Military Lending Act
On December 29th, the CFPB published a report entitled, “The Extension of High-Cost Credit to Servicemembers and Their Families.” The report highlights current gaps in the Military Lending Act’s rules, resulting in high-cost loans for servicemembers. According to the report, the gaps have permitted companies to offer high-cost loans to military families and dependents by avoiding military-specific credit protections. “The current rules under the Military Lending Act are akin to sending a soldier into battle with a flak jacket but no helmet. To give our troops full-cover protection, the rules need to be expanded,” said CFPB Director Richard Cordray. “The Department of Defense’s proposed revisions will go a long way toward better shielding our military from high-cost credit products.” The CFPB included the results
of the report in a comment filed to the Department of Defense (DOD) on December 26th, supporting the DOD’s proposal to broaden the scope of the Military Lending Act rules.
On December 6th, The Wall Street Journal (WSJ) reported that the CFPB appointed Tony Alexis to run its Enforcement Division. According to the WSJ, Alexis “worked for 13 years as an assistant U.S. attorney in Washington focusing on fraud, public corruption and white-collar crimes.” Alexis succeeds Kent Markus, who had led the CFPB’s Enforcement Division since January 2012.
Revised Privacy Act System of Records
On December 31st, the CFPB published in the Federal Register a notice of a revised Privacy Act system of records for the “CFPB Freedom of Information Act/Privacy Act System.” The revision modifies, among other things, for the information contained in the system to include information from the National Archives and the Records Administration, Office of Government Information Services. Individuals whose personal information is maintained as part of the system of records includes, among others:
- People who cite the Freedom of Information Act (FOIA) or Privacy Act to request access to records;
- People whose information requests are treated as FOIA requests; and
- CFPB staff assigned to process such requests.
Public comments will be accepted through January 30, 2015.
On December 31st, the CFPB published a notice of a revised Privacy Act system of records for the “CFPB Consumer Education and Engagement Records.” The revision modifies, among other things, the:
- Purposes for which the records are maintained; and
- Categories of records maintained by the system.
Individuals whose personal information is maintained as part of the system of records include, among others, those who:
- Participate in CFPB-sponsored or CFPB-funded financial education or financial capability programs;
- Utilize financial education web-tools; or
- Participate in surveys conducted by the CFPB or by a third party. Public comments will be accepted through January 30, 2015.
On January 8th, the CFPB published in the Federal Register a notice and request for comment proposing a new information collection entitled, “Bridges to Financial Security: A Multisite Demonstration Project.” Beginning in the winter of 2015, the CFPB will “launch a multi-site financial education demonstration project to provide one-on-one and group financial counseling/coaching services to individuals with disabilities transitioning into the workplace or already employed.” According to the notice, to fulfill the goals of this project, the CFPB will need to collect client information, including:
- Basic contact and demographic information;
- Performance metrics; and
- Other relevant organization-level outcomes.
This data will be collected to develop monthly qualitative reports to monitor the progress of participating clients and effectiveness of the program. The CFPB will accept public comments through February 9, 2015.
On December 29th, the CFPB published in the Federal Register a notice and request for comment for its proposed information collection entitled, “Financial Coaching Program for Veterans and Low-income Consumers.” In early 2015, the CFPB will offer financial coaching services to transitioning veterans and economically vulnerable consumers nationwide. In an effort to monitor participants throughout the program and to evaluate the services provided, the CFPB will undertake three data collection activities:
- Administrative data collected about clients by financial coaches;
- Interview data collected by evaluators; and
- Self-reported survey data collected from coaches and clients.
The information gathered will include a combination of personal information, performance metrics, and programmatic and organizational outcomes. The CFPB is accepting public comments through January 28, 2015.
On December 29th, the CFPB published in the Federal Register two notices and requests for comment proposing to renew the approval for existing information collection activities titled: “Generic Information Collection Plan for Consumer Complaint and Information Collection System” (Generic Information Collection Plan) and “CFPB’s Consumer Response Intake Form.” According to the CFPB, renewing the Generic Information Collection Plan will allow the CFPB to continue to efficiently implement and monitor consumer complaint systems. Similarly, the CFPB states that the Consumer Response Intake Form will aid consumers in the submission of complaints, questions, and comments. Comments for both notices must be submitted by February 27, 2015, to be considered.
Semiannual Regulatory Agenda
On December 22nd, the CFPB published its semiannual regulatory agenda in the Federal Register. The agenda identifies several regulatory matters that the CFPB plans on considering during the period of November 1, 2014, and October 31, 2015. Regulatory matters include:
- Implementing Dodd-Frank Act mortgage protections;
- Issuing a proposed rule to create a comprehensive set of protections for General Purpose Reloadable cards and other prepaid cards; and
- Rulemaking efforts that will further establish the CFPB’s nonbank supervisory authority by defining larger participants of certain markets for consumer financial products and services.
CFPB & CONGRESS
Fiscal Year 2014 Report
On December 31st, the CFPB published its FY 2014 report for the Committees on Appropriations of the
- Senate and House of Representatives under Section 1017(e)(4) of the Dodd-Frank Act. In the report, the CFPB highlights its rulemaking efforts and policy and public outreach initiatives over the past year. Specifically, the CFPB states that its enforcement efforts have helped “secure orders for more than
$2.4 billion in relief for consumers” who fell victim to various violations of consumer protection laws. The report also discussed efforts involving medical debt and credit scores, checking account overdrafts, and
manufactured-housing consumer finance. The CFPB’s budget, as well as recruiting and hiring practices were also discussed.
Growing Our Human Capital Report To Congress
On December 31st, the CFPB published a report entitled, “Growing Our Human Capital: Annual Report to Congress 2014.” In the report, the CFPB discusses its training and workforce development, workforce flexibilities, and recruitment and retention. According to the report, employee training and development initiatives include:
- Lunch and Learn educational sessions;
- Offering financial regulatory trainings and certification options; and
- Consulting with the National Treasury Employees’ Union on various workforce issues to ensure that employees’ views are represented.
The report further details initiatives in workplace flexibility through offering flexible work schedules, part-
time work, telework, and phased retirement programs. Finally, the CFPB discusses recruitment and retention efforts such as targeting highly qualified individuals and having a streamlines employment
On December 17th, Senator Tim Johnson (D-SD) sent a letter to the CFPB, requesting that the CFPB work with the U.S. Departments of Education and Treasury to provide more oversight over the student loan market. In the letter, Johnson expressed his concern over the growth of student loan debt and how it has “swelled” to be the largest form of consumer debt, standing at $1.2 trillion. Johnson cites national statistics, as well as student loan debt statistics from his state of South Dakota, to emphasize the inability of students to save for a home, form a household, or save for retirement. Johnson continued by discussing the “concerning behavior” of student loan servicers, including:
- Allocating payments to maximize late fees;
- Misrepresenting minimum payments; and
- Charging illegal late fees.
Despite these issues, Johnson stated that he is “encouraged” by the work of the CFPB’s Student Loan Ombudsman and the oversight actions the CFPB has taken to improve protections for borrowers of student loans. However, Johnson believes more must be done and he asked the CFPB to “coordinate effectively with the Department of Education on student loan servicing to ensure that borrowers’ rights are prioritized and that taxpayers’ investment in higher education is responsibly managed.”
On December 30th, the CFPB published in the Federal Register a final rule amending their interpretation of regulations that implement section 129H of TILA regarding higher-priced mortgage loans. Under the final rule, the CFPB adjusted the exemption threshold to $25,500 from $25,000 based on inflation. The final rule became effective on January 1, 2015.
On December 29th, the CFPB published in the Federal Register its final rule amending the requirements of Regulation C (Home Mortgage Disclosure) to increase to $44 million from $43 million the asset-size exemption threshold for banks, savings associations, and credit unions. The adjustment is based on the annual percentage change in inflation. “Therefore, banks, savings associations, and credit unions with assets of $44 million or less as of December 31, 2014, are exempt from collecting data in 2015.” The final rule is effective January 1, 2015.
On December 29th, the CFPB published a final rule amending the requirements of Regulation Z (Truth in Lending) to reflect the change in the asset-size threshold for certain small creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan. The threshold will increase to $2.060 billion from $2.028 billion and is based on inflation. The final rule is effective January 1, 2015.
On December 23rd, the CFPB published in the Federal Register a proposed rule and request for public comment regarding prepaid accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z). According to the notice, the “proposal would create comprehensive consumer protections for prepaid financial products. The proposal would expressly bring such products within the ambit of Regulation E as prepaid accounts and create new provisions specific to such accounts.” Additionally, the proposal would modify Regulation E to establish disclosure requirements specific to prepaid accounts, requiring financial institutions to provide certain disclosures to consumers prior to and after the acquisition of the prepaid account. The proposal also suggested amendments to Regulations Z and E to regulate prepaid accounts with overdraft services or credit features.
On December 29th, the CFPB published a blog post entitled, “A New Year’s Resolution to Conquer Your Student Debt.” The CFPB post recognizes that the six-month “grace period” recently terminated for students who graduated in the spring of 2014 with student debt and provides these students with advice on paying off their debt. Advice includes:
- Understanding what the student owes;
- Considering setting up auto-debit with the proper loan servicer; and
- Enrolling in an income-driven payment plan.
The post also mentions consequences for missing a payment on a student loan and tools to help students obtain more information on paying of their debt.
On December 23rd, the CFPB published a blog post on ways that consumers can prepare for tax season. Among the advice was to prepare now and to obtain help by searching online for tax preparation services offered in the consumer’s area. On the same day, the CFPB published a blog post encouraging parents to use the holidays to inform kids how money works.