CFPB Supervision

  • Regulatory accountability: On May 9th, CFPB Director Richard Cordray delivered prepared remarks at the Federal Reserve Bank of Chicago. Cordray described the CFPB’s approach to, “hold[ing] a company accountable.”
    • First, he characterized supervisory and enforcement efforts as both “backward- looking” in order to relieve harmed consumers, and as “forward-looking” in order to change business practices, including sometimes through the deterrent of civil  money penalties. Cordray added that the CFPB has, “taken great pains to signal other actors in the marketplace”—through “detailed [enforcement] orders” and periodic Supervisory Highlights—the problems and remedial actions of interest and concern to the CFPB.
    • Second, Cordray reiterated that the CFPB may, in its supervisory and enforcement activities, “pursue not only the company that was a party to [a] consumer’s transaction, but also individuals who were decision-makers or actors relevant to that transaction.”  Finally, Cordray stated that the CFPB may hold an entity liable for the conduct of a third party when acting as an agent, and highlighted, as examples, CFPB examinations in, “such areas as marketing credit card add-on products, managing loan servicing relationships, engaging debt collectors, and making use of payment processors.”

CFPB & Congress

  • Student loans: On May 9th, Rep. Rick Larsen (D-WA) introduced H.R. 4643, the “Bereaved Borrowers’ Bill of Rights Act of 2014,” which seeks to, “protect grieving students and students facing family hardship from auto-defaulting on their private student loans and to get better access to information about cosigner release requirements.” In a press release on the bill, Larsen prominently cited the CFPB’s April 2014, “Mid-Year Update on Student Loan Complaints,” which primarily concerned issues with student loan cosigners (previously reported).  The bill’s eight original cosponsors are all Democrats.
  • HFS hearings: This week, the House Financial Services Committee announced the following three hearings scheduled for next week:
    • On May 20th, the full House Financial Services Committee will hold a hearing on the Financial Stability Oversight Council’s (FSOC) designation process;
    • On May 21st, the Subcommittee on Financial Institutions and Consumer Credit will hold a hearing entitled, “Legislative Proposals to Improve Transparency and Accountability at the CFPB”; and
    • On May 21st, the Subcommittee on Oversight and Investigations will hold a hearing on allegations of discrimination and retaliation at the CFPB, marking the Subcommittees second hearing on the issue and the first since its April 29th vote to subpoena the testimony of the CFPB’s Assistant Director of the Office of Equal Employment Opportunity and the CFPB’s Director of Employee Relations (previously reported).

The Committee has not yet released the witness lists for any of the three hearings.

CFPB  Rulemaking

  • Truth in Lending Act: On May 12th, the CFPB announced that its Regulation Z, which implements the Truth in Lending Act, is available through eRegulations. The CFPB’s eRegulations tool provides easier navigation of regulatory information. “Ideally,” the CFPB stated in a press release, “using eRegulations will lead to better compliance and improved accessibility.”
  • GLB notices: On May 13th, the Federal Register (79 FR 27214) published the CFPB’s proposed rule regarding GLB privacy notices. The proposed rule would allow a qualifying bank or nonbank to post its annual privacy notice online, in accordance with model forms that federal regulators issued in 2009, if the institution satisfies certain conditions, such as not sharing consumer data in a manner that would trigger consumers’ opt-out rights. The CFPB will accept public comments on the proposed rule through June 12, 2014.

CFPB Operations

  • Servicemembers / student loans: On May 13th, CFPB Assistant Director for Servicemember Affairs Holly Petraeus published a statement on the Department of Justice’s enforcement action against, and the Federal Deposit Insurance Corporation’s settlement with, Sallie Mae regarding alleged violations of U.S. servicemembers’ legal rights in student loan servicing. “Today’s action,” Petraeus stated, “should serve as warning not just to the student loan servicing industry, but to all institutions that provide or service loans to the military.”  She also pledged continued vigilance of agencies engaging with servicemembers.
  • Industry self-regulation: On May 8th, the Council of Better Business Bureaus (BBB) announced that the Online Interest-Based Advertising Accountability Program, whose principles the BBB enforces, referred SunTrust Bank, Inc. to the CFPB following SunTrust’s, “refus[al] to participate in the advertising industry’s self-regulatory process.”  BBB stated that it requested that SunTrust provide real-time notice to consumers of certain third-party data collection activities, as well as an explanation of the activities and an opportunity to opt-out.  BBB added that SunTrust repeatedly declined to participate, stating, “Our institution is monitored by a sizeable number of both federal and state agencies and is subject to regulatory exams and reviews on an ongoing basis.  Complying with these demands consumes all of our allocated resources.” A SunTrust spokesperson stated to The American Banker, “Our website practices comply with all laws and regulations, and we find this organization's challenge to be unfounded.”