CFPB Report May 24, 2013

Senate Postpones Nominee Votes

On Tuesday, May 21, 2013, Senate Majority Leader Harry Reid (D-NV) indicated he would delay until July the confirmation vote of Richard Cordray to lead the CFPB until July. Leader Reid will bring additional stalled presidential nominees into the fold after the Senate completes immigration reform legislation. Republicans are sure to attempt blocking the vote, by not allowing the 60 vote threshold unless requested changes to the Consumer Financial Protection Bureau are considered. Majority Leader Reid has indicated this would prompt him to pursue the “Nuclear Option” on filibuster reform and decrease the current threshold from 60 to a simple majority in efforts to pass stalled legislation and nominees alike. CBA will monitor and provide updates as the Cordray vote as July approaches.

CFPB Testifies Before House Panel on the Qualified Mortgage Rule

On Tuesday, May 21, 2013, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled, “Qualified Mortgages: Examining the Impact of the Ability to Repay Rule.” CFPB’s Assistant Director for Mortgage Markets, Peter Carroll, and Assistant Director for Regulations, Kelly Cochran, testified before Chairwoman Capito’s (R-WV) subcommittee.

In his opening statement, Ranking Member Meeks (D-NY) reiterated his parents would not have been able to purchase a home under the QM rule, a point he had made in a prior hearing. Rep. Sean Duffy (R-WI), the Subcommittee’s Vice-Chair, likened the CFPB to the IRS and described it as an independent agency with a political agenda. He then went on to say banks should not be fearful of their regulator, the CFPB, just like the public should not be fearful of the DOJ tapping their phones.

Republicans and Democrats on the Subcommittee criticized the QM rule for being too narrow. In responding to a question from Congressman Capuano (D-MA), Assistant Director Carroll said the CFPB expects about a 5% decrease in mortgage originations from 2010 to 2013; other Subcommittee Members said they heard as high as 50%. Congressman Steven Pearce (R-NM) stated the QM rule would severely limit lending for mobile homes. The CFPB witnesses pointed to various types of QM as an example of some flexibility being provided. However, the subcommittee seemed to feel the pendulum had swung too far in the final direction on the final rule.

CFPB Issues Framework for State Coordination

On Tuesday, May 21, 2013, the CFPB posted its framework for addressing coordination with state regulators. The framework will apply where there is concurrent supervisory jurisdiction and provides processes for coordinating exam schedules, developing comprehensive supervisory plans for particular institutions; coordinating information requests, and providing advance notice of corrective actions. “Our strong partnership with state regulators is critical to protecting consumers,” said Director Cordray. “By working together, we are streamlining our processes, making the most of our joint resources, and ensuring evenhanded oversight of federal consumer financial laws.”

CFPB Issues Guidance on SAFE Act

On Monday, May 20, 2013, the CFPB issued guidance confirming states may use the Uniform State Test (UST) developed by the Nationwide Mortgage Licensing System and Registry as part of a qualified written test under the SAFE Act. Specifically, a State may use a UST if it adequately tests required laws and regulations.