Posted on 06 September 2011.
‘Abusive’, that’s the 7-letter word that has all financial institutions on edge. At least when it comes to the CFPB and how it regulates the financial services industry. But what does it mean, and how is it different from practices that are unfair and deceptive, which are already banned? According to American Banker’s Kate Davidson, more than a year after the law’s passage, bank lawyers and Bureau officials still can’t say for sure.
“I’ve always said it’s like pornography: I’ll know it when I see it,” said Jeffrey Taft, a partner with Mayer Brown LLP. “It’s hard for you to define it. I think it will be virtually impossible for the bureau to really come out with concrete guidelines.”
So what authority does the CFPB have under Dodd-Frank?
Under Dodd-Frank, the bureau cannot declare an act or practice abusive unless it: “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.”
The Catch 22:
“It creates a knife edge,” said Jo Ann Barefoot, the co-chairman of Treliant Risk Advisors. “What happens if you decide that you think that certain loans are unsuitable for proportionately more minority borrowers, or more women or more elderly, then you could be charged with not being liberal enough in your lending.”
Posted in access to credit, American Banker, Bank Investment Consultant, best practices, CFPB, federal legislation, Financial Reform Bill - CFPB
Posted on 05 August 2011.
U.S. regulators are still feeling the fallout from the D.C. Circuit Court ruling from late last month, scrambling to bulletproof dozens of financial reforms.
The ruling sent shivers down the spines of the SEC and Commodity Futures Trading Commission, and has them bracing for more court challenges as they strain to complete well over 100 rules called for in Dodd-Frank that was enacted last year.
“I was afraid of this all along,” said Jill Sommers, a Republican commissioner at the CFTC. “The SEC had a rule that was challenged on grounds that I think there are concerns in our rules about, and I feel like we could equally have the same kind of challenges.”
Scott O’Malia, the other Republican CFTC commissioner, says he is going to call for a briefing with agency staff to review the ruling and assess the agency’s vulnerabilities.
“I just don’t want to make any mistakes that set us back,” O’Malia said. “It’s a very serious concern.”
Posted in federal legislation, Reuters
Posted on 03 August 2011.
According to American Banker, The U. S. Court of Appeals for D.C. Circuit Court ruled July 22 that the Securities and Exchange Commission did not properly conduct a cost-benefit analysis before finalizing a proxy rule required by the regulatory reform law.
So what does this mean for all other agencies? Well, they could be next.
The decision serves as a stark warning for all federal regulators tasked with writing the myriad of regulations under Dodd-Frank, and gives the industry and others more leeway to challenge new rules in court.
“The entire Dodd-Frank implementation is at heavy risk because if any of these rules are challenged by the courts, they won’t survive,” said Hal Scott, Nomura Professor and Director of the Program on International Financial Systems at Harvard Law School.
Posted in American Banker, CFPB, Federal Government, federal legislation
Posted on 21 July 2011.
The CFPB hasn’t even been up and running for a full 24 hours and the House of Representatives is already considering bills that could mean big changes for the agency.
The House on Thursday afternoon rejected an attempt by House Democrats to abandon legislation they say would gut last year’s Wall Street reform bill.
Democrats forced a vote on whether the bill, H.R. 1315, should even be considered on the House floor today by arguing that the Republican bill weakens the newly formed Consumer Financial Protection Bureau (CFPB). But as expected, the House voted in favor of continuing on with the bill by a 227-173 vote…
…The bill would turn the leadership of the bureau into a five-person commission rather than a single person, and would also make it easier for CFPB financial regulations to be overturned by an oversight body, the Financial Stability Oversight Council.
Posted in CFPB, federal legislation
Posted on 06 July 2011.
Gonna be in DC Monday? According to this press release, Rep. Barney Frank will be providing a report from the congressional front line on the developments with the CFPB.
TOPIC: “Report from the Front Line of Financial Reform”
DATE: Monday, July 11
TIME: 10 a.m.
ROOM: National Press Club, Murrow Room
Posted in CFPB, federal legislation, Financial Reform Bill - CFPB
Posted on 06 July 2011.
The CFPB is calling for comments on its comment intake, according to the ABA’s Dodd-Frank Tracker.
The forms used in the process are being developed to collect the contact information, substance of the complaint, type of contact and related information.
Comments on the intake process are being accepted on or before August 1, 2011.
Click here for the notice.
Posted in CFPB, customers, federal legislation, Financial Reform Bill - CFPB
Posted on 06 July 2011.
Credit unions are urging the CFPB to make them the exception to the potential burdensome regulation that the new agency could put in place.
“Special consideration should be given to ensure that rules aimed at financial institutions with different corporate structures, different products and different financial incentives do not create unintended consequences for not-for-profit credit unions,” NAFCU Associate Director of Regulatory Affairs Dillon Shea wrote in a comment letter.
CUNA Deputy General Counsel Mary Mitchell Dunn wrote that credit unions are in favor of reasonable consumer protections but urged the bureau top minimize the new requirements with which credit unions have to comply.
Posted in CFPB, customers, federal legislation, regulation
Posted on 23 June 2011.
With the CFPB’s latest announcement re: larger nonbank financial institutions, the new consumer agency put out a blog post responding to questions that have called for an exact definition.
What’s a “larger participant”? Our nonbank supervision program may look at all sizes of nonbank mortgage companies, payday lenders, and private student lenders. But Dodd-Frank says that in other markets, the Bureau’s supervision program generally covers only institutions that are “larger participant[s] of a market for other consumer financial products or services.”
“Larger”? Larger than what? Well, that’s what the CFPB has to figure out. Congress did not set the thresholds for inclusion in this supervision program for these other markets. Congress required that we define what these size thresholds should be, so we can lay the foundation to start this part of our nonbank supervision program. In other words, it’s our job to figure out exactly how large “larger” really is.
Posted in access to credit, CFPB, customers, federal legislation, Financial Reform Bill - CFPB, regulation
Posted on 20 June 2011.
It’s not too late to provide public comment to CFPB’s proposed list of rules that are currently under the regulatory jurisdiction of other agencies. After considering any public comments, the CFPB will publish a final list in the Federal Register no later than July 21.
Public comments on the proposed list of rules are due by June 30.
Posted in CFPB, Federal Government, federal legislation, Financial Reform Bill - CFPB