Compliance Blog

Posted by Anthony Demangone

Imagine you are setting up the CFPB.  Your The Agency has the ability to regulate virtually any financial product or service.  Finally, a federal regulator can address the practices of payday lenders or check cashers. You can "level the playing field" by taking a close look at all of the entities that offer financial products and services that were once off the radar.  Elizabeth Warren is now busy setting up her the CFPB, and she gets to make that choice.  So what will be the CFPB's first priority? 

According the American Banker (subscription required), she'll focus on (wait for it...wait for it) credit cards. You have to be kidding me.

• Congratulations, Ms. Warren.  You are directing the CFPB's scarce resources to overhaul the one product that has received the most consumer-related attention in recent memory.  The ink is barely dry on the Credit CARD Act, and you're chomping at the bit to dive back in. Credit unions and banks are still writing checks to outside vendors and computer programmers for all the work that was done to periodic statements and core processors to bring them into compliance with the three sets of regulations needed to implement the Credit CARD Act.  Keep in mind that this process isn't even over yet, as the Fed recently issued another proposal to clarify issues related to credit cards.  
• This latest development must be depressing for credit union compliance officers.  We hear from government officials again and again and again that "we understand that credit unions didn't cause the problem."  That sounds nice, but it doesn't change the following.  Credit unions, you just overhauled credit card disclosures.  Get ready to do it again. Credit unions, you just overhauled mortgage disclosures, specifically related to RESPA and MDIA requirements. Get ready to do it again.  And then again.  The Fed is busy overhauling its mortgage disclosures, and then the CFPB will overhaul them again, creating one set of disclosures where Reg Z and RESPA used to mandate two. 
• For those who thought the CFPB would not create enormous new burdens for credit unions, I hope they take a fresh look at their position.  The decision to focus on credit cards first makes is very disappointing.  It is the one area that was completely overhauled.  Why not first focus on formerly unregulated entities? That would have the “level the playing field” effect of making them operate under the same regulatory requirements which credit unions adhere to already.  Also, Ms. Warren should keep in mind that with the Fed’s recent proposal, the Credit CARD Act’s final requirements are set in stone yet.  Acting to amend the rules so quickly seems premature. This simply reaffirms NAFCU's decision to oppose the CFPB's oversight for credit unions, regardless of asset size. 
• I also find it a bit presumptive for Ms. Warren to indicate what the CFBP will focus on first.  I would let the Senate-confirmed director make such statements. 
• Finally, when Elizabeth Warren talks about consumers getting into trouble with their credit cards, she always points at lenders.  Leave it to Saturday Night Live to highlight the other side of the story. (Video.)

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We now expect NCUA to finalize its Fiduciary Duties regulation during its December 16th board meeting. 

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Have a great weekend, everyone. Even you Hoosier fans.