October 28, 2011

Gillibrand, Blumenthal Call On CFPB To Study Credit Rules That Discriminate Against Stay At Home Spouses

Washington, DC – U.S. Senators Kirsten Gillibrand and Richard Blumenthal today released their letter to the Consumer Financial Protection Bureau (CFPB) requesting the agency study the effects of the Federal Reserve’s “Ability to Pay” provisions that could have unintended, negative consequences for stay-at-home spouses who rely on their partner for a household income.

In the letter, the Senators write, “The study should examine the effects of the uniform standard for the first year after the implementation with a report back to Congress. If it is found that stay-at-home spouses have been negatively impacted, the CFPB should then amend the rule to correct any problems it has found.”

The Ability to Pay provisions were intended to prevent young credit seekers from accessing credit that did not match their income and in turn, acquiring large amounts of debt that they could not pay back.

The full text of the letter is below:

Dear Mr. Date:

We write to follow up on the Federal Reserve Board's final rules that it approved on March 18, 2011, concerning Regulation Z and specifically the "Ability to Pay" provision standard that is contained in those rules. We are disappointed that in issuing this rule with a unified standard for assessing ability to pay, the Federal Reserve has chosen to ignore the intent of Congress which created two standards, one for consumers under 21 and one for all other consumers.

We continue to be concerned that applying an independent ability to pay standard for consumers other than those under 21 may have a negative impact on stay-at-home spouses who rely on household income and do not themselves have independent salaries. We must ensure that the rule will not negatively impact stay-at-home spouses.

We would therefore request that the Consumer Financial Protection Bureau (CFPB) undertake a study to look at the effects of applying a uniform standard on all consumers. The study should examine the effects of the uniform standard for the first year after the implementation with a report back to Congress. If it is found that stay-at-home spouses have been negatively impacted, the CFPB should then amend the rule to correct any problems it has found.

We understand the difficulty that the Board confronted as it attempted to clarify initial confusion that was raised about applying the ability to pay rules. We are sure the Board and the CFPB understand that it was never the intention of Congress that there would be any impact on stay-at-home spouses, and that we should make sure that that is in fact the case.

We appreciate your attention to this matter.

Sincerely,

Richard Blumenthal                                                  Kirsten Gillibrand

United States Senate                                                United States Senate

cc: The Honorable Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System