Compliance Blog

Written by Steve Van Beek

Today is June 20 which means we are just over a month away from the July 21, 2011 "designated transfer date" of powers to the CFPB.  Below are a few thoughts about the CFPB that have been floating around in my head (a very scary place to be!).    

CFPB.  One of the large unknowns is how the new CFPB will operate.  Part of this uncertainty stems from the lack of a Senate-confirmed director.  And, of course, the CFPB and Elizabeth Warren have had to be on the defensive in Congressional oversight hearings rather than providing guidance to financial institutions about what to expect.  In fact, the CFPB has only issued one piece of guidance to financial institutions.

A New Avenue.  Understanding how a new regulator will propose and finalize regulations is not easy.  We will all have to figure out how best to find and track new CFPB regulations.  There are quite a few unanswered questions.  Will the CFPB develop a second website for regulated entities?  If not, where on their current website will regulatory information be placed?  How will they announce new proposed regulations?  Will they issue legal opinion letters?  How will they communicate guidance?  How will they explain which requirements apply to which types of entities?    

Where to Start.  Without a confirmed Director, it has been difficult for the CFPB to announce its intentions of which areas it will focus on.  Earlier speeches and testimonies indicated a desire to revamp credit card and mortgage disclosures - two areas which were just recently reviewed and significantly changed.  Beyond these areas, the CFPB has not issued much guidance on which areas they will regulate first.    

Existing Proposed Rules.  After July 21, the CFPB inherits numerous existing proposed regulations.  The CFPB will be the agency responsible for finalizing those rules in addition to any brand new rules it writes.  The CFPB is not required to "re-propose" these existing proposed regulations.  This means a final regulation could be "dropped" without an additional round of notice and comment rulemaking.  Some of the existing proposals from the Federal Reserve are quite massive (closed-end loans, HELOCs, credit insurance, remittances, etc.). 

Clarity.  I'm hoping the CFPB understands the need to clearly communicate its actions to institutions it will regulate.  Clear regulations and clear guidance go a long way to meeting the CFPB's goal of protecting consumers.  Credit unions want to comply with the rules and are not looking for ways around the rules or other "tricks and traps."