While August has seen little activity of note by the Consumer Financial Protection Bureau ("CFPB"), September promises to be a good month for CFPB watchers. After months of anticipation, the Senate will finally hold a nomination hearing for the director of the CFPB on September 6. President Obama has nominated former Ohio Attorney General Richard Cordray for this position. While many people thought that Elizabeth Warren, who oversaw the development of the CFPB, would be nominated to lead the agency as its official director, her position as the figurehead of the CFPB made her a lightning rod for criticism of the agency and therefore, too controversial for the position.
The fact that there will be a nomination hearing for Richard Cordray does not mean that the CFPB is all that close to having a director. 44 Republican senators have already stated that they will refuse to vote on any nominee for director of the CFPB until the director of the CFPB is replaced with a commission. While the lack of a director may not seem to be a major problem considering the fact that the CFPB has come this far without one, there have been questions raised that the lack of a director limits the CFPB's authority. Without a director, it is unclear whether the CFPB can validly make rules for nonbanks or proceed against nonbanks. Another problem created by the lack of a director is that there is an ongoing vacancy for the CFPB director seat on the Federal Deposit Insurance Corporation and the Financial Stability Oversight Council.
While August has been quiet at the CFPB, it has not been silent. The CFPB, with the National Association of Attorneys General Presidential Initiative Working Group, released a Joint Statement of Principles on August 11 ("Joint Statement"). In the Joint Statement, the parties agree to, among other things, engage in regular consultation and share information about consumer financial products.
In addition, the CFPB credit card complaint process continues to take consumer complaints regarding the 10 largest credit card issuers. This complaint process has not been hiccup-free and the CFPB continues to refine the process.
Finally, the CFPB is on its third of five rounds of Real Estate Settlement Procedures Act-Truth in Lending Act form harmonization. While it is over halfway complete with the harmonization process, this does not mean that we can expect a new mortgage disclosure form anytime soon. Once the final form is chosen, it will be necessary to amend current mortgage disclosure regulations.
The upcoming months will be interesting ones for the CFPB. Whether the CFPB will enter 2012 as currently structured and with a confirmed director is a question that is impossible to answer at this point. What is certain is that the CFPB will continue to carve out a place for itself in the financial regulatory world, with or without a director.
As a reminder, as we celebrate the Labor Day holiday next Monday, there will not be an issue of the Financial Services Update next week. We hope you have a happy and safe holiday!