WSJ: Treasury Report to Call for Curbs on CFPB, CRA

Here. Excerpt:

[The report] is harshly critical of the Consumer Financial Protection Bureau and recommends that the bureau be stripped of its authority to examine financial institutions, people familiar with the matter said. By law, the bureau has the authority to enforce consumer laws as well as to examine individual firms on a continuing basis.

One person familiar with the report’s contents said it is likely to recommend that the CFPB continue to be led by a single director, but that the president be able to remove the director at will. * * *

* * *

The report is expected to set in motion a re-evaluation of the Community Reinvestment Act, a law intended to make sure banks meet local credit needs, people familiar with the matter said.

The report is in response to a Trump executive order.  Some of its proposals would require congressional action to be adopted.

Law360's Evan Weinberger: CFPB Could Avoid Fight With New Debt Collection Plan

Here.  We reported on the plan to separate debt collection regulation into two rules on Thursday. Weinberger reports on speculation on the Bureau's motivation in proceeding in that fashion:

But doing the less controversial update of debt collection communications and disclosures first could also potentially allow the CFPB to avoid any rule getting invalidated by a Republican Congress through the Congressional Review Act, since there is wide agreement among consumer advocates and the industry that those rules need to be updated, said Jonathan Pompan, a partner with Venable LLP.

* * *

The FDCPA technically only covers third-party collectors, but those firms rely on information provided by banks and other debt issuers, so any CFPB rule would have to extend the FDCPA. That would be contentious and could bring in opposition from the entire financial industry, said Margot Saunders, an attorney with the National Consumer Law Center.

And that level of opposition could lead to Republicans in Congress using the Congressional Review Act to invalidate the rule, she said.

"I think that is likely to be their reasoning. And I think that it's a whole lot easier to take on the debt collectors than the entire consumer financial services industry," she said.

* * *

Taking on issues around when a debt collector can call a cellphone and other similar questions might not engender as much of a response from lawmakers, particularly since debt collection firms have been seeking clarifications, Pompan said.

"Modernization has been championed by virtually all segments of the industry for many years now and would significantly benefit not just market participants, but consumers," he said.

Trump Tweets on the Financial Choice Act

by Jeff Sovern

Here's his tweet:  

Donald J. Trump

 

✔ @realDonaldTrump

Congratulations to Jeb Hensarling & Republicans on successful House vote to repeal major parts of the 2010 Dodd-Frank financial law. GROWTH!

 

eSupplement for Our Consumer Law Casebook Available

by Jeff Sovern

My co-author, Dee Pridgen, has created a supplement for our casebook to bring it up to date since it is now nearly four years old (we plan to produce a new edition in 2019).  If you want a copy, please email her directly at Pridgen@uwyo.edu.

 

Fix sought for heat deaths of children left in cars

Each year, roughly three dozen children die of heatstroke in unattended vehicles. Yesterday, three congressmen and a coalition of safety groups announced proposed legislation to require alerts in cars as a reminder that there may still be a child in the back.

FairWarning has the story.

The Alliance of Automobile Manufacturers said it would review the legislation and “provide guidance.”

CFPB Alters Plan for Debt Collection Regs

by Jeff Sovern

Last summer, the CFPB issued a document indicating its tentative plan for third-party debt collector regulation, and saying that it was going to move forward on first-party debt collectors separately. Today, CFPB Director Richard Cordray gave a speech saying that in light of feedback the Bureau had received, it has:

now decided to consolidate all the issues of “right consumer, right amount” into the separate rule we will be developing for first-party creditors, which will now cover these intertwined issues for third-party collectors and debt buyers as well. That way, we can address this entire set of considerations, market-wide.

In the meantime, we will be able to move forward more quickly with a proposed rule focused on the remaining issues. These issues, again, are information third-party collectors must disclose to people about the debt collection process and their rights as consumers, and ensuring that third-party collectors treat people with the dignity and respect they deserve. Once we proceed with a proposed rule on these issues, we will return to the subject of collecting the right amount from the right consumer, which is a key objective regardless of who is collecting the debt. * * *

House Financial Services Committee Democrats Reply to Staff Report About Cordray

Yesterday, Allison wrote about the House Financial Services Committee staff report threatening CFPB Director Richard Cordray with contempt charges.  Democrats on the Committee replied here.  Excerpt:

Debunking Republicans’ Alternative Facts:

• Fiction: “Wells Fargo has cooperated in full with the Committee’s investigation to date.” 
• Fact: Wells Fargo has not responded to Democrats’ multiple requests to provide Democratic staff the same meetings with Wells Fargo executives that it provided to Republican staff.
  * * *
• Fiction: The report faults the Consumer Bureau for not including “internal CFPB records…such as internal emails or memoranda relating to its investigation.” 
• Fact: Committee Republicans fail to note that their September 16, 2016 document request did not ask for internal records nor communications. This report is the first time that Committee Republicans have stated that they are seeking these internal Consumer Bureau records.
  
  
• Fiction: “…the Committee asked the Director to brief the Committee about the CFPB’s investigation. … Director Cordray replied that he would not brief the Committee.” 
• Fact: Director Cordray has repeatedly made himself and Consumer Bureau staff available to speak with, brief, and offer hearing testimony to the Committee. In addition, Committee Republicans rejected Director Cordray’s offer to testify at the Committee’s Wells Fargo hearing. 
  
  
• Fiction: Majority Committee staff “…conclude[s] that Director Cordray is in default of the Committee’s Subpoena.” 
• Fact: The Consumer Bureau provided over 57,000 pages of documents in response to the subpoena. Additionally, the Consumer Bureau has repeatedly requested additional guidance from the Committee to ensure that the Committee has received all records that it requested. 

House Passes Bill to Rescue Banks at Expense of Consumers

by Jeff Sovern

The House passed the Financial Choice Act, H.R. 10, which would cripple the CFPB. According to Law360's Evan Weinberger, the vote was 233-186, and as expected followed party lines.

Trump (and Trump's hotel) want to move unfair competition suit to federal court

For our readers who are following the many suits against Trump and are civil procedure buffs:

We've previously posted (here and here) about an unfair competition suit by a D.C. wine bar against Trump in his personal capacity and his new D.C. hotel. The suit was filed in local court in D.C. (the D.C. Superior Court). The complaint raises a single claim -- unfair competition -- under D.C. law. Trump and the hotel have removed the case from D.C. Superior Court to federal court in D.C. Trump says because he's president he is entitled to remove the suit under the federal officer removal statute, 28 U.S.C. 1442. The hotel says that although the suit arises solely under D.C. local law, it may remove the suit because (1) the wine bar's local-law claim raises disputed and substantial federal-law issues, and (2) removal would not disturb the balance between state and federal judicial responsibilities. The wine bar says all this is wrong and has moved to remand the case back to D.C. Superior Court.

To read the briefs on whether the case should go back to D.C. Superior Court, go here, here, here, and here.

Kathleen Engel Op-Ed: Your consumer protections, on the brink of destruction in Congress

Here.  The whole piece is worth a read, but here's an excerpt:

The bill would take away the CFPB’s ability to inspect banks, mortgage brokers, foreclosure relief firms, student and payday lenders, debt collectors, credit reporting agencies and auto financing companies to ensure they accurately disclose credit terms to borrowers and that they comply with laws that protect consumers from fraud and other wrongdoing.

It would transfer oversight of national banks to the Office of the Comptroller of the Currency, which 10 years ago was (supposedly) minding the hen house when lenders were luring home mortgage borrowers into unaffordable loans with deceptive terms.

Instead of restricting unlawful loans, the OCC and other bank regulators turned a blind eye to the disastrous rise in deceptive and unaffordable home loans that ultimately led to the financial crisis.