Dodd-Frank News Center

Republican senators urge Mnuchin to end 'too big to fail' policies

This story appeared in Bank Digest.

Senator Tim Scott (R-SC) and nine other Republican senators have sent a letter to Treasury Secretary Steven Mnuchin urging him to review the Financial Stability Oversight Council's process for designating nonbank financial companies as systemically important financial institutions, subject to supervision by the Federal Reserve Board and enhanced prudential standards. The senators said this process "lacks transparency and accountability, insufficiently tracks data, and does not have a consistent methodology for determinations."

According to the letter, this process has created "substantial new regulatory costs" that ultimately make American companies less competitive around the world. The senators said Mnuchin had "our strong support for using all the tools available as Secretary of Treasury to end 'Too Big To Fail' and ensure that hard-working Americans are not responsible for any new bailouts."

Tipton column discusses CFPB's accountability issues

This story appeared in Bank Digest. 

In a column posted to his website, Rep. Scott Tipton (R-Colo) discussed problems he sees with the Consumer Financial Protection Bureau's structure and lack of accountability, saying that while the core mission of the CFPB is important, "we should all be concerned about the unconstitutional structure of the Bureau." Tipton noted that an October 2016 federal court decision found the bureau's structure to be unconstitutional and also found it problematic that the CFPB "does not rely on any appropriations from Congress to fund its operations." He added, "The power of the purse is the legislative branch's most powerful check on the executive branch. It should bother all Americans that within the CFPB, unelected Washington bureaucrats can operate without any accountability to Congress."

 

CFPB offers mortgage lenders more flexibility when recording race, ethnicity

This story appeared in Bank Digest                                  

The Consumer Financial Protection Bureau wants to make it easier for mortgage lenders to comply with the requirement that they collect information on loan applicants' race and ethnicity. Proposed amendments to Reg. B--Equal Credit Opportunity (12 CFR Part 1002) would allow lenders to use the updated Uniform Residential Loan Application form adopted by Fannie Mae and Freddie Mac in 2016, rather than the 2004 version currently included in Reg. B, and make other changes that would let lenders use more uniform practices, according to the CFPB. Comments on the proposal will be due within 30 days of its publication in the Federal Register.

• Press release
• Proposed rule
• CFPB blog post

Experian agrees to $3M penalty for alleged credit score marketing practices

This story appeared in Bank Digest.

Experian Holdings, Inc., one of the nation's largest credit reporting agencies, has agreed to pay a $3 million civil penalty to settle allegations brought by the Consumer Financial Protection Bureau that Experian deceived consumers about the use of the credit scores they purchased. According to the bureau, Experian represented that the "educational" credit scores it sold to consumers were used by lenders to make credit decisions when, in fact, lenders did not use the educational scores.

The consent order also charged Experian with violating the Fair Credit Reporting Act by placing advertisements on web pages that consumers accessed when obtaining their free annual credit reports. Experian did not admit any wrongdoing.

Commenting on the bureau's action, Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) said, "The CFPB's action today will help ensure that consumers who make the effort to track and correct their credit information aren't misled by unfair products and deceptive advertising."

FHFA establishes minority and women outreach program

This story appeared in Bank Digest.

The Federal Housing Finance Authority is establishing a minority and women outreach program pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; the Federal Housing Enterprises Financial Safety and Soundness Act of 1992; and the Dodd-Frank Act. The final rule establishing the program also redesignates the current Minority and Women Inclusion regulation in the Code of Federal Regulations to Subchapter B of the FHFA’s regulations. The final rule is effective March 24, 2017.

Oversight and Investigations Subcommittee holds hearing on CFPB's constitutionality

This story appeared in Bank Digest.

 

The House Financial Services Subcommittee on Oversight and Investigations held a hearing entitled "The Bureau of Consumer Financial Protection's Unconstitutional Design" on March 21, 2017. The subcommittee examined whether the structure of the Consumer Financial Protection Bureau violates the Constitution, as well as structural changes to the bureau that are needed to resolve any constitutional infirmities.

 

• Opening Statement of Subcommittee Chairman Ann Wagner
• Testimony of Theodore Olson, Partner, Gibson, Dunn & Crutcher LLP
• Statement of Professor Saikrishna Prakash, James Monroe Distinguished Professor, University of Virginia School of Law
• Testimony of Adam White, Research Fellow, Hoover Institution
• Testimony of Brianne Gorod, Chief Counsel, Constitution Accountability Center
• Committee Memorandum
• Financial Services Committee press release
• Rep. Claudia Tenney (R-NY) press release

CFPB issues guide to help justice-involved individuals with financial challenges

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has released a new guide to help frontline staff working with justice-involved individuals address some of the specific financial challenges these individuals may face. The bureau noted that consumer financial issues are a key concern for many people transitioning from incarceration, and "Your Money, Your Goals: Focus on Reentry" has tools to help people prioritize and manage their debt, know their rights around background reports, and access and fix their credit reports.

The guide is intended as a companion to "Your Money, Your Goals: A financial empowerment toolkit," which is a collection of important financial empowerment information and tools that can be used by frontline staff and volunteers in organizations working with low-income and economically vulnerable consumers.

 

OIG issues report on avoiding conflicts of interest related to vendor activities

This story appeared in Bank Digest.

The Office of Inspector General for the Consumer Financial Protection Bureau and the Federal Reserve Board has issued a report to assess whether the CFPB effectively identifies and avoids the risk of potential conflicts of interest for vendors supporting the work of the bureau's Office of Fair Lending and Equal Opportunity. This office works to ensure that consumers have fair, equitable, and nondiscriminatory access to credit for mortgages and other loans.

The OIG did not find actual conflicts of interest, but it said one vendor's relationships with supervised entities heightened the risk of possible conflicts of interest and increased the need for more timely vendor disclosures and communications. The OIG also found that performing more work internally rather than choosing to outsource that work may effectively mitigate such risks. The report also contains recommendations to reduce the bureau's exposure to operational and reputational risk.

 

Hensarling issues statement on Justice Department's challenge to CFPB's constitutionality

This story appeared in Bank Digest.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has issued a statement on the Justice Department's decision to oppose the Consumer Financial Protection Bureau in a case challenging the constitutionality of the bureau's structure. Hensarling said that the CFPB is "arguably the most powerful and least accountable bureaucracy in American history" and that it "does not recognize core constitutional principles like the right to due process."

He went on to say, "The Bureau's consumer protection mission is important, but no government agency--no matter how well-intentioned--should be able to evade common sense checks and balances that are necessary for accountability. I applaud the Department of Justice for recognizing this unconstitutional CFPB must not stand and must not continue to harm the very consumers it is supposed to protect."

CFPB orders Nationstar to pay $1.75M for alleged HMDA violations

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has ordered Nationstar Mortgage LLC to pay a $1.75 million civil penalty for allegedly violating the Home Mortgage Disclosure Act by consistently failing to report accurate data about mortgage transactions for 2012 through 2014. The enforcement action is the largest HMDA civil penalty imposed by the bureau to date, which stems from Nationstar's market size, the substantial magnitude of its errors, and its history of previous violations, according to the bureau's press release.

In its supervision process, the CFPB found that Nationstar's HMDA compliance systems were flawed and generated mortgage lending data with significant, preventable errors. Nationstar also allegedly failed to maintain detailed HMDA data collection and validation procedures, failed to implement adequate compliance procedures, and produced discrepancies by failing to consistently define data among its various lines of business. Navistar agreed to the issuance of a Consent Order without admitting or denying any wrongdoing.