CFPB Launches Initiative Focused on Financial Issues for Rural Communities

On March 10, 2022, the Consumer Financial Protection Bureau (“CFPB”) announced the agency’s new initiative to focus on the financial issues individuals in rural America are facing. Specifically, the CFPB will focus on rural banking deserts, discriminatory and predatory agricultural credit, and manufactured housing.

Rural Banking Deserts

Stakeholders explained the “stark decline in the number of banks” in rural communities has resulted in higher fees and interest rates from non-bank alternatives.

Additionally, many rural banks have undergone bank consolidation by larger institutions, which has “resulted in the loss of local, on-the-ground knowledge of how rural communities operate.” Many rural community members have elected to step away from these banking relationships and credit extensions, which has led to the disappearance of small businesses and many sources of rural employment.

The CFPB notes that “race is a major factor in banking access in rural areas.” Those most affected by bank branch closures or consolidations are communities of color. The disparate impact on these communities affirms the essential role of the Community Development Financial Institutions ("CDFIs") that were created to serve communities that “other banks won’t.”

Discriminatory and Predatory Agricultural Credit

Farmers in these rural areas described the importance of agricultural credit and the role that it plays in establishing overall financial stability. However, due to a lack of choice and the resulting decreased bargaining power of those engaged in the agricultural industries, many farmers are subjected to “exploitative arrangements with dominant agriculture firms,” such as taking out large loans when the farmer’s income is evidenced to be inconsistent, unpredictable, and cyclical.

As a result of these arrangements, many farmers stated that they are forced to seek off-farm income, incur credit card debt, and apply for personal loans or other forms of credit to ensure they are able to meet loan payments and maintain operations. 

Manufactured Housing

Due to a lack of quality, affordable housing and a lack of rental properties in rural areas, many community members are required to depend on manufactured housing. The residents of these manufactured homes described how these home parks are being purchased by private equity firms, which increases the rental pricing and the fees associated with living in the area.

Those who live in these communities report feeling “trapped” in their arrangements with the park owners as they do not have alternative options and they are still paying for the loans on their manufactured home. In fact, many reported having to move and abandon the homes without payment from the park owner due to the high cost of relocating these homes.

Options for Consumers

The CFPB’s initiative affirms its commitment to combating such threats to these communities and the people who live in them. Although the CFPB has yet to outline any regulatory or enforcement actions in pursuit of this initiative, the CFPB is encouraging those who are facing these threats to share their story and reminded all of their avenue to submit a complaint and report a problem with “an auto loan, credit card, collections, mortgages, debt collector, or another consumer financial product.”