Does Rural America Need More Access to Financial Institutions? (H.R. 1259)

What is H.R. 1259?

(Updated May 6, 2020)

This bill would require the Consumer Financial Protection Bureau (CFPB) to establish an application process for people who live or do business in a place that they would like to designate as a "rural area" under federal consumer financial law.

The application process would be part of a temporary program to designate certain counties as "rural." Usually, for a place to be considered rural, it must meet the Urban Influence Codes (UICs) — guidelines set by the Dept. of Agriculture. This bill would allow people to apply counties for a rural stamp, even if they don't meet the UICs. 

There is a criteria, however. The CFPB to would have to consider the following when reviewing applications for a rural status:

• Criteria for rural/urban/metropolitan/micropolitan designations used by the Bureau of the Census, the Office of Management and Budget, and the Secretary of Agriculture;

• A written opinion provided by the state’s bank supervisor;

• Population density.

Within 60 days after receiving an application, the CFPB would have to publish the application in the Federal Register, and leave it up for 90 days to elicit public comment. Within 90 days of the end of the public comment period the CFPB must grant or deny the application in whole or in part, and publish an explanation of the decision in the Federal Register.

A rejection of an application by the CFPB does not mean an area can't apply for rural status again — as long as the application is made 90 days after the Bureau denies the application. This legislation would only last two years.

Argument in favor

Rural communities that are not considered "rural" by the Consumer Financial Protection Bureau (CFPB) miss out on the financial products and benefits of that category. They need a process to apply for rural status, and this bill creates one.

Argument opposed

The CFPB should be able to figure out for itself whether or not an area is rural. An application process will add more work for the CFPB — it would be simpler if the bureau simply loosened its criteria for defining an area as "rural."

Impact

Banks and their consumers in rural areas, the CFPB, the Director of the CFPB, and other federal agencies that use criteria to designate some areas as "rural".

Cost of H.R. 1259

Between increases in staff and money for running the program, the CBO estimates that implementing this bill would cost around $1 million over the 2015-2025 period.

Additional Info

Of Note:

Based on the 2010 Census, rural areas in the U.S. are home to 59,492,276 people — that's 19.3 percent of the population.

In-Depth:

A nearly identical version of this legislation was introduced in the House in July 2013. It was passed by the House in May 2014 and was sent to the Senate, but it failed to receive a vote in the Senate before the 113th Congress adjourned.

Media:

Sponsoring Rep. Andy Barr (R-KY) Press Release

CBO Cost Estimate

U.S. Chamber of Commerce (In Favor)

Co-Sponsoring Rep. Ruben Hinojosa (D-TX) House Floor Speech (Previous Bill Version)

Conference of State Bank Supervisors (Previous Bill Version)