Consumer Law & Policy Blog

USPIRG's Ed M: US Treasury Report a Gift to Wall Street. A Threat to CFPB and Everyone Else

Here. 

Venable Lawyers Predict Forthcoming CFPB Third-Party Debt Collection Rulemaking

Here.

David Reiss: Americans are better off with consumer protection in place

Brooklyn's David Reiss has written an op-ed for The Hill, Americans are better off with consumer protection in place. Excerpt:

[T]he [Treasury] report argues that the bureau’s jurisdiction overlaps with that of other regulators. That is a red herring. The fact is that abusive lending practices were rampant in the years leading up to the financial crisis. The CFPB has dramatically reduced those practices where the previous regulators like the Federal Reserve turned a blind eye to them. Safety and soundness regulators like the Fed and the Office of the Comptroller of the Currency have typically placed consumer protection at the bottom of their list of concerns. * * *

The fact is that many of the Treasury’s criticisms can be addressed by the next CFPB director. The next director will be appointed by the president after the term of the current director, Richard Cordray, ends next year. There is little need for legislative action that will likely provide the bureau’s opponents with cover to gut [an] effective consumer protection regime * * *

Am. Banker Reports CFPB Expected to Issue Third Party Debt Collection Rule by Early 2018

Here. It might even happen by the end of this year. Excerpt:

"Creditors should be responsible since they are our customers," said Dong Hong, vice president and senior counsel at the Consumer Bankers Association. "For the most part, we're fine with the disclosure regime the CFPB is creating.

WSJ Interview with Elizabeth Warren: Americans Don’t Want Less Regulation

Here.  She discusses the CFPB, among other things.

Cordray Replies to Criticism by House Financial Services Staff

Reuters covers it here, and housing Wire here.  Both stories refer to a five-page letter from the Director.  According to the Reuters' story:

The [Committee staff] report said the CFPB had been an ineffective watchdog against Wells Fargo & Co, missing extensive improper sales practices and taking action only after work on the bank's unauthorized accounts scandal had been done by others.

The committee's report also depicted the CFPB as reluctant to cooperate with the panel's Well Fargo probe.

Cordray insisted that his agency had done critical work in policing Wells Fargo, and said the report "devolves into various misstatements and allegations" about the CFPB's work.

Update: the letter is here.

Treasury Report Recommending Restraints on CFPB Now Out

Here.  On a quick look, it looks less bad than the Financial Choice Act--but still bad.

Prentiss Cox et al Op-ed: Why we must not gut consumer protections

Here, in Minnesota's Star-Tribune. Prentiss wrote it with two other original members of the Bureau's Consumer Advisory Board, Jose Quinonez and William Bynum. Excerpt: 

Have you ever been an eyewitness to an event and later seen it written about in a way that directly contradicts your experience? As three people who witnessed close-up the Consumer Financial Protection Bureau as it began its work after the worst financial crisis since the Great Depression, we are having that sensation as lawmakers in Congress rationalize their proposed evisceration of the agency.

* * *

What we saw as the CFPB developed was an extraordinary effort to move effectively and carefully to prevent the abuses that led to the financial crisis. The CFPB sought varied advice on every rule and policy it adopted. We were impressed time and again at how the agency carefully weighed market impacts and tried to understand how complex financial regulatory choices would impact everyday consumer decisions. * * *

* * *

The Financial Choice Act, * * * would hobble the CFPB’s ability to attack unfair and deceptive practices, allegedly because this authority is “opaque and ill-defined.” This is the exact same law enforced by the Federal Trade Commission to protect consumers for 80 years and the most commonly invoked authority of state attorneys general in consumer protection enforcement. The CFPB has used this authority extensively in returning over $12 billion to consumers who were deceived or treated unfairly by banks and other financial institutions.

                                 

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.