CFPB Enforcement

  • JPMorgan Chase & Co.: On August 27th, national media reported that the CFPB and the Office of the Comptroller of the Currency (OCC) will soon announce approximately $80 million in fines, about a quarter of which will be assessed by the CFPB, against JPMorgan for inappropriately misleading credit card customers to buy products advertised as protecting against identity theft.  Regulators are investigating whether JPMorgan sold identity theft protection, reportedly through third-party vendors during the financial crisis, by advertising the protection as free, mandatory, and important for maintaining a good credit score.  Washington sources are expecting the announcement on Tuesday, September 3 rd .  The CFPB is reportedly also considering a separate action against JPMorgan for inappropriately collecting overdue bills from customers.

CFPB Operations

  • Director’s Notice of Ratification: Today, CFPB Director Richard Cordray published a notice of ratification in the Federal Register (78 FR 53734) stating, “I believe that the actions I took during the period I was serving as a recess appointee were legally authorized and entirely proper.  To avoid any possible uncertainty, however, I hereby affirm and ratify any and all actions I took during that period.”
  • Consumer Advisory Board Meeting: On August 28 th , the CFPB announced a Consumer Advisory Board (CAB) meeting for September 18 th at Mississippi Valley State University.  CFPB Director Richard Cordray will deliver remarks and the CAB will entertain questions and comments from consumer groups, community and industry representatives, and members of the public.
  • Persons with Disabilities: On August 26 th , the CFPB announced a partnership with the Department of Labor’s (DOL) Office of Disability Employment Policy (ODEP) to help consumers with disabilities acquire information and assistance about money management, savings, credit, and financial choices.  Through the partnership, the CFPB and ODEP will develop educational resources and materials and provide them to consumers through the DOL-operated America’s Job Centers (AJCs).
  • Student Loans: On August 26 th , the CFPB launched an initiative to help public sector employers better inform their employees about options for meeting employees’ student loan burdens.  The initiative includes a toolkit for employers entitled, “Employer’s Guide to Assisting Employees with Student Loan Repayments,” which includes practical advice as well as information about various repayment plans and web tools for employees to minimize their debt burden.  The following day, the CFPB published a corresponding Published by Bob Belair, Consumer Regulatory Team Leader | Washington, DC Office       September 3, 2013 report entitled, “Public Service & Student Debt,” which analyzes existing benefits for public sector employees—benefits that are provided through employers, schools, or federal programs.  The report finds that more than 25% of the labor force is employed within the congressional definition of “public service,” a definition based on the type of employer rather than the type of work.  The report offers recommendations for public service employers in informing their employees about and assisting them with repaying students loans.  The focus on student loan debt follows President Obama’s recent initiative to improve college affordability.
  • 3Q Financial Report: On August 15 th , the CFPB released its FY2013 3Q report, which stated that, as of June 30 th , the CFPB has spent approximately $308 million in FY2013, of which $140.2 million went to the salaries and compensation of its 1,226 employees.  Behind personnel and benefits compensation, the largest categories of expenses were:
    • $126.1 million for “Other Contractual Services,” of which the largest obligation was $6.7 million for maintaining ongoing operations of the CFPB’s consumer contact center and for enhancements to the case management database;
    • $21.5 million for equipment; and
    • $10.1 million for travel.
      The largest expense categories by division or program area were:
    • $98.4 million for “Centralized Services,” which are administrative or operational services such as utilities; and
    • $81.1 million for supervision, enforcement, and fair lending.

The CFPB’s annual revenues amounted to approximately 10% of the Federal Reserve’s operating expenses.  Finally, the CFPB also collected $15.4 million in civil monetary penalties from five defendants in settlements reached through the CFPB’s enforcement actions.

CFPB & Congress

  • Criticism: This week, Sen. Mike Enzi (R-WY) criticized the CFPB in an interview with The Sheridan Press (WY) for the CFPB’s lack of accountability, lack of transparency, and invasion of privacy to a degree “worse than the [National Security Agency].”  Enzi called for an audit of the Federal Reserve to quantify its revenue.  He added, “Every other agency comes under our [Congressional] purview.  We may not be able to do anything about it, but we can at least call them in and ask them questions about it and make law changes for it.”

CFPB Personnel

  • Senior Leadership: On August 26 th , the CFPB announced four new hires to senior management positions.
    • Cheryl Parker Rose, Assistant Director for the Office of Intergovernmental Affairs, who previously served as Deputy Director of U.S. Government Relations with the Bill and Melinda Gates Foundation;
    • Christopher Carroll, Assistant Director and Chief Economist for the Office of Research, who will begin in January 2014 and take a leave of absence from Johns Hopkins University, where he is a professor of economics;
    • Kathleen (Kitty) Ryan, Deputy Assistant Director for the Office of Regulations, who previously served as Senior Regulatory Counsel at JPMorgan Chase & Co.; and
    • Elizabeth Ellis, Deputy Assistant Director for the Office of Financial Institutions and Business Liaison, who previously served as the Senior Advisor to the CFPB’s Chief of Staff. 

CFPB Federal Register Notices

  • Office Renovation: On August 27 th , the CFPB published a notice in the Federal Register (78 FR 52909) that the final environmental assessment of its proposed modernization to its office space at 1700 G Street, NW, resulted in a “Finding of No Significant Impact” (FONSI), indicating that the project will not have a significant impact on the environment.  Public comments on the FONSI are being accepted through September 25, 2013.

CFPB Commentary

  • Mortgage Rules: On August 26 th , AOL Real Estate published an article addressing concerns about the CFPB’s new mortgage lending rules.  The article asserts that the new rules will restrict people from either taking out a mortgage or refinancing an existing one if the new loan raises their overall household borrowing to more than 43% of their income.  Critics are particularly concerned that the CFPB’s definition of “overall household borrowing” includes “a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related [to] a home purchase, and property taxes.”  The rules are scheduled to go into effect on January 10, 2014, though many industry representatives are calling for a delay.  Mortgage lenders and industry experts identified the groups most affected by the new rules:
    • First-time homebuyers;
    • People who live in either high-priced housing markets or markets highly affected by the housing collapse;
    • Small business owners or private contractors whose incomes fluctuate;
    • Retirees with sufficient savings but little or no income;
    • Homeowners seeking to refinance but who lost much of their equity in recent years; and
    • Those living in regions affected by Hurricane Sandy.
  • Generic Clearance: On August 23 rd , the American Bankers Association (ABA) sent a letter to the CFPB objecting to the proposed “generic clearance” for the CFPB’s consumer complaint and information collection system from the Office of Management and Budget’s certification process (78 FR 44931, 7/25/13).  The proposed generic clearance would allow the CFPB to bypass the public comment period for new information collections, arguably allowing for greater speed and flexibility in soliciting consumer complaints and in administering public surveys.  The ABA states that the CFPB’s proposed collection raises serious privacy issues and will prompt serious disagreements on policy, all of which “mandates a level of public engagement and accountability not available pursuant to a generic clearance process.”
  • Lenders’ Compliance Committee: On August 20 th , the American Financial Services Association (AFSA) announced the formation of its Operations and Regulatory Compliance Committee (ORCC) to address the policies, guidance, enforcement actions, and regulations issued by federal agencies such as the CFPB.  Bill Himpler, AFSA Executive Vice President, said the ORCC, “will be taking what’s in regulatory proposals and final rules and explaining, ‘This is what you need to do,’ to be in compliance with those regulations.”  Himpler added that the ORCC’s first priority is to help lenders compare notes on addressing consumer complaints filed with the CFPB, something some lenders had already been doing informally.
  • Automobile Dealership Flat Fees: This week, National Automobile Dealers Association (NADA) Chairman David Westcott stated in an interview with Automotive News that the CFPB’s pressure on the industry to replace the indirect lending model with a flat fee rate may actually lead to more expensive loans.  Through the indirect model, a dealership obtains additional basis points for itself on the loan from the lender to the customer; through a flat fee model, the dealer charges the customer a specific fee independent of the loan interest rate