CFPB Report January 10, 2014

CFPB Releases Mortgage Resources

On Tuesday, January 7, 2014, the CFPB released new consumer resources on mortgage rules, many of which take effect today, January 10, 2014. As part of the CFPB’s campaign to educate consumers on the new rules, these resources include sample letters consumers can send to their mortgage servicers, mortgage tips, FAQs, factsheets, and other consumer tools.

“Taking out a mortgage to buy a home is one of the biggest decisions a consumer can make,” said Director Cordray in a press release. “We want to make sure that people are aware of their new protections so they have the knowledge to make sound decisions about their financial futures.”

The CFPB also announced it will host an event entitled: “Protecting homeowners: New tools for empowering consumers and advocates.” Held today, January 10, 2014, in Phoenix, AZ, the forum will be available on the CFPB’s website. According to the CFPB, the event is targeted to housing counselors, legal aid attorneys and other advocates.

Janet Yellen Confirmed as Chair of the Federal Reserve

On Monday, January 6, 2014, the Senate confirmed Janet Yellen as the next head of the Federal Reserve (Fed) by a vote of 56-26. Ben Bernanke will step down at the end of January, and Yellen will begin a four-year term on February 1, 2014. Yellen has served as the Fed’s vice chair since October 2010. 

In related news, the Federal Reserve’s Division of Consumer and Community Affairs, Sandra Braunstein, plans to retire on April 1, 2014. Braunstein has served at the Fed for 27 years. No plans for a replacement have been announced. 

Senators Call for Hearing on Target Data Breach

In a Monday, December 30, 2014 letter to the Chairman and Ranking Member of the Senate Banking Committee, three Senators requested a hearing regarding consumer financial data security. The request follows Target’s announcement indicating hackers stole credit and debit information from nearly 40 million of the retailer’s customers. The data breach could cost banks millions in customer outreach, credit and debit card replacement, and the actual fraud costs which may have occurred. The Senators cautioned, “As companies collect, store, and process ever-greater quantities of consumer data, they—and our regulators – must become ever-more vigilant against breaches and improper use.”

Senators Introduce Bill to Make Federal Agency Settlements More Transparent

On Wednesday, January 8, 2014, Senators Elizabeth Warren (D-MA) and Tom Coburn (R-OK) introduced a bill aimed at increasing transparency for settlements reached by federal enforcement agencies. The bill, titled: The Truth in Settlements Act, would:

  • Require federal agencies to explain in written public statements whether any part of the settlement amount is tax deductible;
  • Require federal agencies to post basic information about settlements over $1 million on their websites;
  • Require companies that settle with enforcements agencies to state tax deductions in their SEC filings;
  • Require federal agencies to report annual aggregate statistics on confidential settlements; and
  • Direct the GAO to conduct a study to examine how agencies deem settlements confidential.

"When government agencies reach settlements with companies that break the law, they should disclose the terms of those deals to the public," said Senator Warren in a press release. Dr. Coburn added, "Taxpayers deserve to know the settlement details corporations arrange with the government, and the best place for Congress to start is with policies that enhance transparency.”

Senator Warner Introduces Prepaid Card Legislation

On Thursday, January 9, 2014, Senator Mark Warner (D-VA), a member of the Senate Banking Committee, introduced The Prepaid Card Disclosure Act of 2014, which would require the CFPB to issue rules mandating financial institutions to provide standard disclosures. The bill would allow disclosures through QR code or barcode, and would also require a toll-free telephone number and website to be clearly displayed on the card. 

“At nearly $700 billion in sales each year, prepaid cards are one of the fastest growing parts of the financial industry,” said Sen. Warner. “However, these cards aren’t subject to the same kinds of consumer protections as other types of credit cards and gift cards. It’s important that young people and people without credit history or access to traditional banking tools have access to prepaid cards, but we can’t let the technology outpace smart consumer protections.”