St. Albans Messenger: Banks, licensed lenders,what's the difference?
AFFIL appeared in this article by Michelle Monroe on March 21, 2008:
The Messenger also spoke with Jim Campen, executive director of Americans for Fairness in Lending (AFFIL), about the differences in lending patterns between banks and licensed lenders.
“To be a bank is a big deal,” Campen said. “To get FDIC insurance, there’s a rigorous review,” Campen explained. That review includes not only the resources and capital of the bank but also the experience and expertise of its managers, according to Campen.
Asked if the lack of lending restrictions contributes to predatory lending, Jim Campen, of AFFIL, responded with an unequivocal “Yes.” Campen said that in Massachusetts, where he has done extensive research into lending patterns, 70 percent of high cost loans, also known as High APR Loans (HALs) are made by licensed lenders.
HALs are loans in which the annual percentage rate for the month in which the loan closed is more than 3 percent above the interest rate on treasury bills for that same month, Campen explained.
icensed lenders are not covered by the Community Reinvestment Act of 1977 (CRA), according to Campen. The act was adopted by Congress in response to “redlining” by banks, in which borrowers in certain neighborhoods would be excluded from loans or given different terms for their loans than other borrowers. The law requires banks to serve all portions of their communities. “A lot of good lending has come out of it,” Campen said.
However, banks are only required to comply with the CRA in communities where they accept deposits. Some banks lend nationally but only have branches in certain states, Campen said.
Licensed lenders are not subject to CRA at all.
Campen said there is a demonstrable pattern between the frequency of HALs made by a bank or lender and whether or not it is subject to CRA. Last fall Massachusetts passed a law subjecting licensed lenders to requirements similar to those in the CRA, according to Campen.
Americans for Fairness in Lending 
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