As former director Cordray left the CFPB last week he named an acting director to minimize operational disruption in his words; the White House on the other hand thinks he meant to provoke a response from the administration; the agency now is broiled in confusion over who is the true interim leader as the White House appointed their own interim leader; Mr. Cordray is working off of language in the Dodd-Frank Act to appoint a successor, while the White House is acting on the Federal Vacancies Reform Act that gives the President authority to appoint interim leaders; each leader will have a different mandate and the confusion will need to be cleared up soon. Source.
News of CFPB Director Cordray’s departure could see regulations on payday lenders lessened; one of Director Corday’s main missions was to crack down on predatory lenders; Director Cordray plans to leave at the end of the months and no long term successor has been chosen yet. Source.
The CFPB asked for more details on which companies consumers use to obtain a free credit score; the agency is looking to help consumers better understand their credit scores and how to potentially improve them; they also want to understand how behavior changes after seeing a free credit score; comments are due by February 12, 2018. Source.
Alexandra Villarreal O’Rourke from McGuireWoods discusses Project Catalyst and the no-action letter program from the CFPB in a Let’s Talk Payments interview; the first no-action letter was issued to Upstart, a consumer lender in the US. Source
This month the CFPB announced a new rule aimed at payday lenders to prevent debt traps; Lend Academy outlines the new rules put in place and shares perspectives from several organizations in the short term loan space. Source
Some fintech companies have stated that banks are not following through on the data sharing guidance set forth by the CFPB; banks on the other hand have said they are following through and sharing data with fintechs; the biggest complaint thus far is that banks are being selective and not granting access widely; banks have more complicated systems and multiple levels of compliance which could end a relationship before it begins; some ideas for better cooperation are for banks to design a set of standards as banks in the UK have done. Source.
The first head of the CFPB has decided to step down at the end of the month without giving a formal reason; the bureau was established in the wake of the financial crisis in 2011; Mr. Cordray sent an email to all CFPB staff saying he thought the agency made a lasting difference to improve people’s lives and that new leadership will preserve what they have done; he is rumored to be interested in running for Governor of Ohio in 2018. Source.
Writing an opinion piece in American Banker Jonah Crane, a fintech advisor, points out that the CFPB and other regulators need to keep a watchful eye on the data sharing guidance; the rules are currently non binding but offer the regulators a chance to use current oversight power to enforce egregious violations; ensuring a level playing field and working with industry players can help not only consumers but regulators better understand how data sharing can be done is the most beneficial way. Source.
The CFPB has laid out principles around the sharing of data between banks and fintechs; while the principles are non binding they are meant to provide guidance on the level of information sharing when a customer grants access to their banking details to a third party; there are still a few points of contention around screen scraping, informed consent and accountability when issues arise. Source.
On October 5, 2017 the Consumer Financial Protection Bureau announced a new rule aimed to protect consumers against payday loan...