CFPB Releases Second Webinar on New HMDA Rule

On February 14, the CFPB announced the availability of a second Webinar on the New Home Mortgage Disclosure Act (HMDA) Rule (amending Regulation C), a Rule that was itself finalized in late 2015 but that is predominantly not effective until January 1, 2018, or later. The new Webinar, with audio and closed-captioning over a slide-deck, focuses solely on identifiers and other “data points,” including the race and ethnicity of an applicant or borrower, which must be collected under the New HMDA Rule. In August 2016, the CFPB released an initial Webinar on the same Rule, covering a broader range of topics and without the focus on data points in the newer Webinar.

In addition, the Bureau has now made available a one-page chart to summarize the options a financial institution has for collecting and reporting ethnicity and race information under current Regulation C, Regulation C effective January 1, 2018, and the Bureau’s Official Approval Notice (issued on September 23, 2016). All of the above-mentioned resources and many more related materials (such as an unofficial transcript we prepared of the initial Webinar) can also be found in BuckleySandler’s HMDA Resource Center.

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Legislation Introduced in Both Houses Seeking to Curb Authority of the CFPB and Other Financial Regulators

On February 14, Senator Mike Rounds, a member of the Senate Banking Committee, introduced S. 365, which seeks to amend the Consumer Financial Protection Act of 2010 to bar the transfer of funds from the Board of Governors of the Federal Reserve System to the CFPB. The bill also would require the CFPB to turn over all penalties it obtains to the United States Treasury. Sen. Rounds also reintroduced the “Taking Account of Institutions with Low Operation Risk (TAILOR) Act” (S. 366)–a bill intended to ease regulatory burden on local banks and credit unions. Specifically, the TAILOR Act would require financial regulators to take into consideration the risk profile and business models of individual financial institutions and tailor those regulations accordingly. The TAILOR Act also would require regulators–including the OCC, the Fed, the FDIC, the NCUA and the CFPB–to conduct a review of all regulations issued since the 2010 passage of the Dodd-Frank Act and revise any regulations that do not conform to the TAILOR Act’s requirements. In addition, the regulatory agencies would be required to provide an annual report to Congress outlining the steps they have taken to tailor their regulations.

On February 15, Senator David Perdue (R-Ga.), along with Sens. John Barrasso (R-Wyo.), John Boozman (R-Ark.), Ted Cruz (R-Tex.), Steve Daines (R-Mont.), Mike Enzi (R-Wyo.), Joni Ernst (R-Iowa), John Hoeven (R-N.D.), Johnny Isakson (R-Ga.), Ron Johnson (R-Wis.), John Kennedy (R-La.), Mike Lee (R-Utah), Rand Paul (R-Ky.), Marco Rubio (R-Fla.), and Thom Tillis (R-N.C.), have introduced legislation S. 387 to amend the Consumer Financial Protection Act so that the CFPB would be subject to the regular appropriations process.

Senator Ted Cruz and Representative John Ratcliffe also introduced legislation in their respective chambers that would abolish the CFPB. The pair of bills–S. 370  and H.R. 1031–would “eliminate the Consumer Financial Protection Bureau by repealing title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Consumer Financial Protection Act of 2010.” As explained by Senator Cruz in a joint press release, the proposed legislation would give “Congress the opportunity to free consumers and small businesses from the CFPB’s regulatory blockades and financial activism, which stunt economic growth.”

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House Financial Services Committee Chairman Called for End of CFPB; Senate Banking Committee Ranking Member Responds

In a February 10 blog post, House Financial Services Committee Chairman Jeb Hensarling called for the abolition of the CFPB, and recommended that the President “immediately fire CFPB Director Richard Cordray.” Specifically, Rep. Hensarling expressed his belief that the CFPB is “arguably the most powerful, least accountable agency in U.S. history,” and his concern that the agency “defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process.” For these reasons, Rep. Hensarling  stated  he believes that “even with good policy, the CFPB would still be unconstitutional.” Ultimately, he argued that the CFPB “must be functionally terminated,” which he said could be achieved by ending the Bureau’s funding through a reconciliation bill.

The same day, Senate Banking Committee Ranking Member Sherrod Brown issued a statement responding to Rep. Hensarling’s proposal to abolish the Dodd-Frank Act. Senator Brown’s response noted, among other things, that “71 percent of Americans approve of the [CFPB]’s mission,” and that “[t]he Hensarling proposal would transform the Bureau from an effective watchdog into a toy poodle.”

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CFPB to Explore “Alternative Data” as Means to Measure the “Credit Invisible”

On February 16, the CFPB published a Request for Information seeking information about the “use or potential use” of “alternative data” and/or modeling techniques that might help increase access to credit for consumers who otherwise lack sufficient credit history. As explained by the Bureau in a press release, and as previously covered by InfoBytes, millions of Americans have insufficient credit history to produce a credit score. Accordingly, the Bureau is seeking public feedback on the benefits and risks of utilizing alternative sources of information–such as bills for mobile phones and rent payments–that may be used to make lending decisions involving consumers whose lack of credit history might otherwise exclude them from lending opportunities.

In prepared remarks delivered at a field hearing on alternative data, CFPB Director Richard Cordray noted, among other things, that

Equal access to credit means even more if overall access to credit is expanded and not constrained by lingering uncertainty about how regulators intend to apply fair lending laws. So we have crafted this Request for Information to help us better understand whether and how such uncertainty may be hindering credit access for disadvantaged populations. We also want to learn more about how the Consumer Bureau might reduce that uncertainty while holding fast to the anti-discrimination principles that are the cornerstones of federal law.

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FTC Reports on 2016 Enforcement Activities to Counter Illegal Debt Collection Practices

On February 14, the FTC announced that it has provided the CFPB with a letter summary of the Commission’s efforts during the past year to combat unlawful debt collection practices, provide education and public outreach activities, and conduct research and policy initiatives in the debt collection area. The purpose of the letter, as explained by the Commission, is to “assist the CFPB in its annual report to Congress about its administration of the [Fair Debt Collection Practices Act]”—an act for which the Commission and the CFPB share enforcement responsibilities.

According to the summary, many of the Commission’s law enforcement actions focused on curbing illegal debt collection practices, including phantom debt collection. Specifically, during 2016, the Commission, among other things: (i) filed or resolved 12 cases against 61 defendants, and obtained nearly $70 million in judgments; (ii) permanently banned 44 companies and individuals that engaged in “serious and repeated violations of law” from working in the debt collection industry; and (iii) obtained summary judgment decisions in three litigated matters that resulted in court orders banning the pertinent defendants from the debt collection industry. The summary notes further that, during 2016, two federal appellate courts adopted interpretations of the FDCPA that it considered “favorable” to consumers in cases in which the Commission and CFPB filed joint amicus briefs.

Moreover, with respect to educational initiatives, the summary highlights the Commission’s continued efforts to educate consumers and businesses during the past year about their rights and responsibilities under the FDCPA and the FTC Act. Among other things, the Commission reported: (i) reaching consumers through approximately 16,000 community-based organizations and national groups; (ii) distributing 15.5 million print publications to libraries, police departments, schools, non-profit organizations, banks, credit unions, and other businesses and government agencies; (iii) logging more than “43 million views” on its pertinent website pages; and (iv) reaching consumers through its videos, which were viewed more than 600,000 times. The Commission also noted that it continues to monitor and evaluate the debt collection industry and its practices through public workshops, and by providing input to the CFPB regarding related “rulemaking and guidance initiatives.”

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