In a new report mandated by the Trump administration, per Executive Order 13772, the Treasury Department slammed the CFPB on multiple counts and called for an overhaul on how the bureau is managed. The Treasury’s perspective was summed up succinctly: “The CFPB was created to pursue an important mission, but its unaccountable structure and unduly broad regulatory powers have led to regulatory abuses and excesses. The CFPB’s approach to enforcement and rulemaking has hindered consumer choice and access to credit, limited innovation, and imposed undue compliance burdens, particularly on small institutions.” The report then detailed a number of more specific criticisms, as follows. “The bureau’s structure renders it unaccountable to the American people,” it began. Also, the CFPB’s substantive authority ...
The Treasury Department’s report on reforming financial regulation in the U.S. blames rules ushered in under the Dodd-Frank Act – and promulgated by the CFPB – for tight credit conditions in the mortgage market. “While Dodd-Frank and the ATR/QM [ability to repay/qualified mortgage] rule were not intended to eliminate markets for loans that did not meet the QM standards, the reality is that the vast majority of lenders remain unwilling to make loans that do not meet those standards, eliminating access to mortgages for many creditworthy borrowers,” Treasury wrote in the 142-page report. (At best, $3 billion to $4 billion in nonprime/non-QM mortgages might be originated this year out of total industrywide originations of $1.5 trillion.) The administration took aim at Appendix ...
The House Financial Services Committee recently threatened to file contempt charges against CFPB Director Richard Cordray over the agency’s alleged failure to comply with the committee’s request for documentation related to the bureau’s response to the Wells Fargo scandal involving the creation of unauthorized customer accounts. “In response to the committee’s records request, the CFPB did not produce a single internal record related to its Wells Fargo branch sales practice investigation,” the HFSC staff said in a report. Over the course of six months, the bureau only produced 1,010 pages of records, “comprised almost entirely of records easily obtainable” from Wells or the Office of the Comptroller of the Currency, it added. After six months of the CFPB’s “refusal to ...
The American Bankers Association recently detailed a handful of major concerns it continues to have with the approach federal regulators take toward fair lending. The first such concern it listed in a new white paper sent to the Treasury Department is the expanded use of the disparate-impact concept. “Federal agencies responsible for ensuring compliance with national fair lending laws have in the last few years aggressively applied a controversial legal theory, disparate impact, to brand banks with violations of fair lending rules,” said the ABA. Under the disparate-impact theory, regulators rely heavily, sometimes solely, on statistical sketches to justify lawsuits or other enforcement actions, it added. “In doing so, since June 2015 they have largely ignored the analytical framework established ...
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