Read the latest on the Consumer Financial Protection Bureau (CFPB).
- Both Parties Seek Edge as Nominee Is Blocked
Wall Street Journal 09 Dec 2011
U.S. Senate Republicans blocked White House nominee Richard Cordray, who was selected to serve as the director of the Consumer Financial Protection Bureau (CFPB). The vote was 53-to-45 in favor of Cordray's nomination, but short of the 60 votes necessary to force consideration of his nomination. Republicans have vowed to block any nominee until the bureau is modified, while Democrats say that the filibuster merely demonstrates Republicans political posturing at the expense of consumers. The White House could consider a recess appointment for the CFPB, though it is unclear if that move is technically possible. Republicans want the CFPB to be led by a board of directors rather than a single director, among other changes. Without a director, the agency cannot regulate nonbank financial firms, even though it can enforce current consumer protections. Democrats are hopeful that the public support for improved consumer protections will work against Republicans who opposed Cordray's nomination. Republicans, on the other hand, are hopeful that their vote against the nominee will demonstrate the party's willingness to dial back government bureaucracy. The White House had issued a media blitz in Maine, Indiana, Nevada, and Tennessee seeking the support of Republican senators that the administration thought were most likely to support Cordray, but the efforts did little to change those senators' votes. U.S. Sen. Scott Brown (R-Mass.) did vote with Democrats in favor of Cordray, keeping his word, while U.S. Sen. Olympia Snowe (R-Maine) did not vote either way, merely voting "present."
- Consumer Bureau Introduces 2-Page Credit Card Agreement
Plain Dealer 07 Dec 2011
The Consumer Financial Protection Bureau on Dec. 7 introduces its new credit card agreement, which is easier to understand. The abbreviated form decreases the lengthy credit card disclosures from 5,000 words to about 1,000 in a two-page document. The agency is unveiling its "Know Before You Owe" campaign in Ohio, just one day before the Senate is scheduled to vote on whether to confirm Richard Cordray as the bureau's first official director. Forty-four of 46 GOP senators have pledged to block confirmation of the director unless the bureau's structure and funding are dramatically scaled back. "Every day we go without a consumer watchdog in place is another day when a student, or a senior citizen, or member of our Armed Forces could be tricked into a loan they can't afford," warned President Barack Obama. He has promised to veto any measure that would delay, defund, or dismantle the new rules set up by the Dodd-Frank financial overhaul. A recent report by the bureau found that there is widespread confusion over credit card terms.
- Senators Wrangle Over Consumer Protection
Roll Call 06 Dec 2011
U.S. Senate Democrats are pushing for the confirmation of Richard Cordray as the first director of the new Consumer Financial Protection Bureau (CFPB) as they build campaign momentum to demonstrate they are "guardians of the middle class." One Democratic aide said, "We think this is a bellwether vote to determine if you are on the side of consumers." GOP aides suggest that the push is merely to score political points and not obtain confirmation for Cordray given that Democrats have not reached out to address Republican concerns about the CFPB. U.S. Senate Majority Leader Harry Reid (D-Nev.) could cut off debate on the nomination on Dec. 6, which could push for a vote on Dec. 8. It is unclear if Democrats will have enough Republican votes to reach the required 60 votes necessary to overcome the filibuster. A recent White House National Economic Council report said, "Without a director, the CFPB cannot fully supervise non-bank financial institutions such as independent payday lenders, non-bank mortgage lenders, non-bank mortgage servicers, debt collectors, credit reporting agencies, and private student lenders." Republicans say that the CFPB should be set up like other agencies with a board, of which no more than three commissioners could belong to the same political party. They also would prefer the funding for the agency go through the congressional appropriations process.
- White House Pushes for Confirmation of Consumer Watchdog Nominee
Washington Post 04 Dec 2011
The White House issued a new report to pressure U.S. Senate Republicans to support the Obama Administration's nomination of Richard Cordray as the first director of the new Consumer Financial Protection Bureau (CFPB). GOP lawmakers continue to block any CFPB nominee unless significant changes are made to the agency, but the White House is pushing for support as the full Senate is expected to vote on Dec. 8 on Cordray's nomination. Along party lines, members of the U.S. Senate Banking Committee voted to approve Cordray's nomination in October, but 45 of the chamber's 47 Republicans have issued a letter vowing to block his nomination, which would ensure that the Senate falls short of the 60 votes necessary to confirm Cordray's appointment. The National Economic Council's recent report said that the CFPB is "hamstrung" because it cannot exercise its full powers until a director is confirmed, noting the CFPB "cannot provide the kind of oversight and transparency that consumers need." Raj Date, who succeeded Elizabeth Warren as special adviser to the treasury secretary in charge of setting up the bureau, has said, "Independent funding of the CFPB and other bank supervisors ensures that we are not at the mercy of outside influences when it comes to protecting consumers or ensuring the safety and soundness of our nation’s financial institutions." If the nomination of Cordray fails to pass, President Barack Obama could appoint him during the winter recess.
- CFPB, Agencies Form Task Force to Crack Down on Mortgage Modification Scams
American Banker 02 Dec 2011
A new task force will investigate and shut down scams that specifically target homeowners attempting to complete loan workouts through the Home Affordable Modification Program. The Consumer Financial Protection Bureau, the Treasury Department, and the Special Inspector General for the Troubled Asset Relief Program created the joint task force to educate struggling homeowners and help them to recognize modification scams. The task force has issued a consumer fraud alert with tips for avoiding scams and will distribute it directly to homeowners eligible for HAMP. The alert informs borrowers where and how they can apply for the program and reminds them that only their mortgage servicer has the authority to approve a modification. Additionally, it cautions consumers to conduct due diligence if an upfront payment is requested, money-back guarantees are offered, or they are advised to cease mortgage payments or stop contacting their servicer.
- CFPB Begins Work to Streamline Consumer Financial Regulations
American Banker 30 Nov 2011
The Consumer Financial Protection Bureau is seeking input on ways to streamline regulations under the consumer financial laws it inherited from other regulators under Dodd-Frank. The bureau issued a notice and request for information asking the public to identify the regulations most in need of updating or elimination because they are outdated, overly burdensome or unnecessary. It also asked for suggestions on how to make complying with the rules easier. "Our goal is to make it easier for banks, credit unions and others to follow the rules," said Raj Date, the bureau's interim leader. "We're asking the public to help us identify and prioritize concrete ways that we can streamline the regulations we inherited so that they work better for consumers and the firms that serve them."
- Consumer Groups Urge CFPB to Impose Greater Protections for Prepaid Cards
American Banker 21 Nov 2011
Consumer advocates are pressing the Consumer Financial Protection Bureau to extend greater protections for prepaid debit card accounts. A letter released on Nov. 18 and signed by seven advocacy groups asked the fledgling agency to clarify that the definition of "account" under Regulation E includes the pooled accounts into which funds accessed by prepaid cards are placed. The organizations -- the Center for Responsible Lending, National Consumer Law Center, and Consumers Union among them -- said the clarification is essential to ensure that prepaid card users have full consumer protections under the Electronic Fund Transfer Act. "As the cost of bank accounts continue to rise, more and more consumers are turning to prepaid cards as an alternative," stated Consumers Union senior attorney Michelle Jun. "But prepaid cards offer weaker protections than bank accounts and can be loaded with hidden fees that make them costly to use." To correct that, Consumers Union and the other advocates are requesting that the CFPB limit how much money consumers can lose if their card is stolen or lost; that card issuers be required to clearly and conspicuously disclose all fees upfront; and that overdraft fees on all prepaid cards be banned, among other protections.
- CFPB Seeks Input for Joint Report on Private Student Loan Market
American Banker 17 Nov 2011
The Consumer Financial Protection Bureau is requesting information from consumers, schools, and industry players on the student loan market as it begins work on a joint report to Congress. It is seeking such information as underwriting criteria for student loans, repayment terms and behavior, servicing and loan modification, and default avoidance. The notice and request for information, published Nov. 16, follows a handful of student loan initiatives announced by the Obama administration in October aimed at relaxing the burden of student debt. It also highlights the priority that the agency is putting on this niche of the financial industry. "The bureau is particularly interested in learning what information would help students make informed decisions about which financial services and products are right for them and what approaches would best assist recent graduates facing (or about to face) difficulty making private education loan payments," the notice said.
- CFPB Official: Elder Financial Abuse 'Crime of the 21st Century'
American Banker 16 Nov 2011
Elder financial abuse and exploitation is a significant and growing financial problem facing the America's senior citizens, a prominent official from the Consumer Financial Protection Bureau told a Senate panel on Nov. 15. Hubert "Skip" Humphrey III, director of the bureau's Office for Older Americans, said the agency intends to partner with law enforcement and senior advocates to build awareness of elder abuse; address the underreporting of fraudulent or abusive practices aimed at this demographic; and coordinate more training on the matter for law enforcement and financial institutions. "It's been called a hidden epidemic or the Crime of the 21st Century, and it's a growing and serious problem that we need to address," Humphrey said. AARP Foundation Litigation senior attorney Julie Nepveu said more older Americans are reporting problems involving payday loans, debt collection, overdraft fees, and mortgage modifications. The CFPB's reach is limited, however, until permanent leadership is in place. "Too many seniors are struggling to meet the unfair terms of unscrupulous lenders looking to take advantage of their vulnerable state," explained Sen. Sherrod Brown, who chairs the Subcommittee on Financial Institutions and Consumer Protection. "Unfortunately, many of these activities are perpetrated by non-banks, and the CFPB does not have authority over these lenders until a full-time director is confirmed."
- CFPB Kicks Off Phase 2: Simplifying Mortgage Closing Forms
ReverseMortgageDaily 08 Nov 2011
Now that is has addressed the initial steps of the mortgage process, the Consumer Financial Protection Bureau is moving on to the other end of the deal: the disclosure forms for loan closings. The agency on Nov. 8 released two prototypes of the Truth in Lending Disclosure and the HUD-1 Settlement Statement -- the federal documents that list final loan terms and costs -- and it is working on amalgamating them and certain other federal disclosures into one simple-to-use form. "We believe the terms and costs on these disclosures should be similar to the ones you received when you first applied for the loan," the CFPB wrote in a recent blog post. "Being able to compare these terms and costs is what it means to 'know before you owe.'" The prototypes may not look shorter or easier to understand at first glance, the CFPB acknowledges, because they contain some new disclosures mandated under the Dodd-Frank Act. The regulator is accepting comment on the forms through Wed., Nov. 16.
- Consumer Agency to Review Outdated Regs on Mortgages, Other Products
eCredit Daily 04 Nov 2011
The newly formed Consumer Protection Financial Bureau is ready to begin reviewing copious regulations on mortgages and other common financial products affecting the lives of most Americans. The CPFB inherited many of the consumer-oriented divisions of existing U.S. agencies and now must "streamline and simplify rules" to guarantee that consumer lending and other services function properly and that lenders are sufficiently transparent, explained Raj Date, de facto head of the agency, before Congress on Nov. 3. "The Bureau has inherited from other agencies numerous regulations, many of which have been on the books for years," Date told the House Financial Services subcommittee, as he reviewed the watchdog’s first 100 days and touched on future challenges. "Changes in technology, market practices, and the legal landscape may have caused some of these rules to be obsolete, unnecessary, redundant, or counterproductive." Date said the review is to begin in November. In the meantime, he said the CFPB's first 100 days has accomplished a great deal, including the launch of consumer education campaigns; meetings with consumers, consumer advocates, civil rights organizations, trade groups, and industry representatives; hiring of an estimated 700 staffers, and initiation of on-site examinations of the country's biggest banks.
- CFPB's First 100 Days Under Microscope at Hearing
MarketWatch 02 Nov 2011
During a recent U.S. House Financial Services Financial Institutions and Consumer Credit Subcommittee hearing, Republican lawmakers said that the new Consumer Financial Protection Bureau (CFPB) needs additional oversight, but Raj Date, special adviser to the Secretary of the Treasury on the CFPB, defended the bureau's work. He outlined the accomplishments of the agency in its first 100 days, noting that examinations of large banks had begun as well as efforts to clarify mortgage documents and student loans. The bureau also plans to review rules inherited from other agencies to reduce duplication, streamline regulation, and make updates, which Date said could help smaller firms. The CFPB is expected to face additional challenges once it has a director in place, which will enable the agency to supervise nonbank consumer-financial-product providers. However, the White House Nominee Richard Cordray continues to face Republican opposition in the U.S. Senate, as Republicans intend to block any nominee until the agency's structure is changed, including the replacement of the director position with a board. Date reiterated the CFPB's stance that its decisions will be "fact-based, pragmatic, and deliberative."
- Rep. Frank: President Should Use Recess Appointment For CFPB Chief
Dow Jones Newswires 02 Nov 2011
U.S. Rep. Barney Frank (D-Mass.) said on Nov. 2 that the president should use a recess appointment to name Richard Cordray as the director of the new U.S. Consumer Financial Protection Bureau (CFPB) as Republicans continue to block any nominee until changes are made to the structure of the agency. Frank, other Democrats, and several consumer groups continue to push for the appointment of a permanent leader to the bureau because without a leader, the agency cannot use its full consumer protection powers. Republicans contend the new agency has too much authority over financial markets, and they are seeking a restructuring of the agency that would replace the director with a commission and provide other banking regulators with greater say over the agency's actions. If the president opts to use a recess appointment, it would circumvent the U.S. Senate approval process.
- Consumer Agency Will Fight to Defend Service Members' Pocketbooks
Los Angeles Times 01 Nov 2011
The federal government has introduced an initiative to prevent financiers from taking advantage of young, financially naive members of the military. To spearhead the effort, it enlisted Holly Petraeus, a longtime champion for military families who said that as an Army wife she was once preyed upon by a deceptive landlord. "I think a lot of people are surprised to think of the military as a target for unethical business practices or abuses," said Petraeus, head of the military affairs office at the new Consumer Financial Protection Bureau. "But the fact is that they have an absolutely guaranteed paycheck; it comes in twice a month, and they're not going to quit or be laid off." Those factors help make service members attractive targets for unscrupulous salespeople. So does their tendency to relocate often. "Military members move all the time, so they're constantly walking into new communities where they don't know the players," Petraeus points out. "They may go for the biggest billboard outside the front gate of the base, which may not be the one that will treat them the most fairly." Since being appointed this year, Petraeus has been visiting bases to learn how the military educates its enlisted persons and where it needs help. In September, her office began soliciting public input on financial products designed for service members and their families so her aides can craft better financial education and outreach initiatives. And although auto dealers managed to escape the purview of the CFPB, Petraeus says her office can at least educate them so that they do not agree to an unfavorable deal in the first place.
- CFPB Unveils Model Disclosures for Student Loans
American Banker 26 Oct 2011
The Consumer Financial Protection Bureau has introduced a student loan disclosure model meant to assist college students in comparing financial aid packages. Created by the CFPB and the Department of Education, the financial aid disclosure would make the costs and risk of student loans clear to the borrower while outlining a student's estimated debt and monthly loan payments after graduation. While student loans are considered a great resource to help students reach their goals, the actual risks need to be clear to parents and students, according to Raj Date, special adviser to the Treasury Secretary for the CFPB. "Having a simple, one-page financial aid shopping sheet would help students compare offers and choose the one that's right for them," he stated. The form will list the cost of attending college, tuition, fees, and other related expenses. Additionally, it includes clear distinctions between scholarships and loans. While the new agency has the authority to make significant changes to many financial practices, it cannot address all issues until it has a permanent director. The CFPB also released a student debt repayment assistance tool that provides information on income-based repayment, deferments, and alternative payment programs for borrowers who may be struggling to repay their student loans.
- Have Regulations Hurt Bank Profits?
New York Times 19 Oct 2011
The recent move by banks to impose debit card fees highlights the need for more transparent and competitive financial products, write Center for Responsible Lending President Michael Calhoun and Leadership Conference on Civil and Human Rights President and CEO Wade Henderson in a New York times commentary. While reforms have been implemented over the past few years to address credit cards and other financial products, Calhoun and Henderson note that debit card markets remain "unfair and dysfunctional." Many banks continue to charge excessive overdraft fees and reorder customer transactions; some have even begun to offer payday loans, they point out. While some large banks have reduced their abusive overdraft fee practices on debit cards, others have not. Congress set up the Consumer Financial Protection Bureau in 2010 to develop ground rules that encourage price transparency and competition. However, the CFPB is still without a confirmed director, leaving the agency significantly weaker than it was intended to be. Without a confirmation from U.S. senators, Henderson and Calhoun warn that the CFPB can only go so far in reducing abusive and predatory practices.
- Consumer Unit for Seniors Draws a Famous Name
New York Times 19 Oct 2011
Hubert H. Humphrey III, son of the late former vice president and Democratic presidential contender, has been tapped to lead the "older Americans" unit of the Consumer Financial Protection Bureau. Humphrey has been a veteran of public service in Minnesota, serving as a state senator and four-term attorney general. More recently, the 69-year-old helmed Minnesota's branch of AARP, the lobbying group representing American retirees. At the consumer bureau, Humphrey will be tasked with preventing financial schemes aimed at swindling senior citizens. "A well-informed consumer is the best protection against fraud and deceptive practices -- especially if that knowledge is backed up by tough regulatory enforcement," he said in a statement.
- State Attorneys General Push for Cordray to Lead Federal Consumer Agency
Washington Post 18 Oct 2011
The White House recently encouraged the National Association of Attorneys General to send a letter to U.S. Senate leaders to break up a nomination blockade against Richard Cordray, a former state attorney nominated to lead the Consumer Financial Protection Bureau (CFPB). The letter indicated that Cordray is "brilliant and balanced," and urged senators to approve his nomination. Senate Republicans have vowed to block any nominee for the consumer agency until structural changes are made to the CFPB, despite members of both parties praise for his experience. Republicans want to replace the director position with a five-member board, require CFPB to submit to the appropriations process, and submit to increased oversight. Since nominating Cordray, consumer angst has increased over bank fees and the Occupy Wall Street movement has grown. President Barack Obama has called for Cordray's approval, and the White House appears to be pushing for Senate approval.
- Consumer Watchdog Nominee Advances; Cordray Faces GOP Blockade on Senate Floor
Washington Post 06 Oct 2011
The U.S. Senate Banking Committee approved former Ohio Attorney General Richard Cordray's nomination to lead the Consumer Financial Protection Bureau (CFPB) in a party line vote on Oct. 6. However, Republicans have stated that they will block his nomination on the Senate floor given previous pledges to block any candidate for the post until changes are made to the bureau's structure. Republicans have called for the replacement of the directorship with a five-member commission, tighter oversight of the bureau by other agencies, and ensuring funding is appropriated rather than given through the U.S. Federal Reserve. U.S. Sen. Bob Corker (R-Tenn.) said following the committee's symbolic approval of Cordray, "We are simply asking that this enormously powerful new agency have checks and balances in place that protect the country from an overly zealous director." President Barack Obama has defended the agency, noting that it would provide accountability and transparency for financial products, and he urged the Senate to approve Cordray's nomination. Republicans could block a floor vote with a filibuster, but U.S. Sen. Tim Johnson (D-S.D.) is reaching out to Senate Majority Leader Harry Reid (D-Nev.) to schedule a floor vote on Cordray's nomination. Some consumer advocates have encouraged the administration to install Cordray through a recess appointment, but that would leave the post open until December 2012.
- Bank Fees Prompt Call for More Disclosure on Checking Accounts
Los Angeles Times 06 Oct 2011
As the backlash continues over Bank of America's new debit card fee, Raj Date, the acting head of the Consumer Financial Protection Bureau, is calling for more disclosure about what customers pay for checking accounts. Date says banks often are unclear about how much they charge customers for various services, and he suggests the agency might move to simplify checking account disclosures. "This isn't about any one fee from any one bank," he says. "The problem is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers." Date cites a July poll commissioned by the Pew Charitable Trusts that found that nearly three out of four Americans with checking accounts supported regulations requiring banks to provide better disclosure of fees, terms, and conditions. "Different banks charge different fees. Different fees are applied under different terms and conditions. Different banks give different names to the very same fee," says Date. "Ideally, consumers would have a simple way to evaluate checking account costs."