[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1566 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 1566

To create a Federal charter for Internet consumer credit corporations, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 15, 2013

 Mr. Luetkemeyer (for himself and Mr. Meeks) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To create a Federal charter for Internet consumer credit corporations, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Credit Access, Innovation, 
and Modernization Act''.

SEC. 2. FINDINGS; PURPOSE; AND INTENT.

    (a) Findings.--Congress finds the following:
            (1) Studies by the Federal Deposit Insurance Corporation 
        (FDIC), National Bureau of Economic Research, FINRA Investor 
        Education Foundation, and other credible parties have shown 
        that roughly half of all American families, including not only 
        lower and moderate income families but also a large segment of 
        middle and higher income families who have poor credit scores 
        and limited disposable incomes, are literally living paycheck-
        to-paycheck, lacking adequate savings and other resources to 
        cover unplanned expenses that frequently arise in every 
        household.
            (2) These consumers (in this Act referred to as 
        ``underserved consumers'') include those who are ``unbanked'', 
        having neither a checking or savings account at a depository 
        institution, and those who are ``underbanked'', having such an 
        account and frequently having higher incomes but credit 
        impairments, while nonetheless needing to rely on nondepository 
        financial institutions for short-term, small loans and other 
        credit products and financial services they desperately need, 
        but generally cannot obtain from traditional banking 
        institutions.
            (3) Credit alternatives for underserved consumers generally 
        are limited and often not well suited to their particular needs 
        and in some instances lack any statutory consumer protections.
            (4) Programs by the FDIC and other parties to expand access 
        to small loans and other financial products or services for 
        underserved consumers through banking institutions have had 
        very limited success because banks, which typically have 
        relatively high operating costs, generally have been unable to 
        make affordable small personal loans on a widespread, 
        commercially viable basis to these higher risk consumers, most 
        of whom may not even qualify for a loan under the high-credit 
        standards regulators necessarily require insured depositories 
        to maintain.
            (5) To the extent that depository institutions offer 
        underserved consumers affordable small loans and other 
        financial products or services on a commercially viable basis, 
        they should be encouraged to do so, but it must be recognized 
        that overcoming the practical business obstacles for 
        depositories to offer such products or services appears to be 
        quite difficult at best for most depositories, and given the 
        massive scope of the short-term credit needs of such consumers, 
        depositories most likely will be unable to provide affordable 
        small loans and other financial products or services for a 
        significant number of them.
            (6) Efforts of governmental, nonprofit, and private sector 
        institutions to help underserved consumers manage their 
        personal finances more effectively through financial education 
        and counseling programs also are important and must continue, 
        but given the tremendous number of consumers who face 
        significant ongoing financial challenges, most such underserved 
        consumers are likely to be unable to overcome their financial 
        difficulties through such efforts.
            (7) Nondepository creditors historically have been 
        primarily State-regulated, are not federally insured, generally 
        pose little or no systemic or taxpayer risk, typically have 
        lower operating costs and can employ less restrictive credit 
        standards than depositories, and are a major source of small 
        loans and financial products or services for underserved 
        consumers, providing such consumers annually with billions of 
        dollars in credit.
            (8) A number of nondepository creditors have developed 
        advanced proprietary loan underwriting and servicing procedures 
        and cutting-edge technologies allowing them to offer credit to 
        more underserved consumers, but such creditors lack the 
        authority available to national banks to operate on a 
        multistate or nationwide basis using a single lending charter 
        and subject to strong, uniform Federal regulation that would 
        enable them to maximize their capacities to operate more 
        innovatively and efficiently.
            (9) Nondepository creditors are instead subject to widely 
        differing State licensing laws that impose substantial cost and 
        compliance burdens, and, more significantly, laws that severely 
        limit the types of financial products or services that may be 
        offered, prevent loans from being provided on a commercially 
        viable basis, stifle innovation, reduce competition, and leave 
        underserved consumers with a limited choice of products or 
        services that in many cases are not well suited to their 
        personal needs and cost significantly more because of these 
        conflicting and outdated restrictive State laws.
            (10) It is in the national interest and will greatly 
        benefit the millions of underserved consumers who have pressing 
        needs for additional credit alternatives for Congress to adopt 
        legislation to authorize creditors the option of receiving a 
        Federal charter under which they can provide such consumers 
        loans and other financial products and services through the 
        Internet and electronic devices and not traditional brick-and-
        mortar storefront locations, allowing them to operate more 
        innovatively and efficiently on a nationwide basis.
            (11) An Internet consumer credit corporation chartered 
        under this Act will be adequately regulated under Federal laws 
        and regulations prescribed by the Comptroller of the Currency 
        and the Director of the Consumer Financial Protection Bureau, 
        and such laws and regulations shall be enforced in accordance 
        with this Act without such corporation being subjected to 
        duplicative and conflicting State laws that in many cases 
        severely and unnecessarily restrict product innovation and 
        choice and raise the cost of the limited credit choices now 
        available to underserved consumers.
            (12) Allowing such federally regulated lending by Internet 
        creditors as authorized by this Act through the Internet and by 
        electronic devices, but not through traditional storefront, 
        brick-and-mortar locations, on a nationwide basis, is 
        consistent with the fact that consumers' borrowing habits are 
        shifting rapidly to seeking more financial product and service 
        choices with the convenience, ease of credit access, and more 
        alternatives provided by computers, mobile phones, and other 
        electronic devices, and millions of underserved consumers will 
        be able to secure credit from Internet consumer credit 
        corporations that are subject to applicable State and Federal 
        laws.
            (13) Small businesses, which are vital to job creation and 
        the health of the Nation's economy, also have a continuing need 
        for additional credit alternatives, and allowing Internet 
        consumer credit corporations to offer certain financial 
        products and services to small businesses through the Internet 
        and by electronic devices will be in the national interest.
    (b) Purpose and Intent.--The purpose and intent of this Act is to--
            (1) provide underserved consumers greater access to 
        innovative, affordable, commercially viable, and better suited 
        financial products and services;
            (2) create a Federal charter for creditors that offer 
        financial products or services through the Internet and 
        electronic devices and not traditional brick-and-mortar 
        storefront locations and focus their business primarily on 
        meeting the credit needs of underserved consumers and small 
        businesses, enabling such Internet creditors to provide more 
        innovative, affordable, and appropriate credit options, subject 
        to uniform Federal lending standards rather than operating 
        under the widely varying, often conflicting, overly 
        restrictive, and unnecessarily costly system of State lending 
        laws that currently prevent nondepository creditors from 
        offering underserved consumers and small businesses the credit 
        options they need;
            (3) clarify that Congress understands that even with the 
        more innovative and efficient lending authorized by this Act 
        and reasonable pricing by Internet consumer credit 
        corporations, the cost of commercially viable, short-term, 
        small-dollar credit for higher risk underserved consumers 
        typically will be considerably higher than the cost for other 
        consumers who have no credit impairments and that when the cost 
        of such credit is expressed in terms of an annual percentage 
        rate, in most cases such rate will be much higher than such 
        rate for larger, longer term loans, especially those made to 
        consumers with unimpaired credit records, and therefore it 
        should not be presumed or necessarily concluded that such 
        credit extensions to underserved consumers are unfair or 
        abusive, provided full disclosure of the cost of such credit is 
        made as required by this Act and such corporation has a 
        reasonable basis for determining that an underserved consumer 
        can repay, therefore indicating that the credit is affordable;
            (4) require that the Comptroller exercise his or her 
        authorities to administer, enforce, and implement the 
        provisions of this Act and regulations prescribed pursuant to 
        this Act to provide for ongoing prudential regulatory oversight 
        of Internet consumer credit corporations and to promptly adopt 
        reasonable and flexible policies and procedures to ensure the 
        approval of Federal charters for qualified applicants, while 
        also promoting the offering of innovative, affordable, and 
        commercially viable financial products or services; and
            (5) require that the Director exercise his or her 
        authorities to administer, enforce, and implement the 
        provisions of Federal consumer financial laws and applicable 
        provisions of this Act and regulations prescribed pursuant to 
        this Act to ensure that underserved consumers receive effective 
        consumer financial protections, while also promoting the 
        offering of innovative, affordable, and commercially viable 
        financial products or services.

SEC. 3. INTERNET CONSUMER CREDIT CORPORATIONS.

    (a) Federal Charter.--In accordance with the provisions of this 
Act, and regulations prescribed pursuant to this Act, the Comptroller 
shall charter creditors which shall become Internet consumer credit 
corporations (hereinafter referred to as ``Internet creditors'') to 
offer financial products or services primarily to underserved consumers 
and small businesses as provided for in this Act.
    (b) Application Required.--
            (1) In general.--A person that desires to obtain a Federal 
        charter under this Act shall submit an application to the 
        Comptroller at such time, in such manner, and accompanied by 
        such information as the Comptroller may require.
            (2) Expeditious determination.--The Comptroller shall make 
        a determination as to whether an application submitted under 
        paragraph (1) is approved or denied expeditiously.
    (c) Requirements.--In seeking a Federal charter under this Act, an 
applicant shall meet the following requirements:
            (1) A business plan shall be established covering at least 
        the initial 3-year period of operation as a commercially viable 
        entity with its primary business activities being to serve the 
        needs of underserved consumers and small businesses for credit 
        and related financial services through the Internet and 
        electronic devices and not through brick-and-mortar locations, 
        and such plan shall--
                    (A) realistically forecast market demand, the 
                intended customer base, competition, economic 
                conditions, financial projections, and business risks;
                    (B) include a marketing plan that describes the 
                types of financial products or services such creditor 
                intends to offer, how it will market them, and how such 
                products or services are expected to be affordable for 
                underserved consumers and small businesses and 
                commercially viable for the creditor; and
                    (C) contain an acceptable plan for--
                            (i) ensuring compliance with all applicable 
                        laws and regulations; and
                            (ii) for promptly addressing complaints 
                        from underserved consumers and small 
                        businesses.
            (2) A competent and experienced management team of good 
        moral character with expertise in and a commitment to serving 
        the credit needs of underserved consumers, experience in 
        offering financial services products to consumers through the 
        Internet or electronic devices, and awareness and understanding 
        of applicable legal requirements shall be established.
            (3) Adequate capital structure relative to the operational 
        and financial assumptions and business plans of the applicant, 
        including the cost of utilizing advanced technology and 
        information management systems for its operating and compliance 
        needs, shall be established.
            (4) No Internet creditor shall be directly or indirectly 
        owned or controlled by any person unless--
                    (A) the person is an individual, a Federal- or 
                State-chartered depository institution, a bank holding 
                company (as defined in section 2(a) of the Bank Holding 
                Company Act of 1956 (12 U.S.C. 1841(a))), a savings and 
                loan holding company (as defined in section 10(a)(1)(D) 
                of the Home Owners' Loan Act (12 U.S.C. 
                1467a(a)(1)(D))), or a nonprofit corporation; or
                    (B) the primary business activity of the person 
                involves--
                            (i) providing financial products or 
                        services to consumers; or
                            (ii) owning or controlling persons whose 
                        primary business activity is providing 
                        financial products or services to consumers.
            (5) Any other requirements provided for under this Act or 
        in regulations prescribed by the Comptroller consistent with 
        the purposes of this Act.
    (d) Authority of Internet Creditors.--Upon receiving a Federal 
charter pursuant to subsection (a), an Internet creditor shall become, 
as from the date of the execution of its charter, a body corporate, 
and, as such, an Internet consumer credit corporation, and in the name 
designated in the charter it is authorized to--
            (1) adopt and use a corporate seal;
            (2) have succession from the date its charter is issued 
        until such time as it be dissolved by the act of its 
        shareholders owning two-thirds of its stock, or until its 
        charter is revoked by the Comptroller, or until terminated by 
        an Act of Congress, or until its affairs are placed in the 
        hands of a receiver and finally wound up by the receiver in 
        accordance with title 11, United States Code, or other 
        applicable law;
            (3) borrow money, issue stock, and enter into contracts;
            (4) sue and be sued and complain and defend, in any court 
        of law and equity of competent jurisdiction, as fully as 
        natural persons;
            (5) elect or appoint directors, and by its board of 
        directors to appoint a president, vice president, and other 
        officers, define their duties, require bonds of them and fix 
        the penalty thereof, dismiss such officers or any of them at 
        pleasure, and appoint others to fill their places;
            (6) prescribe, by its board of directors, bylaws not 
        inconsistent with law, regulating the manner in which its stock 
        shall be transferred, its directors elected or appointed, its 
        officers appointed, its property transferred, its general 
        business conducted, and the privileges granted to it by law 
        exercised and enjoyed;
            (7) hire employees and consultants and fix their 
        compensation, define their duties, and give such persons 
        appropriate authority to carry on its business operations;
            (8) enter into joint ventures and other business 
        partnerships with other Internet creditors, depository 
        institutions, State-chartered or licensed nondepository 
        creditors, third-party service providers and vendors, and other 
        parties to promote or facilitate providing as herein authorized 
        commercially viable financial products or services to 
        underserved consumers and small businesses;
            (9) contribute to community funds, or to charitable, 
        philanthropic, or benevolent instrumentalities conducive to 
        public welfare, such sums as its board of directors may deem 
        expedient and in the interests of the Internet creditor;
            (10) invest in, or buy or lease, real estate or tangible 
        personal property, including vehicles, equipment, furnishings 
        and furniture, to be used by the Internet creditor in 
        conducting business related operations authorized under this 
        Act;
            (11) provide loans and other financial services only 
        through the Internet and electronic devices as its board of 
        directors or duly authorized officers or agents may determine, 
        in accordance with this Act and regulations prescribed pursuant 
        to this Act, are appropriate for providing financial products 
        or services to consumers, including underserved consumers, and 
        to small businesses in accordance with the provisions of this 
        Act and regulations prescribed pursuant to this Act;
            (12) exercise by its board of directors or duly authorized 
        officers or agents, subject to law, all such incidental, 
        implied, or reasonably necessary powers as may be appropriate 
        to carry on its corporate operations and the business of 
        providing commercially viable financial products or services to 
        consumers, including underserved consumers and small businesses 
        in accordance with the provisions of this Act and regulations 
        prescribed pursuant to this Act;
            (13) be affiliated with, or owned by, an insured depository 
        institution, nondepository creditor, nonprofit organization, or 
        other qualified entities unless otherwise limited by this Act 
        or regulations prescribed pursuant to this Act;
            (14) acquire or merge with other Internet creditors; and
            (15) exercise such other powers as may be reasonably 
        necessary or appropriate to offer financial products or 
        services as provided for pursuant to this Act, or provided for 
        through regulations prescribed by the Comptroller pursuant to 
        the provisions of this Act.
    (e) Duties and Responsibilities.--
            (1) Comptroller of the currency.--The Comptroller shall--
                    (A) ensure that Internet creditors only provide 
                loans and other financial products or services through 
                the Internet and electronic devices and that, to the 
                extent reasonably possible, such creditors primarily 
                focus their business operations on providing 
                underserved consumers a variety of affordable financial 
                products or services that are commercially viable for 
                such creditors, including certain products or services 
                that contain features to facilitate personal savings 
                and enhance the credit record of such consumers;
                    (B) encourage and facilitate--
                            (i) innovation with respect to the 
                        financial products or services offered to 
                        underserved consumers; and
                            (ii) joint ventures and other business 
                        partnerships among Internet creditors, insured 
                        depository institutions, other nondepository 
                        creditors, third-party service providers and 
                        vendors, nonprofit organizations, and other 
                        parties in order to ensure greater credit 
                        access for underserved consumers and small 
                        businesses;
                    (C) provide, through regulations, details on how 
                Internet creditors should be organized, incorporated, 
                and operated in a prudential manner;
                    (D) conduct examination and supervisory activities 
                of Internet creditors to--
                            (i) access their internal controls and 
                        management ability;
                            (ii) evaluate their financial condition and 
                        risk profile;
                            (iii) determine if they are meeting the 
                        needs of underserved consumers and small 
                        businesses; and
                            (iv) monitor their compliance with this Act 
                        and other applicable laws and regulations that 
                        the Comptroller may have administrative 
                        responsibly for, and identify areas in which 
                        corrective action is needed;
                    (E) consult, cooperate and coordinate, as 
                appropriate, with the Director and with other Federal 
                and State regulatory agencies, including State bank 
                supervisors, to promote much greater availability of 
                innovative, affordable, commercially viable credit for 
                underserved consumers, and consistent regulatory 
                treatment of consumer and small business financial 
                products and services;
                    (F) help ensure that the supervisory activities, 
                including examination schedules, of Internet creditors 
                and affiliated companies are conducted in a coordinated 
                and efficient manner; and
                    (G) adopt adequate safeguards to ensure appropriate 
                privacy and confidentiality protections with respect to 
                individually identifiable personal data and proprietary 
                corporate data.
            (2) Director of the bureau of consumer financial 
        protection.--The Director shall--
                    (A) regulate the offering and provision of consumer 
                financial products or services by Internet creditors 
                under the Federal consumer financial laws pursuant to 
                its authorities under the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act (12 U.S.C. 5301 et seq.), 
                this Act, and regulations prescribed pursuant to this 
                Act;
                    (B) consult, cooperate, and coordinate, as 
                appropriate, with the Comptroller and with other 
                Federal and State regulatory agencies, including State 
                bank supervisors, to promote--
                            (i) much greater availability of 
                        innovative, affordable, commercially viable 
                        credit for underserved consumers and small 
                        businesses; and
                            (ii) consistent regulatory treatment of 
                        consumer and small business financial products 
                        or services;
                    (C) help ensure that the supervisory activities, 
                including examination schedules, of Internet creditors 
                and affiliated companies are conducted in a coordinated 
                and efficient manner; and
                    (D) adopt adequate safeguards to ensure appropriate 
                privacy and confidentially protections with respect to 
                individually identifiable personal data and proprietary 
                corporate data.
            (3) Internet creditors.--Each Internet creditor shall--
                    (A) make financial education information available 
                to each consumer it offers a financial product or 
                service, including information on how a consumer may 
                obtain financial counseling services, the benefits of 
                following a regular personal savings program, and how 
                consumers can improve their credit ratings;
                    (B) comply with all applicable Federal laws and 
                regulations, including Federal consumer financial 
                protection law requirements and such State laws, 
                regulations, and enforcement actions as are authorized 
                under the provisions of this Act;
                    (C) provide account access to its customers through 
                the Internet and a toll-free telephone number;
                    (D) provide, in accordance with regulations 
                prescribed pursuant to this Act, to all consumers who 
                are extended credit with a repayment term of 1 year or 
                less by the Internet creditor a clear and conspicuous 
                statement in the loan agreement that discloses the true 
                cost of the loan, including all interest, fees, and 
                other loan-related charges, as a dollar amount and as a 
                percentage of the principal amount of the loan in lieu 
                of the annual percentage rate disclosure that otherwise 
                would be required under the Truth in Lending Act (15 
                U.S.C. 1601 et seq.) or regulations prescribed pursuant 
                to such Act;
                    (E) report to the Comptroller or Director such data 
                as either may require regarding its activities, 
                including the types of financial products or services 
                provided to underserved consumers and small businesses, 
                and data demonstrating that its business activities are 
                focused primarily on serving underserved consumers and 
                small businesses as required by this Act;
                    (F) offer--
                            (i) an underserved consumer who is unable 
                        to repay an extension of credit by an Internet 
                        creditor that has a loan repayment term of less 
                        than 120 days, an extended repayment plan, at 
                        no cost to the consumer, at least once in a 12-
                        month period; and
                            (ii) to the extent reasonably possible, 
                        certain financial products or services that 
                        contain features to facilitate personal savings 
                        that could help underserved consumers enhance 
                        their credit records if such consumers fully 
                        comply with the terms and conditions of such 
                        products or services; and
                    (G) not--
                            (i) accept consumer or commercial deposits;
                            (ii) make commercial loans, except to the 
                        extent allowed by the provisions of this Act 
                        and regulations prescribed pursuant to this 
                        Act, with respect to small businesses;
                            (iii) make a consumer loan with a term of 
                        30 days or less;
                            (iv) make a loan that requires a consumer 
                        to repay the loan balance in one lump-sum 
                        payment; or
                            (v) extend credit to a consumer--
                                    (I) unless the Internet creditor 
                                has a reasonable basis for believing 
                                that the consumer will have the ability 
                                to repay the credit extension;
                                    (II) if the maximum principal 
                                amount of the credit outstanding from 
                                all financial products or services 
                                authorized by the Internet creditor to 
                                such consumer, in the case of an 
                                unsecured credit transaction, exceeds 
                                $5,000, or in the case of a secured 
                                credit transaction, $25,000, unless a 
                                higher amount is authorized by 
                                regulations prescribed by the 
                                Comptroller; or
                                    (III) if the loan terms include a 
                                prepayment penalty; or
                            (vi) extend credit to a small business in 
                        excess of $25,000.
    (f) Additional Product or Service Offerings.--Financial products or 
services that may be offered to underserved consumers pursuant to this 
subsection for underserved consumers and certain small businesses may 
also be offered to other consumers and businesses.
    (g) Rule of Construction.--Nothing in this Act is intended to 
provide the Comptroller or the Director with the authority to--
            (1) regulate financial products or services that are 
        provided or offered by an affiliate company or another entity 
        that the Internet creditor has a business relationship with, 
        but the Internet creditor does not provide or offer to 
        underserved consumers or small businesses in accordance with 
        this Act;
            (2) determine, directly or indirectly, pricing applicable 
        to an extension of credit offered by an Internet creditor to a 
        consumer or small business pursuant to this Act through a usury 
        limit, a cap on the rate of interest, fees, or other charges, 
        or otherwise;
            (3) prohibit, directly or indirectly, the offering of a 
        financial product or service to underserved consumers or small 
        businesses by an Internet creditor pursuant to this Act unless 
        a determination is made by the Comptroller or Director, based 
        on a fair and reasonable determination of the facts and 
        circumstances regarding the financial product or service, that 
        offering such a product or service will seriously harm the 
        financial interests of underserved consumers or small 
        businesses; or
            (4) presume or conclude that a credit extension offered to 
        underserved consumers by an Internet creditor under the 
        provisions of this Act, regulations prescribed by this Act, and 
        such other statutes and regulations as either may have 
        administrative and enforcement authority for is unfair, 
        abusive, or otherwise inappropriate solely on the basis that 
        the interest rates and other charges to such consumers, who 
        typically pose relatively high credit risks, are significantly 
        higher than those on credit extensions offered to other 
        consumers who do not pose such high credit risks.
    (h) Internet Creditor Regulatory Fee.--Each Internet creditor shall 
pay to the Comptroller an annual fee in a reasonable amount that the 
Comptroller determines is sufficient, in the aggregate of all such fees 
paid by Internet creditors, to offset the cost to the Comptroller of 
carrying out the provisions of this Act.
    (i) Charter Suspension or Revocation.--The Comptroller, pursuant to 
procedures established in regulations prescribed by the Comptroller, 
may suspend or revoke the charter of an Internet creditor if there has 
been a material failure by the Internet creditor to comply with the 
requirements set forth in the charter, provisions of this Act, or other 
applicable statutes, regulations, or orders.
    (j) Relationship to Other Federal and State Laws.--
            (1) Federal law.--An Internet creditor is subject to--
                    (A) all otherwise applicable provisions of Federal 
                statutes and regulations, including the consumer 
                financial laws listed under section 1002(14) of the 
                Consumer Financial Protection Act of 2010 (12 U.S.C. 
                5481(14)), section 987 of title 10, United States Code 
                (relating to consumer credit extended to servicemembers 
                and dependents), and the provisions of this Act and 
                regulations established pursuant to this Act; and
                    (B) the administration and enforcement of such 
                statutes and regulations by the Comptroller, the 
                Director, any other Federal agency, or State attorney 
                general (or the equivalent thereof) having enforcement 
                authority.
            (2) State law.--An Internet creditor, or an employee, 
        agent, or other business partner of an Internet creditor, shall 
        not be subject to--
                    (A) State laws that relate to office location, 
                licensing, education, or training that apply to the 
                operations of an Internet creditor, or its employees, 
                agents, or other business partners to the extent that 
                these operations relate to the exercise of its powers 
                or authorities under this Act and implementing 
                regulations to provide financial products or services 
                to underserved consumers and small businesses; or
                    (B) other State laws that--
                            (i) have a discriminatory effect on an 
                        Internet creditor compared to the effect of 
                        such laws on any other depository or 
                        nondepository creditor chartered or licensed in 
                        that State;
                            (ii) consistent with the legal standard for 
                        preemption in the decision of the Supreme Court 
                        of the United States in Barnett Bank of Marion 
                        County, N.A. v. Nelson, Florida Insurance 
                        Commissioner, et al., 517 U.S. 25 (1996), 
                        prevent or significantly interfere with the 
                        exercise by an Internet creditor of its powers 
                        and authorities as set forth in this Act; or
                            (iii) are preempted by any provision of 
                        Federal law.
            (3) Determination of preemption.--An Internet creditor may 
        challenge the applicability of a State law as preventing or 
        significantly interfering with the exercise of such creditor's 
        powers under this Act, or for violating any provision of 
        paragraph (2), in any court of competent jurisdiction, and the 
        Comptroller or Director, by regulation or order, or any court 
        of competent jurisdiction may make a determination, on a case-
        by-case basis, that a State law prevents or significantly 
        interferes with the exercise of an Internet creditor's powers 
        under this Act, or violates a provision of paragraph (2), in 
        accordance with applicable law.
    (k) Enforcement.--
            (1) In general.--The Comptroller or the Director may 
        enforce in any court of competent jurisdiction the provisions 
        of this Act, regulations prescribed pursuant to this Act 
        relating to their respective regulatory authority in this Act, 
        and their respective cease and desist or other orders or 
        regulatory requirements.
            (2) Action by state.--The attorney general (or the 
        equivalent thereof) of any State shall have the power to 
        investigate violations of this Act and may bring a civil 
        enforcement action in the name of such State against an 
        Internet creditor in any district court of the United States or 
        in State court that has jurisdiction over the Internet creditor 
        and to secure civil penalties and such other remedies under 
        provisions of this Act or otherwise provided under other 
        applicable law.
            (3) Consultation required.--
                    (A) Notice.--
                            (i) In general.--When initiating any action 
                        in a court or other administrative or 
                        regulatory proceeding against any Internet 
                        creditor as authorized by this Act to enforce 
                        any provision of this Act, including any 
                        regulation pursuant to this Act, a copy of the 
                        complete complaint filed or to be filed and 
                        written notice describing such action or 
                        proceeding shall be provided to the Comptroller 
                        and the Director by the State attorney general 
                        (or the equivalent thereof) prior to or 
                        immediately upon instituting the action or 
                        proceeding.
                            (ii) Contents of notice.--The notification 
                        required under this paragraph shall, at a 
                        minimum, describe--
                                    (I) the identity of the parties;
                                    (II) the alleged facts underlying 
                                the proceeding; and
                                    (III) whether there may be a need 
                                to coordinate the prosecution of the 
                                proceeding so as not to interfere with 
                                any action, including any rulemaking, 
                                undertaken by the Comptroller or the 
                                Director.
                    (B) Comptroller and director response.--In any 
                action brought by a State attorney general (or 
                equivalent thereof), the Comptroller and Director may--
                            (i) intervene in the action as a party; and
                            (ii) upon intervening--
                                    (I) remove the action to the 
                                appropriate United States district 
                                court, if the action was not originally 
                                brought there;
                                    (II) be heard on all matters 
                                arising in the action; and
                                    (III) appeal any order or judgment, 
                                to the same extent as any other party 
                                in the proceeding may.
            (4) Regulations.--The Comptroller and the Director shall 
        jointly prescribe regulations to implement the requirements of 
        this subsection and, from time to time, consult with State 
        attorneys general (or the equivalent thereof) in order to 
        develop appropriate protocols to coordinate actions with the 
        State attorneys general and other appropriate regulators.
            (5) Preservation of state authority.--No provision of this 
        Act shall be construed as modifying, limiting, or superseding 
        the operation of any provision of any Federal consumer 
        financial protection law or regulations prescribed pursuant to 
        such laws that relates to the authority of a State attorney 
        general (or the equivalent thereof) to enforce such Federal law 
        and regulations.
    (l) Penalties for Violations.--The relief available for violations 
of provisions of this Act, regulations prescribed pursuant to this Act, 
or orders or supervisory mandates, including cease and desist orders, 
with respect to proceedings involving Internet creditors by the 
Comptroller, the Director, or State attorneys general (or the 
equivalent thereof) shall be the same as or equivalent to that provided 
with respect to actions by the Director in section 1055 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5565).
    (m) Reports to Congress.--Not later than 180 days after the 
effective date of this Act, and annually for 5 years thereafter, the 
Comptroller and the Director shall submit to Congress a joint report on 
their activities and progress in helping to expand access to innovative 
and affordable credit for underserved consumers and small businesses, 
and such reports shall include--
            (1) a descriptive summary of the actions of the Comptroller 
        and the Director during the reporting period to carry out the 
        purposes of this Act;
            (2) the number of charter applications received by the 
        Comptroller;
            (3) the number of charter applications that were approved, 
        disapproved, conditionally approved, or are pending and a 
        detailed explanation of each disapproval or conditional 
        approval;
            (4) a description of any further actions the Comptroller or 
        the Director believes should be undertaken to--
                    (A) facilitate the chartering of qualified 
                nondepository institutions; and
                    (B) increase the number of financial products that 
                are available to help increase competition and consumer 
                choice for underserved consumers; and
            (5) any recommendations the Comptroller or the Director may 
        have regarding other legislative measures that would improve 
        the ability of an Internet creditor to provide additional 
        financial products or services to underserved consumers or 
        small businesses.
    (n) Regulations.--The Comptroller and the Director shall consult 
and prescribe joint regulations implementing the provisions of this Act 
not later than 180 days after the effective date of this Act.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Affiliate.--The term ``affiliate'' means any person 
        that controls, is controlled by, or is under common control 
        with another person.
            (2) Affordable.--The term ``affordable'' means that a 
        creditor has a reasonable expectation that a consumer or small 
        business will be able to repay an extension of credit.
            (3) Commercially viable.--The term ``commercially viable'' 
        means that a reasonable economic profit is expected to be made 
        when a financial product or service is provided to a consumer 
        or small business.
            (4) Comptroller.--The term ``Comptroller'' means the 
        Comptroller of the Currency.
            (5) Consumer.--The term ``consumer'' means an individual or 
        agent, trustee, or representative acting on behalf of an 
        individual.
            (6) Control and controlled by.--The terms ``control'' and 
        ``controlled by'' mean that--
                    (A) a person directly or indirectly or acting 
                through 1 or more other persons owns, controls, or has 
                power to vote 25 percent or more of any class of voting 
                stock of a company;
                    (B) a person controls in any manner the election of 
                a majority of the directors or trustees of a company; 
                or
                    (C) the Comptroller makes a determination, after 
                notice and opportunity for hearing, that a person 
                directly or indirectly exercises a controlling 
                influence over the management or policies of a company.
            (7) Credit.--The term ``credit'' means the right granted by 
        a person to a consumer or a small business to defer payment of 
        a debt, incur debt and defer its payment, or purchase property 
        or services and defer payment for such purchase.
            (8) Creditor.--The term ``creditor'' has the same meaning 
        as is given such term in section 103(g) of the Truth in Lending 
        Act (15 U.S.C. 1602(g)), and for purposes of this Act, shall 
        include a person who extends credit to a small business 
        pursuant to the provisions of this Act.
            (9) Director.--The term ``Director'' means the Director of 
        the Bureau of Consumer Financial Protection.
            (10) Electronic device.--The term ``electronic device'' 
        means an electronic device that communicates by any transfer of 
        signs, signals, writing, images, sounds, data, or intelligence 
        of any nature transmitted in whole or in part by a wire, radio, 
        electromagnetic, photoelectronic, or photo-optical system that 
        affects interstate or foreign commerce.
            (11) Extended repayment plan.--The term ``extended 
        repayment plan'' means an installment plan under which a 
        consumer who is unable to repay a credit extension on a loan 
        with a term of less than 120 days on the date due, and who 
        complies with applicable requirements established in 
        regulations pursuant to this Act, may repay a creditor the 
        outstanding balance of the loan in at least 4 substantially 
        equal payments without being charged any additional interest, 
        fees, or other charges.
            (12) Federal consumer financial laws.--The term ``Federal 
        consumer financial laws'' has the same meaning as is given to 
        that term in section 1002(14) of the Consumer Financial 
        Protection Act of 2010 (12 U.S.C. 5481(14)).
            (13) Financial product or service.--The term ``financial 
        product or service'' has the same meaning as is given the term 
        ``consumer financial product or service'' in section 1002(5) of 
        the Consumer Financial Protection Act of 2010 (12 U.S.C. 
        5481(5)), and for purposes of this Act, shall also include a 
        financial product or service provided to a small business.
            (14) Insured depository institution and depository 
        institution.--The terms ``insured depository institution'' and 
        ``depository institution'' (also referred to herein as 
        ``depositories'') have the same meanings as are given such 
        terms under section 3(c) of the Federal Deposit Insurance Act 
        (12 U.S.C. 1813(c)), and for purposes of this Act, also 
        includes an ``insured credit union'' as such term is defined 
        under section 101(7) of the Federal Credit Union Act (12 U.S.C. 
        1752(7)).
            (15) Internet.--The term ``Internet'' means the 
        international computer network of interoperable packet-switched 
        data networks.
            (16) Nondepository creditor.--The term ``nondepository 
        creditor'' means an entity that is chartered or licensed by a 
        State and offers personal loans or other financial products or 
        services to consumers or small businesses, but does not accept 
        consumer or commercial deposits.
            (17) Person.--The term ``person'' means an individual, 
        partnership, company, corporation, association (incorporated or 
        unincorporated), trust, estate, cooperative organization, or 
        any other entity.
            (18) Primary business activities.--The term ``primary 
        business activities'' means that the business activities of an 
        Internet creditor predominately involve providing financial 
        products and services to underserved consumers and small 
        businesses.
            (19) Secured credit transaction.--The term ``secured credit 
        transaction'' means--
                    (A) a consumer credit transaction where the 
                performance of the credit obligation is secured by an 
                interest in property; and
                    (B) such transaction is recognized as secured by 
                State or Federal law, provided, however, a consumer's 
                authorization for an electronic fund transfer as a 
                payment on a financial product or service shall not be 
                considered, for purposes of this Act, as security on a 
                credit transaction.
            (20) Small business.--The term ``small business'' means a 
        business entity, including a sole proprietorship, that has less 
        than 500 full-time employees.
            (21) State.--The term ``State'' means--
                    (A) a State, territory, or possession of the United 
                States, the District of Columbia, the Commonwealth of 
                Puerto Rico, the Commonwealth of the Northern Mariana 
                Islands, Guam, American Samoa, and the United States 
                Virgin Islands.
            (22) Underserved consumer.--The term ``underserved 
        consumer'' means a natural person who--
                    (A) does not have a checking or savings account 
                with an insured depository institution; or
                    (B) has a deposit account with an insured 
                depository institution, but has limited or no ability 
                to obtain small personal loans or other nondepository 
                financial products or services from an insured 
                depository institution.
            (23) Unsecured credit transaction.--The term ``unsecured 
        credit transaction'' means a consumer credit transaction where 
        the performance of the credit obligation is not secured by an 
        interest in property or where the security interest is not 
        recognized by State or Federal law.

SEC. 5. CONFORMING AMENDMENT TO TILA.

    Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended 
by adding at the end the following:
            ``(8) Credit transactions involving extensions of credit 
        with a term of 1 year or less in which the creditor provides 
        consumers in all such credit transactions with a clear and 
        conspicuous statement in the loan agreement that discloses the 
        true cost of the loan, including all interest, fees, and other 
        loan related charges, as a dollar amount and as a percentage of 
        the principal amount of the loan.''.

SEC. 6. EFFECTIVE DATE.

    This Act shall be effective 180 days after the date of the 
enactment of this Act.
                                 <all>