Compliance Blog

Written by Steve Van Beek

One of the areas of the CFPB's regulatory authority that hasn't received very much attention is the CFPB's ability to finalize a regulation that was proposed by another regulator.  We saw the CFPB take this action with the Remittances final rule - which was originally proposed by the Federal Reserve.

Section 1063(j).  Dodd-Frank specifically indicated that proposed rules - to amend a consumer regulation - would transfer to the CFPB as well.  This allows the CFPB to finalize a proposed rule without having to "repropose" the regulation in the Federal Register.  Section 1063(j) of Dodd-Frank:

"(j) STATUS OF RULES PROPOSED OR NOT YET EFFECTIVE.— (1) PROPOSED RULES.—Any proposed rule of a transferor agency which that agency, in performing consumer financial protection functions transferred by this title, has proposed before the designated transfer date, but has not been published as a final rule before that date, shall be deemed to be a proposed rule of the Bureau."

Remittances.  As we saw with remittances, the CFPB decided to finalize the remittances rule (by their statutory deadline of January 21, 2012) and issue a proposed rule at the same time.  NAFCU members:  Our Regulatory Alert (12-EA-05) on the remittances proposal is now available.    

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Existing Proposed Rules.  There are quite a few other proposed rules that are "hanging out there" and which could be finalized by the CFPB without further warning (i.e., without a new proposed rule).  Of course, the CFPB could reissue a new proposed rule if it wanted to take a different approach than was taken by the Federal Reserve.    

Below is a listing of a few proposed rules that the CFPB inherited on July 21, 2011 when it obtained its regulatory authority.

Regulation Z:  Ability-to-Repay for Mortgages.  Originally proposed by the Federal Reserve in April 2011, the CFPB has indicated it will finalize this rule in Spring 2012.  

Regulation Z:  Escrow Accounts.  Originally proposed by the Federal Reserve in February 2011.  I wouldn't be surprised if we saw this rule finalized sometime in 2012.     

Regulation Z:  Credit Insurance; Right of Rescission; HELOCs.  The Federal Reserve had proposed changes in August 2010.  In February 2011, the Federal Reserve announced it would not finalize these proposals as the CFPB would gain authority over Regulation Z on July 21, 2011.  

Regulation Z:  Closed-End Mortgages; HELOCs.  The Federal Reserve also had proposed changes to Closed-End Mortgage disclosures and HELOC disclosures.  The Fed issued these proposals in July 2009.  These proposals were also tabled by the Federal Reserve in February 2011 - passing authority on to the CFPB.    

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Credit Insurance.  We've blogged on the credit insurance issue a couple of times in the past.  

• A September 2010 blog post highlights the proposed model form and how it will definitely lead to fewer policies.
• A March 2011 blog post highlights a GAO study focused on credit insurance products.    

If your credit union offers these products, this is definitely an area to keep an eye on.