Un­der new man­age­ment: CFPB

Credit unions and banks are won­der­ing how new lead­er­ship will re­mold the agency

Credit Union Journal - - Front Page - BY KATE BERRY

WITH LEAD­ER­SHIP OF THE CON­sumer Fi­nan­cial Pro­tec­tion Bureau re­solved by a fed­eral court, the fi­nan­cial ser­vices in­dus­try is ea­ger to find out what in­terim head Mick Mul­vaney plans to do once he gets a han­dle on the agency.

Mul­vaney, who is also the di­rec­tor of the Of­fice of Man­age­ment and Bud­get, has pledged to change di­rec­tion at the CFPB, fo­cus­ing less on new rules and more on eas­ing ac­cess to credit.

He has al­ready in­sti­tuted a 30-day hir­ing and pol­i­cy­mak­ing freeze and is re­view­ing all rules and guid­ance, as well as pend­ing en­force­ment ac­tions and in­ves­ti­ga­tions. Though he has ac­knowl­edged that some fi­nal rules like the small-dol­lar pay­day lend­ing rule are beyond his au­thor­ity to change in the short-term, many in the in­dus­try be­lieve oth­er­wise and are gear­ing up to en­cour­age him to change ef­fec­tive dates and re­open old rule­mak­ings.

Fol­low­ing are five key ques­tions now that Mul­vaney is solidly in charge:

1) Is Mul­vaney go­ing to be a fig­ure­head and leave the day-to-day op­er­a­tions to some­one else?

Mul­vaney told re­porters this week

that he would split his time be­tween CFPB and OMB, work­ing six days a week un­til Pres­i­dent Trump can nom­i­nate a per­ma­nent suc­ces­sor who is con­firmed by the Se­nate.

But many ob­servers be­lieve he will hand the reins of day-to-day op­er­a­tions to a trusted lieu­tenant, given the fact that the Trump ad­min­is­tra­tion is fac­ing a loom­ing po­ten­tial gov­ern­ment shut­down. Se­nate Mi­nor­ity Leader Chuck Schumer and House Mi­nor­ity Leader Nancy Pelosi can­celed a planned meet­ing with Pres­i­dent Trump on Tues­day after the pres­i­dent said on Twit­ter that a bud­get deal was un­likely to hap­pen. The two sides have un­til Dec. 9 to agree to a plan.

2) Is the top man­age­ment at the CFPB now work­ing on bor­rowed time?

Just as Sec­re­tary of State Rex Tiller­son has an­nounced plans to cut his agency by at least 30% and Scott Pruitt, the head of the En­vi­ron­men­tal Pro­tec­tion Agency, has re­as­signed sci­en­tists and aca­demics at the EPA, so too is Mul­vaney ex­pected to take the ax to what he con­sid­ers a bloated bu­reau­cracy.

No one is ex­pected to be fired on the spot, said one for­mer top CFPB of­fi­cial. More likely, Mul­vaney or his lieu­tenants will sit down with man­agers and ex­plain that they can keep their jobs if they are on board with the new regime, or be re­as­signed and stripped of their port­fo­lio of du­ties.

3) Will the CFPB re­open the pay­day rule?

Though Mul­vaney has said he can­not change rules that have al­ready been fi­nal­ized, he could change the ef­fec­tive date of a rule or re­open it for pub­lic com­ment. Some ex­pect that will hap­pen with the re­cently fin­ished small-dol­lar lend­ing rule, which has a 20-month lead time be­fore it goes into ef­fect.

Mul­vaney may also urge law­mak­ers to re­peal the rule, which is ex­pected to up­end the pay­day lend­ing busi­ness—but the pol­i­tics will be tricky.

4) Will the CFPB de­lay im­ple­men­ta­tion of the Home Mort­gage Dis­clo­sure Act rules?

The Dodd-frank Act re­quired the mort­gage in­dus­try to col­lect and re­port cer­tain data on ev­ery mort­gage in­clud­ing the eth­nic­ity, race and sex of po­ten­tial bor­row­ers. The mort­gage in­dus­try has spent years mod­ern­iz­ing sys­tems to meet a Jan­uary 2018 dead­line for new Home Mort­gage Dis­clo­sure Act re­port­ing.

That is un­likely to change, but lenders are also con­cerned about the CFPB’S plans to make the vast ma­jor­ity of HMDA data pub­lic, be­gin­ning in 2019 (ag­gre­gate data is al­ready pub­lic, but this would go fur­ther). That is one area ripe for change.

5) What’s the plan for the CFPB’S pro­pos­als on debt col­lec­tion?

In 2013, the CFPB be­gan work to fix abuses in the debt col­lec­tion mar­ket after wide­spread com­plaints by con­sumers.

Due to is­sues in the gov­ern­ing statutes, the CFPB split its plan into two parts: one gov­ern­ing first-party and the other han­dling third-party debt col­lec­tors.

Of the two plans, only the lat­ter has made the light of day and has drawn much crit­i­cism. In­deed, since re­spond­ing to some of that crit­i­cism back in June by drop­ping a pro­vi­sion that would have made third-party debt col­lec­tors re­spon­si­ble for the ac­cu­racy of in­for­ma­tion on con­sumer debts the agency has been mum.

“I was just learn­ing about the pow­ers that I have as act­ing [CFPB] di­rec­tor — they would frighten most of you,” said OMB Di­rec­tor Mick Mul­vaney.

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