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Since Richard Cordray’s departure as CFPB Director and after a brief power struggle surrounding the appointment of Michael Mulvaney as Acting Director, CFPB started making some changes.
In January, they issued notification of a series of Requests for Information (RFIs) to obtain comment to help determine if they are properly fulfilling their obligation to protect consumers. The RFIs to date include:
- The process for Civil Investigation Demands (CIDs)
- Enforcement Activities
- Supervisory Program/Process
- External Engagements
They are asking for comment from stakeholders for recommended changes and improvements to their processes. How can they make things better while still protecting consumers?
If you plan to comment, and you should, it is recommended you do so anonymously, through counsel, or your trade association. Any comments will become part of the administrative record which is made public. You may not want others to know that you are, or were, party to a prior CID.
CFPB also issued its new five-year Strategic Plan. Some highlights are:
- Removal of the reference for CFPB’s enforcement of UDAAP
- A move away from a focus on enforcement. The CFPB changed its first goal in the Strategic Plan from referencing enforcement to referencing access to credit
- Focus on the limits of its Statutory Authorities. Work within the limits rather than stretching them
- Regulatory Reform
Regulatory reform is also being discussed in Congress. Both the House and the Senate have put forth proposals to ease the burdens of Dodd-Frank on financial institutions.
However, think again if you believe Dodd-Frank will be repealed. Republicans have pulled away from any such action.
There is now some bipartisan support in the Senate to raise the threshold from $50 billion in assets to $250 billion. This gives significant relief from stress testing requirements to banks below that higher threshold.
The Senate bill would also make other changes for banks with less than $10 billion in assets. It would also include granting the QM status for loans held in portfolio. Additionally, while allowing these smaller institutions that hold a high level of tangible equity to be exempt from certain capital and liquidity requirements.
These are positive signs. But, remember they come under the direction of an Acting Director. Someone who will likely be replaced soon by a Presidential appointment. There are no guarantees.
Compliance is still important. Other than some discussion about potentially modifying some of the HMDA data, there are no reported changes to QM, ATR, or TRID. Further, some state regulators have already signaled that they will pick up any slack for enforcement of violations in areas which are no longer a prime focus of the CFPB, like UDAAP.
CFPB is offering the industry the opportunity to participate in some potential for meaningful change. Take advantage of this opportunity. It won’t last forever.
Lend responsibly, my friends.
Note: Thanks to Attorney Richard Horn, of Richard Horn Legal, PLLC, for his updates which provided information used to write this blog.
