CFPB launches initiative to address financial issues facing rural communities

Federal Issues CFPB Consumer Finance CRA Rural Communities Manufactured Housing

On March 10, the CFPB launched an initiative focusing on financial issues facing rural communities in the U.S. Citing economic trends that have disproportionately affected rural communities over the past several decades, the Bureau stated its initial focus will center around banking deserts, discriminatory and predatory agricultural credit, and manufactured housing. Last month, CFPB Director Rohit Chopra hosted an event where individuals from organizations representing rural communities shared consumer financial concerns and discussed issues affecting the financial resilience of rural families. Among other things, attendees highlighted the issue of banking deserts caused by “stark declines in the number of banks in rural areas,” which has “led to non-bank alternatives that charge higher fees and interest rates.” Bank consolidation has also caused the loss of institutional knowledge, which in turn, has resulted in the disappearance of banking relationships, credit, small businesses, and jobs. Attendees stressed the need for Community Reinvestment Act requirements that would serve rural banking deserts, particularly in persistent poverty counties, most of which are overwhelmingly rural. Additionally, attendees raised issues related to discriminatory and predatory agricultural credit, with stakeholders pointing out that a long history of credit discrimination against Black farmers has contributed to the decline of Black farmers and Black land loss. Other stakeholders raised concerns that farmers’ obligations to banks can make them more vulnerable to exploitative arrangements with dominant agriculture firms. Manufactured housing concerns were also raised by attendees, who spoke about the lack of affordable housing in rural communities, explaining that “manufactured home parks are increasingly being bought up by private equity firms that have, in some cases, dramatically increased rents and tacked on fees in short periods of time.” The Bureau emphasized that it is “concerned about these threats to rural household financial resiliency” and has launched this initiative “to ensure that rural communities, and the people who live in them, have opportunities to build wealth and thrive.”