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CFPB Report June 21, 2013
House Financial Services Subcommittee Hears Testimony on the CFPB’s Budget
On Tuesday, June 18, 2013, the House Financial Services Subcommittee on Oversight and Investigations met regarding the CFPB’s Budget for FY 2013. CFPB Chief Financial Officer Mr. Stephen Agostini testified on behalf of the Bureau. The Committee Chairman, Jeb Hensarling (R-TX) still refuses to hear testimony from Director Cordray, who he believes was appointed illegally. Democrats worked to defend the CFPB, including its recent report on overdraft products, for which Cong. Maloney (D-NY) demonstrated some interest in future rulemaking. Republicans on the Committee continued to call for changes to the CFPB that would provide more accountability and oversight, and highlighted what they consider to be unnecessary expenses.
Mr. Agostini received a number of difficult questions. In responding to Cong. Garrett, (R-NJ) who asked if anyone outside the agency can direct it to take action, the CFPB witness told the Committee, “I do not believe so.” Cong. Barr, (R-KY) was especially interested what percentage of employees have banking experience and how this compared to those with enforcement backgrounds. Republicans on the Committee were also very interested in a recent article published in American Banker suggesting the CFPB has very high attrition rates for senior staff. While Mr. Agostini was prepared to answer many of the questions, it was evident that testimony by Director Cordray may have been better placed to answer these questions these questions.
House Financial Services Subcommittee on the QM Rule
On Tuesday, June 18, 2013, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled, “Examining How the Dodd-Frank Act Hampers Home Ownership,” focused on the CFPB’s Qualified Mortgage rule. Witnesses focused their comments and concerns on the impact the final QM rule will have on the availability of credit. A primary concern of Chairman Capito, (R-WV) and other members of the Subcommittee is that the QM rule will reduce credit for already underserved demographics and possibly impact fair lending.
The discussion also focused on the impact of the points and fees rules. The Consumer Mortgage Choice Act (HR 1077), sponsored by Cong. Bill Huizenga, (R-MI) appears to be the favorite approach to making some corrections to the QM rule. The bill would modify TILA to update definitions for points and fees in connection with mortgage transactions, among other things. The only witness who did not express support for the legislation was Michael Calhoun of the Center for Responsible Lending, who deemed it an unnecessary measure.
Hackett to Leave CFPB
The CFPB announced the departure of Rick Hackett, the agency’s Assistant Director for installment and liquidity lending markets such as auto lending, student loans and small dollar loans - payday and deposit advance. Hackett will leave the agency at the end of July. Rohit Chopra, CFPB Student Loans Ombudsman, will temporarily assume Hackett’s responsibilities for overseeing student and auto lending. Corey Stone, Assistant Director for Deposits, Cash, Collections and Reporting Markets will assume responsibilities for small dollar loans.
CFPB Partners with Boston on Complaints
On Monday, June 17, 2013, the CFPB and the City of Boston announced a partnership that allows Boston consumers to submit complaints directly to the Bureau. “We are proud to be teaming up with Mayor Menino to give Bostonians new ways to access help with financial products and services,” said Director Cordray. “Consumers deserve to have someone on their side, and we look forward to working with the City of Boston to do just that.”
CFPB Announces Changes to Project Catalyst
In a blog post issued on Wednesday, June 19, 2013, the CFPB announced the latest update in its support for consumer-friendly disclosures, part of Project Catalyst. The initiative allows companies to use a new disclosure or delivery method that, on a limited trial basis, is exempt from certain existing Bureau rules. The CFPB announced the following changes based on initial feedback:
- Iterative testing. Companies can conduct iterative testing during disclosure trials, making small adjustments throughout the trial rather than testing one static disclosure.
- Additional consumer safeguards. Trial proposals must identify any risks to consumers and include plans to mitigate those risks.
- Collaboration. To defray the costs of developing and testing trial disclosure, companies can submit collaborative proposals.
- Pre-submission consultation. Potential applicants can consult with the Bureau prior to formal submission, saving time and expense.
- Delivery methods. Trial proposals can cover innovative delivery methods and platforms.
- Privacy. We will not ask for or accept any test data that includes consumers’ personally identifiable financial information.
The revisions are open for comment until July 18, 2013.