Following Richard Cordray’s announcement that he will leave the Consumer Financial Protection Bureau (CFPB) this month, the Republican administration is eyeing Mick Mulvaney to replace Cordray’s position on an interim basis. With this possibility, experts expect that the appointment can create changes in the direction of the bureau before a permanent successor is named.
“A new director is likely going to want to understand what is going on and to change course,” supports former CFPB deputy enforcement director Ori Lev. “The first thing that a new director is going to want to do is to get a lay of the land and the kinds of issues that are the most imminent in the enforcement realm.”
Here’s an overview of what analysts predict could be the pivot points for these changes:
Easing back enforcements
Cordray’s stint in the CFPB has been widely criticized for engaging in regulation by enforcement. Lawsuits have been filed against lenders and debt collectors for failing to disclose some overdraft policies.
Experts suggest that a new director could look at the current situation and reevaluate the need to close some matters, perhaps drop some outstanding litigations or refer them to supervision.
Rolling back on enforcement would, however, entail coming up with a resolution with the CFPB’s newly appointed enforcement director Kristen Donoghue.
Revisiting the qualified mortgage rule
The Trump administration already previously hinted about examining the legislative reform placed after the crisis in 2008. Under the qualified mortgage rule, lenders have to ensure that their borrowers have the capacity to repay the loan they owe. This requires some traditional documentations that are not always plausible for a) individuals with unconventional sources of income, b) the self-employed, and c) those who have bad credit, among others.
Easing the qualified mortgage rule will expand credit to more segments of the borrower market, an event that is subject to much debate and arguments.
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Delay rule implementations
With newly formed rules on the pipeline, a new director could delay the effectivity of implementation to give more time for the examination of said rules, especially those deemed controversial. These potential delays could, however, take a while owing to the possible resistance within the bureau.
One of the rules projected by experts to be delayed (again) is the payday lending rule which was already previously postponed by Cordray in order to give industry participants more time to comply with the new set of rules. Another is a 2013 bulletin that concerns banks and discrimination against minorities.
End public disclosure of consumer complaints
Lenders think that the CFPB’s transparency practices should be revamped by the new director. By current SOP, the bureau publishes complaints that they receive after a response has been made or after 15 days. But lenders are concerned that because the public’s resentments and objections are not always necessarily accurate, they can influence the behavior and perspective of other consumers.
The lenders raise the issue of fairness, saying that most of the time, they have no knowledge of the complaints until they show up in the database or after it’s been made public. They hope that the measure receives a revision from the new director.