cfpb - the good, the bad and the ugly
TRANSCRIPT
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The CFPB –The Good, The Bad
and The Ugly
E. Andrew Keeney, Esq.
Kaufman & Canoles, P.C.
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E. Andrew Keeney, Esq.
Kaufman & Canoles, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
(757) 624-3153
http://www.kaufmanandcanoles.com/movies/credit-unions.html
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CFPB
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Past Regulators
OCC
FRB
NCUA
FTC
FDIC
HUD
ETC4
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Consumer Protection Actof 2010
CFPB was formed as independent agency within the Board of Governors of the Federal
Reserve
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CFPB
• 1,625 +++ employees – including 800+ attorneys
• FY 2016 Budget of $605.5 million (4% increase from 2015)
• No oversight
• Reports to nobody
• Multiple regulations
• Aggressive enforcement/litigation
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CFPB Budget by Strategic GoalGoal 1 Prevent financial harm to consumers while
promoting good practices that benefit them.
Goal 2 Empower consumers to live better financial lives.
Goal 3 Inform the public, policy makers and the CFPB’s own policy-making with data-driven analysis of consumers financial markets and consumer behavior.
Goal 4 Advance the CFPB’s performance by maximizing resource productivity and enhancing impact. 7
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EnforcementCFPB/NCUA will enforce the following rules:
• Equal Credit Opportunity Act (Regulation B)
• Home Mortgage Disclosure Act (Regulation C)
• Electronic Fund Transfers Act (Regulation E)
• Registration of Residential Mortgage Loan Originators
• Consumer Leasing (Regulation M)
• Privacy of Consumer Financial Information
• Fair Credit Reporting
• Truth in Lending (Regulation Z)
• Truth in Savings (Regulation DD)
• Vendor Due Diligence9
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Comparison
• CFPB focus on risks of harm to consumers, including risks of non-compliance with Federal consumer laws
• NCUA focus on safety and soundness – then risks of harm to consumers
• CFPB staff see themselves as law enforcers, not as regulators
• The CFPB staff is the JUDGE and the JURY and the Prosecutor
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Vigorous CFPB Activity
• New regulations under TILA and RESPA
• Ability to Repay/Qualified Mortgages
• Continuing public statements, regarding consumer financial laws
• Emphasis on credit reporting and debt collection
• Seemingly endless number of Civil Investigative Demands
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CFPB Jurisdiction – Credit Unions
• Very large credit unions
• It can require reports from all other credit unions if it deems it necessary (their determination is probably not reviewable or appealable)
• Although not as well-known, the CFPB also has the authority to “participate” in examinations of all other credit unions
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CFPB Jurisdiction - CUSOs
• CFPB’s jurisdiction extends to all entities that provide services to credit unions – CUSOs
• No worry about limitations – extensive use of Civil Investigative Demands
• Will require disclosures for any consumer financial product or service
• Broad authority to prohibit unfair, deceptive, and abusive practices
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CFPB Overall Requirements
• Written policies and procedures for compliance are absolutely essential
• Monitoring and auditing for compliance is also necessary. Across the board – no exceptions
• Need for a complaint system– They maintain information about complaints, disputes, and
validation
– They analyze complaints to identify patterns
– They take written and verbal complaints
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What Does the Future Show?
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Credit Unions Beware• Significant changes involving collections
(disputes, communications, lawsuits)*
• TILA, RESPA*
• Ability to Repay/Qualified Mortgages*
• Comprehensive dispute procedures*
• Extraordinary documentation requirements*
• Indirect Auto lending
• Courtesy pay
• Payday lending
* Implemented16
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CFPB Factors Used to Evaluate
“Responsible Conduct”“Appropriate Actions”
• Policy and procedures
• Self-policing
• Self-reporting
• Remediation
• Cooperation17
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2016 List
• Payday Loans
• Debt Collection Rule
• Overdraft
• Prepaid Cards
• TILA-RESPA
• Mortgage Servicing
• Home Mortgage Disclosure Act
• Expedited Funds Availability Act
• Appraisals
• Student Loans18
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Takeaways/Best Practices
• Focus on compliance policies, practices and procedures
– Three key issues• Whether a policy exists
• Whether the policy was implemented
• Whether the policy is effective
– Be prepared
– CFPB Website
– CFPB Supervision and Examination Manual
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The CFPB –The Good, The Bad
and The Ugly
E. Andrew Keeney, Esq.
Kaufman & Canoles, P.C.