CFPB Starts to Flex Its Muscles
The Consumer Financial Protection Bureau may be set to hit a stride in 2014 when it is expected to take on several new industries as it settles in as a financial regulator.
The bureau, less than three years into its existence, has largely moved past political and legal challenges to its mandate and has put in place many of the rules the 2010 Dodd-Frank law required it undertake, including a set of mortgage-lending rules mandated by the law.
Allen Zibel / Wall Street Journal / December 27th
The CFPB has already started flexing its muscles, filing a string of enforcement cases toward the end of 2013 on lending discrimination, mortgage servicing , online lending and credit card products. More is expected on the enforcement front and officials are looking to expand their oversight reach to other financial products, with a particular focus on short-term loans offered to cash-strapped consumers.
Those include including short-term “payday loans” offered in storefronts and online and similar “deposit advance” products issued by banks — as well as overdraft fees charged by banks. Issuers of prepaid payment cards are likely to face standards for how they disclose fees, which critics call confusing. And debt collectors may face rules designed to ensure the industry is attempting to recover the right amount of money from the correct debtor.
In addition, the agency will police the mortgage industry for compliance with its new rules, which are effective in 2014. CFPB Director Richard Cordray has said he expects lenders will be largely in compliance with the rules, but will give lenders some leeway at first.
“We’re not going to be playing a game of “gotcha” with people in the early months,” he said in November.
Although Republican criticism of the CFPB has eased, lawmakers are expected to continue to press for structural changes to how the bureau operates.
Republicans want the agency’s leadership to be a bipartisan commission, instead of a single director nominated by the president, and to be subject to appropriations purse strings, making it more accountable to Congress. But those efforts are unlikely to gain traction unless Republicans gain control of the Senate in the 2014 midterm elections.
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