Brown what are fringe financial institutions briefly

BROWN: What are “fringe” financial institutions? Briefly describe the theory and practice of
such fringe institutions as pay day loan centers, check-cashing outlets, and pawn shops. How do
they work to provide financial access to the unbanked? How large are these industries compared
to mainstream banks? What are the major problems and issues with these types of financial
institutions? Do they harm or help the unbanked? Is further government regulation warranted?
Will the Consumer Financial Protection Bureau have any effect on this industry?
GRAY: What is risk-based lending? Provide some examples from the U.S. financial system.
How does risk-based lending help to reduce poverty and provide access to financial services? Is
risk-based lending (or subprime lending) discriminatory because riskier borrowers face higher
interest rates?
TURQUOISE: What is the Home Mortgage Disclosure Act (HMDA)? How does HMDA affect
lending in the banking industry? What is the Community Reinvestment Act (CRA)? When the
CRA was enacted, what was its purpose? Has it been successful in achieving that purpose?
How are CRA rankings determined for financial institutions? What is the purpose of these
rankings? Has the CRA contributed to the current financial crisis?
BEIGE: Contact several tax preparation centers in your area. Inquire about the types of
services they offer. What are the provisions of their rapid refund programs? What would be the
effective interest rate charged on these loans? Are these programs a form of predatory lending?
Do tax preparation centers still offer rapid refund programs/ Why or why not?