Barely a 100-days-old, the U.S. Consumer Protection Financial Bureau – created by landmark Wall Street reform legislation – is ready to start reviewing numerous regulations on mortgages and other common financial products touching the lives of most Americans.
The CPFB inherited many of the consumer-oriented divisions of existing federal agencies. The bureau needs to “streamline and simplify rules” to ensure that consumer lending and other services work properly and that lenders provide sufficient transparency, said Raj Date, the CPFB’s de facto chief, in prepared Congressional testimony yesterday.
“The Bureau has inherited from other agencies numerous regulations, many of which have been on the books for years,” Date told the House Financial Services subcommittee, as he reviewed the bureau’s first 100 days and outlined future challenges. “Changes in technology, market practices, and the legal landscape may have caused some of these rules to be obsolete, unnecessary, redundant, or counterproductive.”
Date said the review is to start this month.
One task likely undertaken by the new agency is the combining and simplifying of two overlapping mortgage disclosure forms that emerged as a result of the Truth in Lending Act (TILA) of 1968 and the Real Estate Settlement Procedures Act (RESPA) of 1974. Both forms are required for mortgage applicants. The two forms have converged somewhat over the years, but remain separate and too complicated for consumers taking out the biggest loan of their lives, consumer advocates say.
One of the bureau’s primary responsibilities is to address outdated and burdensome regulation. Republicans who opposed the creation of the CFPB contend that the agency will only create more bureaucracy that will hurt both businesses and consumers.
Democrats point to recent strategies by big banks to implement debit card fees – plans later abandoned after widespread consumer blowback. They say the bureau will help keep the banks accountable through transparency that will weed out unfair fees.
The bureau’s scope is substantial. It can write rules to protect consumers from predatory, abusive or deceptive practices by banks and non-banks that offer financial services or products, including mortgages, credit cards and payday loans. The financing arms of auto dealerships are exempt.
The bureau – which officially launched July 21 — also has the authority to examine and enforce regulations for banks and credit unions with assets of more than $10 billion; all mortgage-related businesses; and large non-bank financial companies, such as large payday lenders, debt collectors, and consumer reporting agencies.
The consumer agency will seek public input in its review of outdated regulations.
“This input will be vital to the Bureau as we seek to determine how we can make regulations more effective at achieving intended benefits for consumers while lowering costs for lenders,” Date said.
In his testimony, Date outlined the following accomplishments of the bureau in its first 100 days:
- Hired some 700 employees, many of whom transferred from existing U.S. regulators’ consumer protection divisions;
- Travelled across the country to meet and listen to consumers, consumer groups, civil rights organizations, big banks, community banks, investors and trade organizations;
- Started on-site examinations of the largest banks;
- Started consumer education campaign, taking consumer complaints and solving consumer problems.
Date is the acting head of the CFPB. President Obama has nominated Richard Cordray to head the agency, but Republicans have opposed his nomination because of their opposition to the structure of the CFPB.