CFPB Report - June 12, 2015

CFPB Releases Final Larger Participant Rule for Auto Finance Companies
On Wednesday, June 10, 2015, the CFPB issued its final larger participant rule for the automobile financing market, as authorized by section 1024 of the Dodd-Frank Act. When the final rule becomes effective, the Bureau will have supervisory jurisdiction over nonbank auto finance companies engaging in at least 10,000 aggregate annual originations, which includes auto lending, leasing and refinancing activities. According to the Bureau's estimates, 34 auto finance companies would now be subject to supervision, covering around 90 percent of the nonbank auto lending and leasing market.
CBA has long supported the Bureau's authority to level the playing field for bank and nonbank companies operating in the same market. CBA offered its support for this rule when the CFPB first released its proposal, and is pleased to see the Bureau agreed to set the supervisory threshold for auto finance companies at 10,000 aggregate annual originations. The final rule also incorporates a broad exclusion for securitization-related transactions.
In addition to the final rule, the CFPB also issued an updated version of its automobile finance examination procedures to offer the industry guidance on how the Bureau will supervise bank and nonbank auto finance companies.
The final rule will be effective 60 days after publication in the Federal Register.
Regulators Finalize OMWI Policy
On Tuesday, June 9, 2015, the interagency Office of Minority and Women Inclusion (OMWI) issued a final policy, along with a request for comment on information collection activities, with official publication in the Federal Register on Wednesday, June 10th.
Under the Dodd-Frank Act, the OCC, Federal Reserve Board, FDIC, National Credit Union Administration, CFPB, and Securities and Exchange Commission are each required to establish an Office of Minority and Women Inclusion to be responsible for all agency matters relating to diversity in management, employment, and business activities. Dodd-Frank also instructed each OMWI Director to develop standards for assessing the diversity policies and practices of entities regulated by the agency. The agencies issued a proposed policy on October 25, 2013. CBA commented on the proposal.
At first glance, the final policy seems relatively similar to the proposal. However, in response to the concerns of commenters, the final policy added the following language clarifying the voluntary nature of the standards: "This document is a general statement of policy under the Administrative Procedure Act, 5 U.S.C. 553. It does not create new legal obligations. Use of the Standards by a regulated entity is voluntary."
CBA is conducting a more thorough review and will update members with any relevant details.

House Hearing Examines Consumer Choice
On Thursday, June 11, 2015, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled: “Examining Legislative Proposals to Preserve Consumer Choice and Financial Independence” to examine several bills aimed at insuring consumers have greater access to the financial services they want and need by reducing regulatory burden and streamlining regulatory compliance. CBA and other trade associations sent a joint statement for the record supporting H.R. 1266, bipartisan legislation which would transition the CFPB from a sole director to a five-member, bipartisan commission. Subcommittee Chairman Randy Neugebauer (R-TX) stated, “To ensure a sustainable, effective, and balanced CFPB, we need to reform its structure—not get rid of it—but reform it. Ultimately, the consumer’s experience in the financial marketplace will be significantly enhanced.”
Members addressed a number of issues including the benefits and downfalls of the Bureau having a commission verses a single director, the challenge consumers might face with the industry’s ability to comply with the approaching TILA-RESPA Integrated Disclosure (TRID) implementation deadline on August 1, 2015, and the advantages of having a public comment period and an understanding of market impact before issuing guidance, specifically related to indirect auto financing.

House Committee to FTC, FCC: Modernize TCPA
On June 11, 2015, members of the House Energy and Commerce Committee sent a bipartisan letter to the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) asking the agencies to modernize the rules under the Telephone Consumer Protection Act (TCPA). The lawmakers also voiced concerns about FCC Chairman Tom Wheeler’s fact sheet and June 18, 2015 vote on the proposal which had not been publicly released. Reps. Leonard Lance (R-NJ), Gus Bilirakis (R-FL), Jerry McNerney (D-CA), and Tony Cardenas (D-CA) signed onto the letter, which urged “the FCC to implement real reforms that provide greater clarity and guidance for businesses seeking to contact their customers for legitimate reasons.”
The letter follows a Monday, June 8, 2015 meeting betwwen CBA and House Energy and Commerce staff to advocate for the modernization of TCPA and requesting support.

CBA Supports Cybersecurity Information Sharing
On Wednesday, June 10, 2015, CBA and other trade associations sent a joint letter to Senate Majority Leader Mitch McConnell (D-KY) and Senate Minority Leader Harry Reid (D-NV) supporting an amendment entitled: “Cybersecurity Information Sharing Act” (CISA). The amendment would alter the National Defense Authorization Act (NDAA) to increase the nation’s ability to defend against cyber-attacks by encouraging faster and more efficient sharing of cyber-threat information among businesses and the government.
In addition to its support of CISA, CBA noted, “Despite the alarming rise in the number and sophistication of cyber threats, a federal standard to protect consumer data across the payment system currently does not exist. With the recent data security breaches at major retailers and others that have put millions of consumers at risk, the need to pass legislation to establish such a standard could not be more evident.” CBA emphasized that protecting our payments system “is a shared responsibility of all parties involved and we must work together and invest the necessary resources to combat increasingly sophisticated threats to the payments system.”

CBA Letter on Check Imaging Services
On Monday, June 8, 2015, CBA and the Clearing House Association submitted a letter supporting the Electronic Check Clearing House Organization's (ECCHO) request that the Federal Reserve (Fed) Payment System Advisory Committee undertake, or recommend that the Fed Board undertake, a de novo competitive impact analysis of the check image services at Federal Reserve Banks. CBA strongly supports ECCHO's request and agrees an impact analysis is justified. 

Disparate Impact Amendment Passes House
On Wednesday, June 3, 2015, the House agreed to a measure limiting the U.S. Department of Justice’s (DOJ) application of disparate impact theory. Rep. Scott Garrett (R-NJ) amended the Commerce, Justice, and Science appropriations bill to bar DOJ from using funds for litigation in which they seek to apply disparate impact theory.
“While everyone agrees that discrimination has no place in the lending practices of any respectable institution, the application of disparate impact theory has had devastating impacts on law-abiding businesses who have diligently maintained fair and consistent lending standards,” said Rep. Garrett in a press release.