In January, we posted a piece highlighting a resolution passed by NOBEL/Women, supporting traditional installment loans. A second resolution has also passed, this time focused onMAKING MAINSTREAM LENDING AVAILABLE AND ACCESSIBLE IN UNDERSERVED COMMUNITIES.
This resolution again points to number of desirable attributes in safe and affordable loans, including tests of consumers’ ability to repay, reporting payment history to at least one of the three major credit agencies. It goes further, however, discussing the issue of banks getting involved (or, more frequently, not getting involved) in underserved communities (Our latest comment on this is HERE).
This resolution urges regulators and the Congress to allow commercial banks to participate in the provision of credit to minority communities indirectly, by lending to other mainstream consumer lenders, who are comfortable being part of those underserved communities. In this way, the banks can earn Community Reinvestment Act (CRA) credits, without undue risk to their depositors or to taxpayers, who frequently foot the bill for government inspired bank lending programs. The resolution states:
BE IT FURTHER RESOLVED, that NOBEL Women recommends to the financialregulators of this country and to the Congress of the United States, that banks be allowed and encouraged to earn their CRA credit indirectly by providing loans to eligible third parties, which in turn and at their own risk will make safe and affordable installment loans to lower income Americans in minority communities when ends don’t meet…
The resolutionalso deplores the use of the concept of reputation risk by certain groups to discourage banks from even such an indirect, but helpful, means of supporting these communities.
Once more, NILA applauds the resolutions and the NOBEL/Women group’s position on Traditional Installment Loans.
NOBEL/Women is a non-profit, non-partisan organization primarily composed of current and former black women legislators as well as many appointed officials. Originally established in 1985 as a national organization to increase and promote the presence of black women in government, NOBEL/Women in recent years has expanded its vision to serve as a global voice to address a myriad of issues affecting the lives of all women.
More information is available at http://nobel-women.org