CFPB Report August 30, 2013

August 30, 2013

CFPB Consumer Advisory Board to Meet

The CFPB has announced on its blog that the Consumer Advisory Board will meet on September 18, 2013 in Itta Bena, Mississippi, to discuss “innovate strategies for improving consumer access to credit, information, and financial resources.” Director Cordray is scheduled to give remarks, and the event is open to the public. 

CFPB Announces Student Debt Report & Toolkit for Public Service Professions

In an effort to aid public service organizations, the CFPB introduced a toolkit, on Wednesday, August 28, 2013, aimed at enhancing access to existing student loan debt forgiveness programs. According to areport released by the CFPB on August 27, 2013, more than 25 percent of the U.S. labor force is in public service. The Bureau expects various public service professions, including education, nursing, social work, and law enforcement, will face workforce shortages. Improved access to existing loan forgiveness programs, such as income-based repayment (IBR) and programs offered by employers and schools, could mitigate this shortage. The Bureau also offered an action guide, which outlines the program and provides enrollment guidance. 

CFPB Adds Leadership Staff

On Monday, August 26, 2013, the CFPB announced four additions to its leadership team. Cheryl Parker Rose, previously the Deputy Director of U.S. Government Relations for the Bill and Melinda Gates Foundation, joins the CFPB as the Assistant Director for Intergovernmental Affairs. Christopher Carroll, a John Hopkins University economics professor will take a leave of absence from the university to serve the Bureau as Chief Economist in the Office of Research. Formerly Senior Regulatory Counsel at JPMorgan Chase and member of CBA’s CFPB Committee, Kathleen Ryan, joins the CFPB as the Assistant Director for Regulations. Elizabeth Ellis, previously the Senior Advisor to the CFPB’s Chief of Staff, is now the Deputy Assistant Director in the Office of Financial Institutions and Business Liaisons. 

Cordray Ratifies Past Actions

On Friday, August, 30, 2013, the CFPB published a Ratification Notice in the Federal Register in which Director Cordray affirmed and ratified all actions he undertook as a recess appointee. In the notice, he stated his belief that all of those actions were legally authorized and proper, but is issuing the notice to avoid any uncertainty.

CBA Submits Joint Amici Brief on Interchange

CBA along with fellow trade associations submitted an amici brief, on Wednesday, August 28, 2013, in the NACS v. Federal Reserve Board case, after the U.S. District Court vacated the Federal Reserve’s debit interchange regulation. This brief was submitted to address whether the court, during the pendency of the Board’s appeal, can order the Board to promulgate an interim rule replacing the previously vacated Regulation II. In our brief we argue that the court does not have the authority to order an interim rule during the appeal, and in any case, should not do so. The Fed, in its brief, also challenges the court’s authority to require the Fed to issue an interim rule pending appeal. However, with both the Fed and the merchants requesting a stay in the judge’s order pending appeal, the issue of an interim rule might not arise, should either Judge Leon or the DC Circuit grant the stay—as we hope. That would leave the current rule in place for the duration of the appeal.

Credit Risk Retention Proposal Aligns QRM with QM

On Wednesday, August 28, 2013, the Fed, FDIC, OCC, FHFA, SEC and HUD released a second inter-agency credit risk retention proposal. The risk retention proposal was implemented by section 941 of the Dodd-Frank Act, which calls for Mortgage Backed Securities (MBS) securitizers to retain at least 5 percent of the credit risk of an issuance, unless exempted by complying with the Qualified Residential Mortgage (QRM) standard. The inter-agency proposal would closely align QRM with the CFPB’s Qualified Mortgage (QM) rule, which was issued earlier this year. The rule would eliminate the down payment requirement, but would raise the back-end debt-to-income ratio from 36 to 43 percent. Additionally, the new proposal makes other significant changes, such as eliminating the premium capture cash reserve account requirement, and allowing MBS issuers outside the QRM standard to hedge any retained credit risk after a specified period of time. The comment deadline for this proposal is October 30, 2013.
Congress Questions DOJ Interference in Bank and Online Lender Relationships

On Wednesday, August 22, 2013, 31 Republican Members of Congress sent a letter to Attorney General Holder and FDIC Chairman Gruenberg regarding the relationship between banks and online lenders. The Congressmen expressed concern over the Department of Justice’s (DOJ) intentions to “change the structures within the financial system… choking [online short-term lenders] off from the very air they need to survive.” The letter acknowledges the presence of “bad actors” in the online lending marketplace, but questions the justification for the DOJ and FDIC to discourage the many legal transactions between banks online lenders. The Congressmen also noted the need for Americans to have access to short-term credit.