NonPrime101 Conference Focuses on Subprime Consumer Trends, Industry Regulation

    ST. PETERSBURG, FL, August 13, 2015 /24-7PressRelease/ -- On August 4th and 5th, key thought leaders in the subprime consumer space came together with nearly 100 attendees to discuss the fastest growing consumer segment in the United States.

The NonPrime101 Conference in St. Petersburg, Florida brought together business executives, regulatory bodies, researchers, and academics who discussed the industry's unique challenges, and what the future does, or should hold in the subprime lending space.

Tim Ranney, the President and CEO of Clarity Services, Inc., served as host and emcee of the two-day conference. Ranney noted that he was extremely pleased both with the conference turnout, and some of the conversations that took place there. "I was thrilled with the conversations we had at the conference, and I look forward to working with the speakers and experts on how to convey some of the research and information that we've heard here with a wider audience," Ranney said.

Conference attendees heard from economists, academics, and experts in the subprime lending space, starting with Kelly Edmiston, Senior Economist at the Federal Reserve Bank of Kansas City. Edmiston presented empirical research on the effects of lending restrictions on consumer credit, showing that restrictions on small dollar lending may have unintended consequences for low-income consumers. These adverse effects, said Edmiston, should be considered in creating and implementing appropriate industry regulation so as not to harm consumers.

Rick Hackett, former CFPB Assistant Director and current Partner at Hudson Cook LLP, spoke about current regulatory proposals, and how Clarity's research demonstrates that the proposals will be unsupportable for the single payment lender, essentially ending the payday lending structure as it exists today. The demand for such products however, will not go away, said Hackett, and using consumer characteristics and data can help design better products rather than eliminating options altogether.

Attendees also heard from Cynthia Campbell, Director of Impact and Labs at the Filene Research Institute, who shared the Institute's work on testing five financial products and analyzing how each benefit subprime consumers, and are profitable/sustainable from a business standpoint.

John Thompson, Senior Vice President at the Consumer Financial Services Institute (CFSI) talked about understanding and improving consumer financial health, sharing some rather stark statistics about the financial health of Americans today. More than half of the U.S. population (57%) is struggling financially he reported, and 30% of American households say that they could make ends meet for just three months or less if suddenly faced with a drop in income. Understanding the financial realities of Americans, as well as the interplay between financial health and financial product and service usage is a key focus of CFSI, Thompson said.

Thompson was followed by Luz Urrutia, VP of Field Sales and Services for Oportun Financial Corporation, who talked in detail about the consumer trends in the Hispanic population, which is the largest minority population in the United States. Currently 46% of the 54 million Hispanics in the U.S. are un- or underbanked, said Luz.

Wednesday's presentations began with Daniel Smith, Associate Professor of Economics at Troy University in Alabama. Professor Smith talked about the small-dollar lending business, highlighting the relatively small profits made by lenders, despite high interest rates, when compared to other businesses or commercial lenders. Excessive government regulation of the markets, Smith said, reduces competition within the industry, which inevitably is felt by consumers. Smith also notes that comparing short-term lending APRs to other APRs like for auto and home loans is comparing apples and oranges. Higher APRs on small-dollar loans appropriately reflect the risk involved in lending to consumers, Smith said.

Closing out the individual presentations was Gregory Elliehausen, Senior Economist at the Federal Reserve Board. Elliehausen explored the question of whether or not consumers who use high-rate credit products are making deliberate and rational decisions. What he found was that customers were aware that such products may be expensive, but when compared to alternatives for not using these products, they were considered safer and more cost-effective.

Once presentations were concluded, all panelists gathered on the stage to participate in an audience Q&A, moderated by Tim Ranney. The success of the NonPrime101 conference in Florida has inspired conference leaders to think about holding similar events in other cities, such as Washington, DC. "I feel that this is an extremely important conversation, and I think policy makers in particular could benefit tremendously from hearing from experts like the ones we have featured here," Ranney said.

A full list of speakers is below:

- Rick Hackett, Partner, Hudson Cook, LLP, former CFPB Assistant Director
- Cynthia Campbell, Director of impact + labs at the Filene Institute
- Kelly Edmiston, Senior Economist, Federal Reserve Bank of Kansas City
- Dr. Daniel J. Smith, Assistant Professor, Johnson Center at Troy University
- Paul Desaulniers and Ken Pruett, Experian
- John Thompson, Senior Vice President - CFSI
- Luz Urrutia, VP of Field Sales and Services, Oportun, formerly known as Progreso Financiero
- Gregory Elliehausen, Senior Economist at the Board of Governors of the Federal Reserve System

nonPrime101.com, powered by Clarity Services, Inc., was founded two years ago in an effort to provide research studies and articles about non-prime consumer behavior to help the public and researchers better understand them. The rate of non-prime consumers, which include thin-file, no-file, and prior prime consumers, continues to rapidly grow and nonPrime101.com provides unbiased and empirical studies that show the credit usage behaviors, activities, and needs of non-prime consumers as a whole.

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