System Thoughts Regarding The Consumer Protection Act

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System Thoughts Concerning the Consumer Protection Act
One can only speculate as to why the data reflects such a dramatic decrease in the number of consumer loans processed in 2014, but based on the responses captured by the System survey it would appear that the increased costs to comply with the revised consumer lending regulations and reluctance by some System institutions may be some of the major factors. However, the mass majority of institutions indicated although there is an added cost or added regulatory burden they will continue to process consumer loans subject to TIL in some capacity. The following responses were grouped by the most common theme: (System Survey, [12])
1. Noted no change, and will continue processing consumer
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According to survey responses, of the 78 System institutions, seven have elected discontinue processing of consumer loans subject to TIL regulations as of July 31, 2014. The three primary reasons institutions have decided not to offer consumer lending products include: regulatory burden, cost to train and maintain the program, and finally the lack of demand within the institutions lending territory that constitutes a high cost to benefit scenario in order to comply with consumer regulations.
The institutions that stated regulatory burden as a major reason not to continue with consumer lending was the direct result of Dodd-Frank Wall Street Reform and Consumer Protection Act that has affected TIL requirements. They stated in order to comply, they will have to hire outside personnel or revamp their current training program dealing with consumer lending. If costs were not considered (will be discussed later), the lack of expertise and appropriate training for all administrative staff and lending officers would require a significant time investment and result in production loss in other critical lending areas (e.g. agricultural products). Thus, some institutions believe the man-hour investment needed by institutions to comply was burdensome and not cost effective with production losses to core borrowing activities.
The second major reason institutions have ceased or reduced consumer lending deals with the expenses related to comply with the Act. Through the
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