscal
Read more: https://www.consumerfinance.gov/rules-policy/ year 2023, for an average of 12,600 reports a day, the agency said
rules-under-development/prohibition-on-creditors-and-consumer- in its year-in-review report. The report provides an overview of
reporting-agencies-concerning-medical-information-regulation-v/

4