In a speech at the Money 20/20 conference in Las Vegas, the head of the CFPB said he was troubled by banks who would shut off access to third-party data providers and believes consumers should have access to their data; though the agency declined to comment on the possibility of a new rule, they did make it clear that consumers should be the ones who decide when and who should have access to their data; this puts banks in a tough position as they work to comply with the current regulations and burgeoning fintech market that has given consumers a variety of technology options to use their personal data. Source
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.
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 Consumer Financial Protection Bureau (CFPB) has released a report on financial innovation; the report entitled “Project Catalyst Report: Promoting Consumer Friendly Innovation” is an effort from the CFPB to expand its knowledge and inform consumers on the benefits of financial innovation. One specific approaches reflected upon is the CFPB's "Trial Disclosure Waiver Policy" to test and revise disclosure statements in a controlled environment, and no-action letters. Source
The Consumer Financial Protection Bureau was approved to investigate the activities of Indian tribe lenders; the online lenders under investigation will be Great Plains Lending, MobiLoans and Plain Green; the lenders are providing credit to a range of borrowers outside of their Indian tribes; they are claiming sovereign immunity because of their status as Indian tribes. 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.
In October, CFPB Director Richard Cordray warned banks not to limit access to financial data by third parties working on behalf of the customer; now the bureau he leads is opening an inquiry into a data sharing dispute between banks and fintech companies; the inquiry is focused on consumer choice, security and control; the CFPB believes this will help banks and fintech companies better understand what the customer needs, how to accurately give the customer choice and security, and who ultimately owns the customer's data. Source
This weeks PeerIQ Weekly Industry Update covers the power struggle at the CFPB and Lending Club’s new pass through security transaction; a federal judge sided with the Trump administration in the CFPB spat and allowed for Mr. Mulvaney to run the agency for now; Lending Club completed a first of it’s kind deal and in turn will help them to expand the market, lower financing costs, address secondary market liquidity and allows valuation agents to calibrate pricing; PeerIQ also took a deep dive on mortgage delinquencies during the 2008 financial crisis. 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.
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.