Consumer Financial Protection: What’s New at CFPB?
Biden appoints U.S. consumer watchdog veteran
The White House has announced Dave Uejio as President Biden’s choice to run the Consumer Financial Protection Bureau (CFPB) on an acting basis after its director, Kathy Kraninger, resigned at the new administration’s request.
Uejio is a nine-year CFPB veteran and was most recently its chief strategy officer, according to his LinkedIn profile.
Kraninger tweeted her resignation following Biden’s swearing in. She was appointed by President Donald Trump, and her term was due to end in 2023.
CFPB Codifies Final Rule on Role of Supervisory Guidance
The CFPB has issued a final rule regarding the Bureau’s use of supervisory guidance for its supervised institutions. The rule codifies the statement, with amendments, that the Bureau and other federal financial regulatory agencies issued in September 2018, which clarified the differences between regulations and supervisory guidance.
Unlike a law or regulation, supervisory guidance does not have the force and effect of law and the Bureau does not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.
In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if regulated institutions are in violation. Regulations are also generally required to go through the notice and comment process.
The Bureau collaborated closely with other federal financial regulatory agencies in this rulemaking, including by issuing a joint proposal for public comment.
CFPB Issues Rule on Higher-Priced Mortgage Loan Escrow Exemption
The CFPB has issued a final rule to implement a requirement of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The final rule exempts certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs).
The final rule takes effect upon publication in the Federal Register and exempts from the HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if (1) the institution has assets of $10 billion or less; (2) the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and (3) certain of the existing HPML escrow exemption criteria are met.
CFPB announces partnerships with communities across country to promote financial resiliency
The CFPB has announced that it will partner with seven communities across the country to help build financial resiliency among Americans. The partnerships, part of the Bureau’s Start Small, Save Up initiative, aim to increase the number of people having sufficient liquid savings by testing new approaches as well as identifying existing approaches that can assist Americans to become more financially secure.
The CFPB will provide training, technical assistance and other technical support to help community-based organizations in Great Falls MT; Little Rock, AR; Louisville, KY; Manchester, NH; Richmond, VA; Seattle, WA; and St. Louis, MO, build or expand their financial resiliency initiatives.
The seven communities were among a large number that were considered and represent a broad cross section of the country’s population. Lead organizations in each community applied to the Bureau to participate in this partnership and after thorough consideration and due diligence these seven were selected.
Taskforce on Federal Consumer Financial Law Releases Its Report
The CFPB’s taskforce on Federal Consumer Financial Law has released a report with recommendations on how to improve consumer protection in the financial marketplace, including consumer protection, information and education, competition and innovation, regulatory modernization and flexibility, and inclusion and access.
Chartered by the Bureau in January of 2020, the Taskforce has examined the existing legal and regulatory environment facing consumers and financial services providers. The Taskforce was in part inspired by the National Commission on Consumer Finance, which was established by the Consumer Credit Protection Act in 1968 to conduct original research and provide recommendations relating to the regulation of consumer credit.
In its report, the Taskforce makes approximately 100 recommendations to the Bureau, Congress, and state and federal regulators to strengthen consumer protection, including authorizing the Bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services; research and develop policies to address problems of financial inclusion in rural communities; facilitating creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions. Read more in Volume I and Volume II of the report.
NCUA, CFPB Memorandum Calls for Coordination of Compliance, Enforcement
The CFPB and the National Credit Union Administration (NCUA) announced a Memorandum of Understanding (MOU) agreement to improve coordination between the agencies related to the consumer protection supervision of credit unions over $10 billion dollars in assets.
Under this MOU, CFPB and NCUA will pursue opportunities to proactively and efficiently share supervisory information, including drafts of Covered Reports of Examination and final Reports of Examination for credit unions over $10 billion dollars in assets, using secure, two-way electronic means. CFPB and NCUA will jointly collaborate in semi-annual strategy planning sessions to identify and address areas of alignment and coordination in examinations for covered institutions.
The MOU will better facilitate coordinated examinations to reduce redundancy and unnecessary overlap. CFPB and NCUA will also share information on training activities and content. Finally, the MOU will permit both agencies to share information related to supervisory activities and potential enforcement actions.
Credit union trade groups have long argued that the NCUA should be the lone supervisor of credit unions. However, the Dodd-Frank Act, which created the CFPB, gave the agency enforcement power over credit unions with assets exceeding $10 billion.
CFPB Announces Results of its Prioritized Assessments of CARES Act and Other Borrower Protections in Light of COVID-19 Pandemic
The CFPB or Bureau has published a special edition of its Supervisory Highlights focused on its COVID-19 Prioritized Assessments. As previously reported, the CFPB announced in July 2020 that it had sent targeted information requests to supervised financial institutions regarding the consumer risks posed by the pandemic, including how institutions were implementing the special borrower protections under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Last week’s Supervisory Highlights shares the CFPB’s key findings stemming from these reviews, which are summarized in more detail here.
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