CFPB  Enforcement

  • Add-on Products: On April 3rd, media reported that the CFPB is close to finalizing an $800 million settlement agreement with Bank of America to resolve allegations of deceiving consumers in relation to credit card add-on products.  Bank of America first disclosed possible regulatory concerns regarding its debt cancellation and identity theft protection products in its August 2013 SEC filings.  In September 2013, the CFPB and the Office of the Comptroller of the Currency announced an $80 million settlement with JPMorgan to resolve similar allegations (previously reported).  Neither Bank of America nor the CFPB have responded to media requests for comment.

CFPB Supervision

  • Inspector General Review: On March 27th, the Office of the Inspector General (OIG) of the Federal Reserve and the CFPB issued an Evaluation Report entitled, “The CFPB Can Improve the Efficiency and Effectiveness of Its Supervisory Activities.”  The report is based on the CFPB’s supervisory activities through July 31, 2013, which totaled 35 reports of examination and 47 supervisory letters.  Among its conclusions, the OIG stated that the CFPB:
    • Failed to meet internal timeliness requirements for exam reporting in 60% of cases;
    • Failed to consistently apply standard definitions of compliance ratings; and
    • Failed to consistently approach tracking of examination staff hours.

CFPB Operations

  • CFPB Priorities: On April 2nd, CFPB Deputy Director Steven Antonakes delivered prepared remarks to the Consumer Bankers Association. Antonakes stated that public understanding of the CFPB’s consumer complaint function, “is spreading, as last month we received more than 20,000 complaints and the volume continues to grow.”  He added, “the voice of the consumer is likewise playing a tangible role in producing a shift in the financial marketplace to an emphasis on legal compliance and excellent customer service.” Antonakes characterized the CFPB’s supervision and enforcement approach as, “not interested simply in assuring that all the right boxes have been checked, but [interested in] asking more fundamental questions.”  Finally, he reviewed recent CFPB actions to address the availability of consumer credit scores, to solicit feedback from the debt collection industry, and to “level the playing field” in indirect auto lending.
  • Consumer Complaints: On March 31st, the CFPB released its 2013 Consumer Response Annual Report, which detailed the CFPB’s collection of consumer complaints through its public Consumer Complaint Database in calendar year 2013.  In the report, the CFPB described how it handles the consumer complaints it receives, identified the categories of collection complaints by product type, and provided information both on how companies respond to consumer complaints and on how consumers rate those responses. The report also stated that:
    • Since July 21, 2011, the CFPB has handled approximately 309,700 consumer complaints;
    • Consumer complaint volume has, “steadily increased, rising 80% from 91,000 to 163,700 in 2013”;
    • 37% of all received complaints related to mortgages;
    • 19% of all received complaints related to debt collection; and
    • 15% of all received complaints related to credit reporting.
  • FOIA: On March 27th, a federal district judge in Washington, D.C., ruled that the CFPB is entitled to withhold, under the deliberative process privilege, a White House official’s e- mail to CFPB Director Richard Cordray regarding preparation for a forthcoming Congressional hearing.  Judicial Watch, which had filed a Freedom of Information Act request for the documents, argued that the White House is not an agency under the deliberative process privilege.  The judge also affirmed a previous decision that the CFPB is entitled to withhold several other documents under the presidential communications privilege and the attorney-work product privilege.
  • No FEAR Act: On March 28th, the CFPB published its annual report on the “No FEAR (Notification and Federal Employee Antidiscrimination and Retaliation) Act.” In an introduction, Director Cordray stated that the CFPB has “achieved numerous successes” and “is also facing challenges” stemming from, “differences in employee performance ratings for calendar year 2013 [that we identified] through an internal analysis, which we shared with our labor organization.” The CFPB reported that in FY2013 it:
    • Resolved a civil action in federal court under the Age Discrimination in Employment Act;
    • Did not discipline any employees for discrimination, retaliation, harassment, or an infraction of any provision of law covered by the No FEAR Act;
    • Received nine formal complaints, one of which was withdrawn, and closed six complaints; and
    • Successfully trained 93% of new employees on the No FEAR Act in a timely manner.

CFPB & Congress

  • Employee Management: On April 2nd, the House Financial Services Committee’s Subcommittee on Oversight and Investigations held a hearing entitled, “Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau.”  Angela Martin, a CFPB Senior Enforcement Attorney, alleged gender discrimination as well as retaliation for filing an Equal Employment Opportunity complaint with the CFPB’s Human Capital Office.  Misty Raucci, a former investigator with the Defense Investigators Group whom the CFPB retained to investigate Martin’s allegations, testified that she heard similar allegations from multiple other CFPB employees.  Raucci concluded that the CFPB’s, “general environment…is one of exclusion, retaliation, discrimination, nepotism,demoralization, devaluation, and other offensive working conditions, which constitute a toxic workplace for many of its employees.” The CFPB declined the Committee’s invitation, sent to its Director of Employee Relations and its Assistant Director of the Office of Equal Opportunity Employment, to testify, citing a, “confidential and ongoing employee grievance resolution process.” Democratic members of the House Financial Services Committee had requested cancelling the hearing, citing Republicans’, “political motivations.” Committee Chairman Jeb Hensarling (R-TX) stated, “I’m hoping that members on both sides of the aisle may revisit the necessity of this agency being accountable to the American people.”

CFPB Outreach

  • Employee Financial Literacy: On March 31st, the CFPB published a blog post entitled, “Delivering Financial Education at Work Makes Sense,” as a follow-up on its February 25th Financial Literacy and Education Commission hearing in Atlanta (previously reported).  In the post, the CFPB highlighted salient issues raised at the event and provided links to resources it developed for employers to share with their employees regarding major financial issues, such as paying for college and buying a home.