The Designated Transfer Date is Here: The CFPB Opens Its Doors

Written by Steve Van Beek

There are some issues we know about the new Consumer Financial Protection Bureau and there are plenty of unknowns.  For a recap of the knowns, the CFPB's Progress Report provides a good summary.

Some of the unknowns that I've thought about leading up to July 21, 2011:

• Legal Opinion Letters?  Now that the CFPB has authority over the consumer protection laws, will it issue legal opinion letters to help clarify issues for both financial institutions and consumers?  NCUA's staff of attorneys write numerous legal opinion letters each year that are made public.  Other agencies do not issue public legal opinions.  I'm wondering how the CFPB will handle this issue.  In my book, public legal opinion letters [redacted if specific to an institution] help clarify the issue for all parties involved - institution, regulators, examiners and consumers.

• Letters to Impacted Entities?  NCUA issues Letters to Credit Unions to announce certain issues impacting credit unions.  How will the CFPB announce new regulations and new guidance documents?  Remember, the CFPB does not have an easy task in determining which entities it regulates.  The number of credit unions is easily accessible.  What about the number of payday lenders?  Mortgage brokers?  I'm interested to see how the CFPB will make sure that all regulated entities are aware of what rules apply to them.  As a bonus - how will NCUA inform credit unions of new CFPB requirements?  Will it rely on the CFPB's message or will it send Letters to Credit Unions informing them, for example, that the CFPB has amended Regulation E?

• Preambles and Staff Commentaries.  I'm interested in seeing the CFPB's rulemaking authority (though I'd prefer if they gave everyone a breather).  I took a first look at the CFPB's regulatory writing here.  I'm interested in seeing how the CFPB handles issues when it gets into the weeds.  Sometimes regulators bury issues in the preamble or staff commentary rather than putting the requirement out front in the regulatory text.

• Realistic Timeframes.  Will the CFPB understand that when regulators issue model forms institutions often work with third-parties to develop and implement those forms?  Will the CFPB reach out to those forms providers and ask about their current set-up and the expected timeframe for changing to a new model form?  Credit unions who have been working furiously on including the credit score information on adverse action and risk-based pricing notices are probably wondering the same thing.     

• Examination Manual.  The CFPB recently mentioned that it will be issuing an early version of its Examination Manual online.  I'm anxious to see that manual and hope it will clear up some issues that credit unions have continually struggled with due to confusing and complex regulations.

If you have any thoughts, don't be afraid to leave a comment.  I think we are all wondering what areas the CFPB will wade into first.  There has been plenty of talk about credit card and mortgage disclosures - two areas that have been constantly tinkered with by Congress and the Federal Reserve for the past three years.  

Normally we leave the italics for Fridays and Holidays, but:  Good luck everyone!  We'll do our best to help guide you through the numerous issues that will come up in the CFPB's second year.  

Comments

[Dianna]

I know the July 21st date has officially arrived but . . . won't the director have to be confirmed before any real changes can happen through the CFPB?

[Rusty Vellek]

Great posting, Steve! You ID'd some big questions that will impact us all at some point. I hope the CFPB is reading too!

[Steve Van Beek]

Dianna,
The CFPB can propose and finalize regulations for institutions that are already regulated by a federal regulator (i.e., credit unions). It can also examine institutions above $10 billion in assets.

However, the CFPB does not obtain its full powers over nondepository institutions (such as payday lenders, mortgage brokers, etc.) until it has a Senate-confirmed Director.

We discussed this in a June 21 blog post here. http://nafcucomplianceblog.typepad.com/nafcu_weblog/2011/06/cfpbs-authority-without-a-director.html

[Dianna]

Thank you - The June 21st post explains it perfectly!

[Joyce]

Great points....all in favor of Steve heading the CFPB say "aye"!
Aye!!!!