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The ex-CFPB Deputy Director Raj Date has attracted criticism for creating a mortgage company which competes in nonqualified mortgages, a category of loan he helped create at the CFPB. While Date’s conduct has its critics and defenders, one thing is certain. Community banks have been pushed out of the mortgage business by the rules Date helped write, and Date’s company now plans to soak up the extra loans.
Since its creation in July 2011, the Consumer Financial Protection Bureau (CFPB) has entered into five public consent orders with financial institutions and, in one case, a service provider, to correct alleged consumer protection violations. While these orders involved some of the biggest institutions in the industry (Capital One, Discover and American Express), there are valuable insights to be gleaned from these orders for both institutions directly monitored by the CFPB and institutions that are examined for consumer protection compliance by their prudential regulators (especially since the Federal Deposit Insurance Corporation (FDIC) joined in two of the orders).
Often when Congress creates a new agency, those subject to such agency’s jurisdiction anxiously await the implications. Bankers are no exception with respect to the newly created Consumer Financial Protection Bureau (CFPB). While we hope for the best, the skeptic in us naturally expects draconian consequences and inflexible policies designed to benefit consumers without consideration of the safety and soundness of the financial institution. However, a recent CFPB bulletin provides reason to be cautiously optimistic that the CFPB may be responsive to the business needs of the banking industry under the proper circumstances.
Agricultural bankers will likely find themselves subject to additional reporting and disclosure requirements, courtesy of the Dodd-Frank Act and the Consumer Financial Protection Bureau the law established. But their biggest competition in rural America will not.
Given that only a basic CFPB organizational chart – without names – exists on the agency’s web site, CFPB Journal did some digging to offer a more thorough look at the other leaders and staff members who will shape the bureau going forward.
The Consumer Financial Protection Bureau (“CFPB”) has issued its initial CFPB Supervision and Examination Manual (Version 1.0). According to the Bureau, the Manual is a guide to how the CFPB will supervise and examine consumer financial service providers that fall within the CFPB’s supervisory authority – depository institutions with more than $10 billion in assets and their affiliates, and nondepository entities. At first blush, the Manual seems familiar and comparable to the examination manuals and procedures currently followed by the Federal banking agencies. Indeed, the introduction pages to the Manual expressly incorporate examination procedures developed under the Federal Financial Institutions Examination Council (“FFIEC”), and the CFPB Manual states that the Bureau will use the FFIEC’s Uniform Consumer Compliance Rating System. However, upon further review, there are significant differences.