Read the latest on the Consumer Financial Protection Bureau (CFPB).
- Consumer Agency to Review Outdated Regs on Mortgages, Other Products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."
- Consumer Experts Urge Senate to Confirm CFPB Director
American Banker 05 Oct 2011
Consumer lending experts urged a Senate panel on Oct. 4 to confirm a director of the Consumer Financial Protection Bureau before the end of the week. The Senate Banking Committee's subcommittee on financial institutions and consumer protection convened the hearing mere days before the entire panel is slated to vote on the nomination of Richard Cordray as the bureau's first director. Although the witnesses spoke about the wealth gap and discriminatory lending practices, the subtext of the hearing and the matter on everyone's mind was the CFPB. In particular, they complained that the bureau's authority is limited until a director is in place. "There are abuses going on that need to be curtailed," said Douglas Fecher, president and CEO of Fairborn, Ohio-based Wright-Patterson Federal Credit Union. "We have a branch near a pawn shop and a payday lender, and the only one that is regulated is us. The CFPB needs to address that fact."
- Banks Selling Insurance Products to Face More Scrutiny
Washington Post 02 Oct 2011
According to speakers at the American Bankers Insurance Association conference, while insurance companies may not receive much oversight from the new Consumer Financial Protection Bureau (CFPB), banks that sell insurance and debt protection products will not escape such scrutiny and could, in fact, see it increased. Banks opted to sell insurance products as a way to shore up their bottom lines as income from fees and loans fell. The Dodd-Frank financial law provided the CFPB with jurisdiction over banks offering these insurance products and whether those firms are disclosing terms to consumers. Some have said that language on disclosure information made available by the bureau could dissuade consumers from purchasing these insurance products and could impact long-term demand. According to a U.S. GAO report released in March, the nine largest credit card issuers earned $2.4 billion in fees for debt protection products in 2009, but only paid out $518 million in benefits to consumers. Critics of the CFPB language say that it is too biased against the products and are looking for language that is more neutral.
- Senators Should Confirm Cordray
Lakeland Ledger 29 Sep 2011
U.S. senators contemplating President Obama's preference to lead the Consumer Financial Protection Bureau have an easy decision before them, according to a pair of consumer advocates. The choice is clear, write Alice Vickers of Florida Legal Services and Brad Ashwell of the Florida Public Interest in their editorial: confirm Richard Cordray or give payday lenders an edge over other banks. The CFPB has been up and running since July 21, but the former attorney general for Ohio has yet to be confirmed by the Senate Banking Committee. Obama officially nominated him on July 18 as the new enforcement chief of the bureau, created to protect consumers against banks, nonbanks, and payday lenders. While Cordray has received strong support, 44 Republican senators wrote a letter to the president saying the would not confirm any nominee unless the bureau's powers were reduced significantly. Without a director, the bureau cannot fully protect consumers.
- Consumer Bureau Readies Its New Financial Rules
New York Times 20 Sep 2011
Temporary leader of the Consumer Financial Protection Bureau (CFPB) Raj Date indicates that a new string of regulations will be unveiled soon, including one that will require lenders to gauge whether homeowners can repay their mortgages. He says that while he believes in the power of free markets, "free markets need rules." Other possible changes could revamp mortgage disclosure forms, which could be revealed in 2012. Date said, "We're taking the required mortgage disclosure forms and streamlining them into a single form. We believe the final product will be more useful to consumers, and simultaneously reduce costs for lenders."
- Consumer Bureau Targets Checking Overdraft Fees
Chicago Tribune 19 Sep 2011
A controversial new federal agency is targeting a consumer pariah: checking account overdraft fees. The de facto head of the Consumer Financial Protection Bureau, Raj Date, said in a speech in Philadelphia in mid-September that the new regulator is going to begin scrutinizing overdraft programs with the goal of clarifying the cost of free checking accounts. "With these free checking accounts, much of the costs to the consumer were buried in overdraft fees," said Date, special adviser to the Treasury Secretary on the consumer bureau. "Going forward, the bureau will carefully assess how we can best ensure that the overall market for short-term credit is fair, transparent, and competitive." Date -- who is running the consumer bureau as it anticipates the confirmation of its first chairman -- said that one of the CFPB's first major decisions could be establishing guidelines for banks to make sure consumers understand what they are doing when they accumulate overdraft fees.
- New CFPB Leader Pledges 'Tough' Enforcement Regime
American Banker 16 Sep 2011
In his first speech since taking the reins at the Consumer Financial Protection Bureau, Raj Date cautioned that the agency will take a tough stance when it identifies products that are harmful for the public. On Sept. 15, he told a group of bankers and consumer advocates in Philadelphia, "Make no mistake: When we find unjustified practices that cause substantial consumer harm, we will take the necessary action to put an end to them." However, he emphasized that enforcement is only one tool the CFPB will have its disposal along with supervision, rulemaking, and research. While Date touched on the bureau's overall agenda, he intimated that specific products -- including bank overdraft programs and short-term cash advances -- will be given special attention. The CFPB is hamstrung from reforming the mortgage market, including through the introduction of loan servicing standards, until a permanent director has been appointed; but it does plan to flag problems in the student loan market and roll out additional rules for credit cards. Date stressed that all of the regulator's work will be grounded in product transparency, common-sense regulations, consistent oversight, and smart enforcement. By giving consumers the confidence to borrower for a home purchase or for higher education purposes while simultaneously giving banks the confidence they need to innovate and compete, Date said the new agency will stimulate the economy as a whole.
- FTC, CFPB Sorting Out Respective Roles in Reducing Financial Fraud
Law.com 15 Sep 2011
Just seven weeks after the new Consumer Financial Protection Bureau opened its doors, the Federal Trade Commission shows no signs of ceding any of its own overlapping jurisdiction over financial fraud. The agency recently brought suit against a payday lender that allegedly tried to garnish consumers' wages without obtaining the required court order. Earlier this month, the FTC also amended its complaint against U.S. Mortgage Funding, charging the company with falsely promising financially strapped consumers that they would get loan modifications to make their mortgages more affordable. Meanwhile, the CFPB is still gearing up and has yet to issue a single enforcement action. It is unclear how the two agencies will split up the responsibility. "The FTC and the CFPB will have joint enforcement over deceptive marketing of payday loans and a range of other financial products," according to FTC spokeswoman Betsy Lordan, who said details on how the agencies will split joint enforcement efforts will be made clear in a Memorandum of Understanding, set to be complete by Jan. 21, 2012. But one FTC commissioner, J. Thomas Rosch, has challenged why the CFPB is even necessary, as the two agencies have so much overlapping jurisdiction. "The proposed new agency has no track record in protection consumers from deceptive and unfair practices in the financial marketplace," he said.
- CFPB Launches Fourth Round of Mortgage Disclosure Form Testing
Housing Wire 12 Sep 2011
The Consumer Financial Protection Bureau continues to test various mortgage disclosure forms to compare the pros and cons of each. In its fourth round of testing, the agency this week will compare two identical forms with different loan information to see how clear the price differences are to consumers and lenders who read the documents. "Comparing two versions of a form is useful, but in the real world, consumers should be able to use disclosures to compare different loan offers, not different forms," according to a statement from the CFPB. "We want to make sure the disclosure actually helps consumers understand features of competing loan products, from the overall loan amount to estimates of taxes and insurance costs." The forms are designed to combine the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures into a single, easy-to-read document; feedback gathered about the sample forms will enable the bureau to develop standard uniform lending documents for the industry.
- Consumer Pick Vows to Streamline Regulations
New York Times 07 Sep 2011
During a U.S. Senate Banking Committee hearing, Consumer Financial Protection Bureau (CFPB) nominee Richard Cordray said that if he was confirmed, he would use the agency's "bigger and more flexible toolbox" to enforce consumer financial laws, use litigation judiciously, and prioritize the streamlining of regulations. He noted that the number of regulations crafted over the last three decades have burdened some banks and has discouraged them from lending. Cordray's testimony aimed to assure lawmakers that as head of the CFPB, he and the agency would be accountable to Congress, but Republican lawmakers remained unconvinced saying that the bureau had too much unchecked power. Banking Committee Ranking Republican member Sen. Richard Shelby (Ala.) said, "Unless the bureau is reformed. It is only a matter of time before this concentration of power is abused or misused to the detriment of American consumers and the economy." Shelby is among the 44 Republicans who have pledged not to confirm the CFPB director unless the Obama Administration agrees to change the agency's structure. Among the changes republicans are seeking are changing the director's position to a board of directors and subjecting the agency to the Congressional appropriations process. The Financial Stability Oversight Council can overturn CFPB regulations by a two-thirds majority, which Cordray admitted was a high hurdle, but says that it would be unnecessary as the CFPB is required to "communicate and consult with our fellow banking agencies."
- Consumer Bureau Reaches Out to Military Families
New York Times 07 Sep 2011
Regulators took note that military households were proving to be especially vulnerable to financial rip-offs following the financial crisis. After gathering information about unscrupulous mortgage lending practices, deceptive car loans, and other abusive financial products, the newly opened Consumer Financial Protection Bureau wants to hear from military families about what they found to be the best financial products and services tailored to them. According to the assistant director of the CFPB's Office of Servicemember Affairs, Holly Petraeus, the division is looking for information on homeowner assistance programs, such as loan modification services; financial education opportunities; and marketing and communication strategies. "Military families face unique challenges especially when it comes to their finances," Petraeus says. "By identifying the products and services that aim to assist their particular needs, our office will be able to better serve service members and their families." Comments from the public will be accepted via e-mail through Sept. 20.