Title XII of the Dodd-Frank Act is designed to assist individuals with limited financial resources in accessing traditional banking services instead of resorting to costly payday loans and cash advances. This legislation enables the government to provide financial support to banks and other institutions, enabling them to offer small loans and provide financial education to individuals. Consequently, people can save money for essential expenses such as medical appointments or education. Additionally, Title XII facilitates community banks in granting loans to individuals who may not meet the criteria for loans from larger banks. In summary, Title XII aims to empower individuals with limited financial means to utilise regular banking services and avoid expensive loan options.
Title XII, a component of the Dodd-Frank Wall Street Reform and Consumer Protection Act, seeks to enhance the accessibility of mainstream financial products and services for low-to-moderate income individuals in the United States. It grants the Secretary of the United States Department of the Treasury the authority to establish grant programs that incentivize the utilization of federally insured banks and credit unions instead of relying on non-traditional financial options like payday loans and cash advances. For instance, consider the case of John, a low-income individual who has been relying on payday loans to meet his expenses. Through Title XII, John can receive financial counseling and education to improve his money management skills. Additionally, he can apply for small-dollar loans from participating institutions that offer fair terms and conditions. By availing these services, John can avoid the exorbitant interest rates and fees associated with payday loans, thereby enhancing his financial situation. The objective of Title XII is to diminish the dependence of low-to-moderate income individuals on predatory non-traditional financial products and services. By facilitating access to mainstream financial institutions and providing small-dollar loans with reasonable terms, Title XII assists individuals like John in effectively managing their finances and avoiding debt traps. This, in turn, can lead to greater financial stability and security for these individuals and their families.
Dodd-Frank: Title XII is a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act that aims to improve access to mainstream financial institutions for underserved communities and individuals.
Dodd-Frank: Title XII primarily targets individuals and communities that have historically been underserved by mainstream financial institutions, such as low-income individuals, minorities, and rural communities.
Some key provisions of Dodd-Frank: Title XII include the establishment of the Office of Financial Education, the creation of the Community Financial Access Pilot Program, and the requirement for financial institutions to provide access to basic banking services.
The Office of Financial Education, established under Dodd-Frank: Title XII, aims to promote financial literacy and education among underserved communities, helping them make informed financial decisions and improve their financial well-being.
The Community Financial Access Pilot Program, created under Dodd-Frank: Title XII, is a program that provides grants to eligible entities to support initiatives aimed at expanding access to financial products and services in underserved areas.
Basic banking services, as required by Dodd-Frank: Title XII, include services such as opening and maintaining a deposit account, making withdrawals and deposits, and accessing electronic banking services.
Yes, financial institutions covered under Dodd-Frank: Title XII are required to offer basic banking services to everyone, regardless of their income level or credit history.
Financial institutions can charge reasonable fees for basic banking services, but they must ensure that the fees are not excessive and do not create a barrier for underserved individuals and communities.
Dodd-Frank: Title XII prohibits discrimination in the provision of financial services based on factors such as race, color, national origin, sex, marital status, or age. It aims to ensure equal access to financial services for all individuals.
Dodd-Frank: Title XII aims to provide individuals and communities with increased access to mainstream financial institutions, which can help them build credit, save money, and improve their overall financial stability. It also promotes financial education, empowering individuals to make informed financial decisions.
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This glossary post was last updated: 17th April 2024.
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