CFPB Report March 14, 2014

CFPB to Hold Field Hearing on Payday Loans

The CFPB has announced it will hold a field hearing in Nashville, TN on Tuesday, March 25, 2014 to discuss payday loans. The hearing will include remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public. The event, to take place at the Nashville Public Library Auditorium, is open to the public; and pre-registration is required. 

 

CFPB Announces New Senior Hires

On Wednesday, March 12, 2014, the CFPB announced three senior hires to fill vacant positions. Christopher Carroll will serve as the CFPB’s Assistant Director and Chief Economist for the Office of Research in the Bureau’s Research, Market and Regulations Division. Daniel Dodd-Ramirez has joined the CFPB as the Assistant Director of Financial Empowerment in the Bureau’s Consumer Education and Engagement Division. Jeffrey Langer will serve as the CFPB’s Assistant Director of Installment and Liquidity Lending Market in the Bureau’s Research, Markets, and Regulations Division.

 

“I’m pleased that these incredibly talented individuals have joined the Bureau,” said CFPB Director Richard Cordray. “All three offices play an essential role in making sure that consumers are being treated fairly. These experts will lead the teams that help us monitor the marketplace and provide tangible benefit to consumers.”



Treasury Hosts President’s Advisory Council on Financial Capability

On Monday, March 10, 2014, the U.S. Department of the Treasury hosted the inaugural meeting of the President’s Advisory Council on Financial Capability for Young Americans. The meeting was attended by a number of government officials, including: U.S. Treasury Secretary Jacob Lew; U.S. Department of Education Secretary Arne Duncan; CFPB Director Richard Cordray; Ceciliz Muñoz, Assistant to the President and Director of the Domestic Policy Council; and John Rogers, Chair of the Council and Chairman, CEO and CIO of Ariel Investments. The meeting also included council members representing the finance industry, non-profits, the education community, and thought-leaders in finance.

 

Discussions focused on identifying and promoting the best methods to encuorage financial capability. Muñoz said young people are “bombarded” with financial decisions on a daily basis, and at much younger age than prior generations. She also noted consumers are increasingly depending on “non-traditional” loans. Director Cordray said, “The best form of consumer protection is self-protection.” Secretary Lew wanted to encourage young people to have a better understanding of financing college – arguably the most important financial decisions they will make in their lifetimes. Council members agreed to make financial education a pillar of school curriculums and to expose education students to financial education at an early age.



Senate Banking Leaders Announce Agreement on Housing Finance Reform Principles

On Tuesday, March 11, 2014, Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Crapo (R-ID) announced an agreement on a housing finance reform proposal, largely built from the Corker-Warner proposal introduced last year. With draft legislative language anticipated next week, the announcement outlined collaborative, guiding principles, including to:

  • Protect taxpayers from bearing the cost of a housing downturn;
  • Promote stable, liquid, and efficient mortgage markets for single-family and multifamily housing;
  • Ensure affordable, 30-year, fixed-rate, pre-payable mortgages continue to be available, and affordability remains an important consideration;Provide equal access for lenders of all sizes to the secondary market; and
  • Facilitate broad availability of mortgage credit for all eligible borrowers in all areas and for single family and multifamily housing types.

“There is near unanimous agreement that our current housing finance system is not sustainable in the long-term and reform is necessary to help strengthen and stabilize the economy. This bipartisan effort will provide the market the certainty it needs, while preserving fair and affordable housing throughout the country,” said Chairman Johnson in a press release. “This agreement moves us closer to ending the five-year status quo and beginning the wind down of Fannie and Freddie while protecting taxpayers with strong private capital, building the components for a stable secondary market and avoiding repeating the mistakes of the past,” Ranking Member Crapo also stated in a release.

 

The bill is expected to be marked-up by the Senate Banking Committee in the next few weeks, though Senate Majority Leader, Harry Reid (D-NV), has not yet indicated if he plans to support the bill.



Chairman Hensarling Probes CFPB on Indirect Auto Lending

On Friday, March 7, 2014, House Financial Services Committee Chairman, Jeb Hensarling (R-TX), sent a letter to Director Cordray demanding greater transparency in the Bureau’s use of disparate impact theory for indirect automotive lending. Chairman Hensarling summarized three prior inquiries, sponsored by a wide range of Republicans, and Democrats, both in the hHouse and Senate, demanding more information from the CFPB. Chairman Hensarling concluded the CFPB had withheld key information including the data used to support the Bureau’s March 21, 2014 guidance, the Bureau’s statistical method and threshold for determining disparate impact, and details on the Ally Financial Inc. settlement.

 

“The Bureau’s continued refusal to provide any details related to its disparate impact regression analysis and associated methodologies stands in stark contrast to your explicit promise to at least 48 Members of Congress to be open and transparent in the Bureau’s review of indirect auto lending,” Chairman Hensarling wrote. In his closing, the Chairman added he was not opposed to using his Committee’s subpoena powers to compel a response from the Bureau.



Sarah Bloom Raskin Confirmed as Deputy Treasury Secretary

On Wednesday, March 12, 2014, Sarah Bloom Raskin was confirmed by the Senate via a voice vote to serve as Deputy Secretary of the Treasury Department. Raskin has served as a Governor of the Board of the Federal Reserve System (Fed) since 2010, where she played a key role in determining monetary policy and implementing the Dodd-Frank Act. Prior to the Fed, Raskin was Commissioner of Financial Regulation for the State of Maryland and also held roles at Promontory Financial Group, the WorldWide Retail Exchange, and Columbia Energy Services Corp.

 

“I am very pleased that the U.S. Senate showed broad support today in confirming Sarah Bloom Raskin as Deputy Secretary. The Treasury Department is gaining a proven and experienced leader who is dedicated to promoting economic prosperity, and enhancing business and consumer confidence. I look forward to working with her to safeguard our financial system, drive growth, create jobs, and expand opportunity for all Americans,” said Secretary Lew in a press release.



Senate Banking Committee Considers Nominees for Fed, HUD, and NCUA

On Thursday, Mach 13, 2014, the Senate Banking, Housing, and Urban Affairs Committee held a hearing to consider the nominations of five appointments to financial services agencies. Nominees providing testimony before the Committee included:

In his opening statement, Chairman Johnson (D-SD), stated that, “It is important the [Federal Reserve] Board has thoughtful leaders who will not apply a one-size-fits-all approach with its rules on community banks, traditional insurance companies, and asset managers.” He added Mr. Velasquez will play an important role in affordable access to housing. Ranking Member Crapo (R-ID) stated, “It's important that each of these nominees here today understand the impact of their decision on our broader economy,” and expressed a desire to see the remaining opening on the Federal Reserve Board be filled by someone with community bank experience.

 

The Committee is expected to hold a vote in the coming weeks, in advance of consideration by the full Senate.