CFPB RULEMAKING

Prepaid Cards

On November 13th, the CFPB held a field hearing on prepaid cards and other prepaid products to hear testimony from consumer groups, industry representatives, and members of the public.  At the hearing, Director Richard Cordray announced the CFPB’s proposed rule regarding prepaid accounts under the Electronic Fund Transfer Act and the Truth in Lending Act (TILA). The proposed rule would:

  • Extend rights and protections for checking accounts to prepaid accounts, including with respect to fraudulent uses, error resolution rights, and accessibility at no cost to account history and other information;
  • Extend rights and protections for credit card products to prepaid products, including with respect to monthly billing statements, limited fee and interest charges, reasonable repayment periods prior to the applicability of late fees, and an assessment of the consumer’s ability to pay;
  • Require prepaid product issuers to provide consumers with two forms that highlight associated costs and fees, as well as to disclose customer agreements on their website; and
  • Require issuers to hold prepaid accounts distinct from any credit accounts.

The CFPB previously published an Advance Notice of Proposed Rulemaking on prepaid cards in May 2012.

TILA & RESPA Disclosures

On November 10th, the American Bankers Association (ABA) and the Mortgage Bankers Association (MBA) wrote separate letters to the CFPB asking the agency to give banks more time to disclose mortgage fee changes as the CFPB considers a final rule combining mortgage disclosures required under TILA and the Real Estate Settlement Procedures Act (RESPA) Final Rule. Among the potential modifications to the TILA and RESPA Final Rule, the CFPB is considering an “adjustment to the timing requirement for revised disclosures” when a consumer locks a rate. The ABA specifically argued that the CFPB should “reduce burdens by adopting a consistent three-day redisclosure requirement for fee changes associated with rate locks.” The ABA and MBA also commented on the CFPB’s proposed modification of Loan Estimate forms and the 2013 Loan Originator Final Rule.

Dodd-Frank Enforcement

On November 13th, the CFPB published a notice in the Federal Register (79 FR 67426) requesting comments regarding its proposal to renew its approval for an existing information collection entitled, “CFPB State Official Notification Rule.” The rule concerns how and by when states must notify the CFPB prior to taking enforcement actions under the Dodd-Frank Act. The CFPB will accept public comments on the proposed information collection through January 12, 2015.

CFPB OPERATIONS

Management

On September 30th, the Federal Reserve Office of Inspector General (OIG) sent a letter to Director Cordray detailing a list of major management challenges facing the CFPB that, if not addressed, may thwart the CFPB from accomplishing its objectives. The report was developed with the help of Government Accountability Office audits and CFPB documents. The OIG found the CFPB faces challenges involving:

  • Efficient supervision for depository and nondepository institutions;
  • Employing a knowledgeable, “high-performing” workforce;
  • Establishing clearly defined management roles and responsibilities;
  • Finding adequate temporary facilities and space during headquarters renovations; and
  • Building and maintaining adequate cybersecurity measures.

In addition to a concise description of each challenge the CFPB faces, the OIG report provides corresponding attachments with more detail.

Prepaid Accounts

On November 13th, the CFPB published a report from its study of 325 publicly available prepaid account agreements that the CFPB considers as possibly being subject to its proposed rule. The CFPB examined the agreements for error resolution protections, limited liability protections, access to account information, overdraft services and negative balance fees, deposit or share insurance, and fee disclosures.  The CFPB found that 78% of all agreements that it reviewed contained full error resolution provisions with provisional credit, including 100% of all payroll card agreements and government benefit card agreements, but only 68% of general purpose reloadable card agreements. The CFPB also found that 86% of all card agreements contained disclosures that included fee information, including 95% of general purpose reloadable card agreements, 76% of payroll card agreements, and 58% of government benefit card agreements.

Equal Opportunity

On November 6th, the CFPB published its Equal Employment Opportunity (EEO) Program Status Report for Fiscal Year 2013 to “highlight[ ] CFPB’s accomplishments in FY2013 in establishing a model EEO Program and identify areas where the [CFPB] will take further actions to improve its EEO Program.” In the report, the CFPB addressed several components for the strength of its EEO Program, including a demonstrated commitment from CFPB leadership to EEO issues, integration of EEO into the CFPB’s strategic mission, responsiveness and legal compliance, and proactive prevention of unlawful discrimination. The CFPB announced that it will launch a “formal mentorship program to help employees navigate the CFPB culture, build relationships, and leverage opportunities.” The CFPB also discussed the diversity of its workforce, published a copy of related reports submitted to the Equal Employment Opportunity Commission, and detailed annual trends in its special program plan for individuals with disabilities.

CFPB & CONGRESS

Inspector General

On November 3rd, the Congressional Budget Office (CBO) published a Cost Estimate for H.R. 3770, Rep. Steve Stivers’ (R-OH) bill entitled, “Inspector General Reform Act of 2013,” which would establish an Inspector General for the CFPB separate from the Office of the Inspector General of the Federal Reserve, whose oversight the Dodd-Frank Act broadened to include the CFPB. The CBO estimated that enacting H.R. 3770 would increase direct spending by $100 million over the 2015-2024 period, and also increase revenue over the same period by $51 million, “reflecting lower costs for the Federal Reserve OIG.”

CFPB OUTREACH

Banking Access

On November 6th, Director Cordray delivered prepared remarks at the “Bank On 2.0” conference at the Newseum in Washington, D.C. The conference held panel discussions to explore local banking access programs among regulators and industry representatives. Cordray reiterated the CFPB’s commitment to the availability of safe and affordable banking products and services to the unbanked and underbanked, and reviewed the CFPB’s recent efforts to study, for example, checking accounts and prepaid cards. Cordray also highlighted the CFPB’s partnerships to improve consumers’ financial literacy, and described the CFPB’s handling of consumer complaints.

Information Collection

On November 10th, the CFPB published a notice and request for comment in the Federal Register (79 FR 66695) to propose a new information collection entitled, “Teacher Training Initiative (TTI) Local Education Agencies (LEA) Partnership Application.” The CFPB is seeking unspecified information from LEAs interested in a partnership with the CFPB to “design and implement a model for training K-12 teachers to teach and/or incorporate financial education concepts in their curriculum.” The CFPB will accept public comments through December 10th.