News sources report CFPB Director Richard Cordray as promising, on September 20, to issue a proposed rule to improve access to credit for stay-at-home spouses by the time Congress reconvenes after the November 6 election. The rulemaking would be conducted under the authority of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the “CARD Act”).
A 2011 rulemaking by the Federal Reserve Board amending its Regulation Z established an “ability to pay” standard that has required lenders to evaluate credit card applications on the basis of the applicant’s personal (rather than household or family) income. As reported months ago by my colleagues John Culhane and Barbara Mishkin here and here, this has had the effect of impeding access to credit by nonworking, stay-at-home spouses (predominantly mothers), including military spouses, since the working spouse’s income is not counted in the creditworthiness assessment. Then there was some uncertainty as to what the Bureau would do, but now it is clear that the agency has determined this is a significant problem and has decided to act.
The CFPB inherited from the Fed regulatory jurisdiction with respect to the CARD Act. A regulatory change to help stay-at-home spouses appears to enjoy bipartisan support in Congress. We shall report on the CFPB rule as soon as it is proposed.