Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 – Title X - Consumer Financial Protection Bureau August 2010
Transcript
Slide 1
Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 Title X - Consumer Financial Protection Bureau August
2010
Slide 2
Subtitle A Bureau of Consumer Financial Protection Becomes
effective on enactment date (July 21, 2010). 2
Slide 3
Establishment of Bureau of Consumer Financial Protection (sec.
1011) Bureau within the Federal Reserve. Led by
Presidentially-appointed, Senate-confirmed Director. Fed may not
intervene in any matter before the CFPB. Fed does not have approval
or review authority, cannot delay or prevent issuance of any rule.
3
Slide 4
Enumerated Statutes (sec. 1002) CFPB to implement Federal
consumer financial laws, including: Alternative Mortgage
Transaction Parity Act of 1982 Consumer Leasing Act of 1976
Electronic Fund Transfer Act (except sec. 920) Equal Credit
Opportunity Act Fair Credit Reporting Act (except sec. 615(e) and
628) Home Owners Protection Act of 1998 Fair Debt Collection
Practices Act Federal Deposit Insurance Act (sec. 43,subsections
b-f) Gramm-Leach-Bliley Act (sec. 502-509, except sec 505 as it
applies to sec. 501(b) Home Mortgage Disclosure Act of 1975 Home
Ownership and Equity Protection Act of 1994 Real Estate Settlement
Procedures Act of 1974 S.A.F.E. Mortgage Licensing Act of 2008
Truth in Lending Act Truth in Savings Act Omnibus Appropriations
Act, sec. 626 Interstate Land Sales Full Disclosure Act 4
Slide 5
Definition of Covered Person (sec. 1002) CFPBs jurisdiction
covers a broad array of transactions related to the sales and
marketing of credit, deposit and payment products and services,
including: Loan brokering and servicing Deposit-taking Real estate
settlement services Stored value or payment services Check cashing
Remittances Debt management and collection Credit reporting CFPB
will not have jurisdiction over: securities and commodities
activities regulated by the SEC or CFTC or insurance regulated by
the states. 5
Slide 6
Functional Units Research (sec. 1013) CFPB will research,
analyze and report on- Developments in markets for consumer
financial products or services including market areas of
alternative products/services with high growth rates and areas of
risk to consumers; Access to fair and affordable credit for
traditionally underserved communities ; Consumer awareness,
understanding and use of disclosures and communications; Consumer
awareness and understanding of costs, risks and benefits of
products or services; Consumer behavior with respect to consumer
financial products/services, including performance on mortgage
loans; Experiences of traditionally underserved consumers,
including un- banked and under-banked. 6
Slide 7
Functional Units Community Affairs (sec. 1013) Provide
information, guidance and technical assistance to traditionally
underserved consumers and communities 7
Slide 8
Functional Units Collecting and Tracking Complaints (sec. 1013)
Establish a single, toll-free number, website and database to
facilitate centralized collection of, monitoring of, and response
to consumer complaints; Coordinate with FTC, other federal agencies
to route calls; Route calls to states if practicable; Annual report
to Congress no later than 3/31 with complaint numbers, types and
resolution of complaints where applicable. 8
Slide 9
Office of Fair Lending and Equal Opportunity (sec. 1013)
(established not later than 1 year after designated transfer date)
Oversight/enforcement of federal laws to ensure fair, equitable and
nondiscriminatory access to credit, including Equal Credit
Opportunity Act and Home Mortgage Disclosure Act; Coordinate fair
lending efforts with other agencies and state regulators to promote
consistent, efficient and effective enforcement of Federal fair
lending laws; Work with private industry, fair lending, civil
rights, consumer and community advocates on promotion of fair
lending compliance and education. Annual report to Congress 9
Slide 10
Office of Financial Education (sec. 1013) (established not
later than 1 year after designated transfer date) Develop and
implement initiatives to educate and empower consumers to make
better informed financial decisions. Develop and implement a
strategy to improve consumer financial literacy that includes
measurable goals and objectives, in consultation with the Financial
Literacy and Education Commission, through activities including
providing opportunities for consumer to access: Financial
counseling Information to assist with evaluation of credit products
and the understanding of credit histories and scores Savings,
borrowing and other services at mainstream financial institutions
Prepare consumer for educational expenses/financial aid
applications and other major purchases, reduce debt, improve the
financial situation of the consumer Develop long-term savings
strategies Wealth-building and financial services to claim EITC and
federal benefits. Report to House and Senate Committees after 2
years, then annually. 10
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Office of Service Member Affairs (sec. 1013) (established not
later than 1 year after designated transfer date) Develops and
implements initiatives for service members and their families
intended to: Educate and empower service members and their families
to make better informed decisions Coordinate with complaint unit to
monitor service member complaints and responses to complaints
Coordinate efforts among federal and state agencies, as
appropriate, regarding consumer protection measures offered to or
used by service members and their families. May establish and
maintain regional offices near military bases 11
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Office of Financial Protection for Older Americans (sec. 1013)
(established before end of 180-day period after designated transfer
date) Facilitate financial literacy of age 62+ on protection from
unfair, deceptive, abusive practices and current and future
financial choices, including through dissemination of materials;
Develop goals for senior financial literacy and counseling programs
including programs that help seniors recognize warning signs of
unfair, deceptive or abusive practices; provide 1-on-1 financial
counseling on issues including long-term savings and later-life
economic security; and provide consumer credit advocacy to respond
to consumer problems caused by unfair, deceptive or abusive
practices; Monitor certifications/designations of financial
advisors, alert the SEC and state regulators of
certifications/designations identified as unfair, deceptive or
abusive; Submit legislative/regulatory recommendations to Congress
on best practices for disseminating information on legitimacy of
certifications of financial advisers who advise seniors, methods a
senior can use to identify the financial adviser most appropriate
for their needs, and to verify a financial advisers credentials;
12
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Office of Financial Protection for Older Americans, continued
(sec. 1013) (established before end of 180-day period after
designated transfer date) Conduct research to identify best
practices and effective methods, tools, technology and strategies
to educate and counsel seniors about personal finance management
with a focus on protection from unfair, deceptive and abusive
practices, long-term savings, and planning for retirement and
long-term care; Coordinate consumer protection efforts of seniors
with other Federal agencies and state regulators to promote
consistent, effective, and efficient enforcement, and Work with
community and non-profit organizations and other entities involved
with educating or assisting seniors (including the National
Education and Resource Center on Women and Retirement Planning).
13
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Consumer Advisory Board (sec. 1014) Advise and consult with the
CFPB in the exercise of its functions under the Federal consumer
financial laws and to provide information on emerging practices in
the consumer financial products or services industry, including
regional trends, concerns, and other relevant information. Experts
in consumer protection, financial services, community development,
fair lending and consumer financial products/services. 14
Slide 15
CFPB Funding (sec. 1017) Fed will transfer no more than 10% of
total operating expenses in FY 2011, 11% in FY 2012, 12% in FY 2013
and each year thereafter Amount will be adjusted annually based on
inflation. Funds are not subject to review by House or Senate
Appropriations Committees Transition Period beginning on enactment
date and until designated transfer date, Fed shall transfer the
amount estimated by the Secretary needed to carry out the
authorities granted to CFPB If CFPB Director determines more funds
are needed, Director shall submit report to President and House and
Senate Appropriations Committees If Director submits above report,
CFPB will receive $200,000,000 for each FY 2010, 2011, 2012, 2013,
and 2014 15
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Consumer Financial Civil Penalty Fund (sec. 1017) Maintained
and established at a Federal Reserve Bank. If CFPB obtains a civil
penalty against any person CFPB shall deposit the amount of penalty
collected into the Civil Penalty Fund Amounts in the Civil Penalty
Fund shall be available to the CFPB for payments to victims. If
victims cant be located, CFPB shall use funds for consumer
education and consumer literacy. 16
Slide 17
17 Subtitle B General Powers of the Bureau Becomes effective on
designated transfer date except where noted.
Slide 18
CFPB Powers ( sec 1021) Purpose implement and, where
applicable, enforce federal consumer financial law to ensure that
all consumers have access to product and services and that markets
are fair, transparent, and competitive. Objectives - Consumers
provided with timely and understandable information to make
responsible decisions ; Consumers are protected from unfair,
deceptive, or abusive acts/practices and from discrimination;
Outdated, unnecessary or unduly burdensome regulations are
regularly identified to reduce unwarranted regulatory burdens;
Federal consumer law is enforced consistently to promote fair
competition; Markets operate transparently and efficiently to
facilitate access and innovation. 18
Slide 19
CFPB Functions (sec. 1021) Conducting financial education
programs; Collecting, investigating, and responding to consumer
complaints; Collecting researching, monitoring and publishing
information relevant to functioning of markets to identify risks to
consumers and the proper functioning of such markets; Supervising
covered persons for compliance with Federal consumer financial law,
and taking appropriate enforcement action to address violations;
Issuing rules, orders, and guidance implementing Federal consumer
financial law; and Performing such support activities as necessary
or useful to facilitate the other functions of the Bureau. 19
Slide 20
Plain Vanilla Products and Services House version of the bill
prohibited the CFPB from requiring the offering of standard or
plain vanilla products or services. This provision is not in the
final bill, meaning that the CFPB could require entities to offer
plain vanilla products. 20
Slide 21
Rulemaking Standards and Monitoring (sec. 1022) (becomes
effective on date of enactment - July 21, 2010) Standards for
Rulemaking CFPB must consider: When developing rules, CFPB must
consider potential benefits and costs to consumers and industry;
impact on small banks and rural consumers. To support rulemaking
and other functions, CFPB shall monitor for risks to consumers,
including market developments for products and services In
allocating resources for monitoring, CFPB may consider - likely
risks /costs to consumers associated with buying/using a type of
financial product/service; Consumer understanding of risks of a
type of product/service; Legal protections applicable to offering
/providing a product/service, including extent to which the law is
likely to adequately protect consumers; Rates of growth in offering
/providing product/service Extent, if any, that risks of financial
product or service may disproportionately affect traditionally
underserved customers ;or Types, number and other pertinent
characteristics of entities that offer or provide the product or
service. CFPB must publish annual report of significant findings
21
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Council Veto of CFPB Rules (sec. 1023) On petition of member
agency of the Financial Stability Oversight Council, the Council
may set aside a final CFPB regulation if Council decides that the
regulation/provision would put safety and soundness of U.S. banking
system or stability of financial system at risk. Council: Treasury
Secretary, Fed Chair, Comptroller of Currency, CFPB Director, SEC
Chair, FDIC Chair, CFTC Chair, FHFA Director, NCUA Board Chair,
independent member with insurance expertise. Need 2/3 vote of the
Council to issue a stay or set aside a regulation. 22
Slide 23
Supervision of Non-banks (sec. 1024) (becomes effective on date
of enactment-July 21, 2010) Covers: Mortgage lenders, loan
modification and foreclosure relief services or Larger participant
of a market for other consumer financial products/services, to be
defined by CFPB in consultation with FTC. Entity is engaging/has
engaged in conduct that poses risks to consumers in the
offering/provision of consumer financial product/service, based on
complaints/ information from other sources; Offers or provides
private education loans; Offers or provides a payday loan. Initial
rule defining larger participate to be issued not later than 1 year
after designated transfer date. CFPB will require reports/conduct
examinations on these entities to: Assess compliance with federal
consumer finance law; Obtain information about activities and
compliance systems or procedures; and Detect and assess risks to
consumers and markets. 23
Slide 24
CFPB Non-bank Risk-Based Supervision (sec. 1024) (becomes
effective on date of enactment - July 21, 2010) CFPB will exercise
its authority based on risks posed to consumers in the relevant
product and geographic markets, taking into consideration: Asset
size Volume of transactions Risks to consumers Extent institutions
are overseen by state authorities Anything else CFPB deems relevant
24
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CFPB Non-bank Supervision/ Coordination (sec. 1024) (becomes
effective on date of enactment - July 21, 2010) Coordinate
supervision and examinations with activities of prudential
regulators and state bank regulatory agencies. CFPB will use
reports that have been provided to a federal or state agency to the
greatest extent possible. CFPB will write rules on registration
requirements for non-banks. 25
Slide 26
CFPB Non-Bank Enforcement (sec. 1024) (becomes effective on
date of enactment - July 21, 2010) CFPB has exclusive authority to
enforce federal consumer financial laws that authorize the CFPB and
another agency to provide enforcement. CFPB and FTC will negotiate
an agreement for coordinating enforcement actions 26
Slide 27
CFPB Non-Bank Rulemaking and Examination Authority (sec. 1024)
(becomes effective on date of enactment - July 21, 2010) CFPB has
exclusive authority to prescribe rules, issue guidance, conduct
examinations, require reports, or issue exemptions for non-banks to
the extent that federal law authorizes the CFPB and another federal
agency to take these actions. 27
Slide 28
CFPB Supervision of Very Large Banks, Savings Associations,
Credit Unions (sec 1025) Covers insured banks and credit unions
with total assets of >$10 billion. CFPB will have authority to
require reports and conduct examinations for purposes of: Assessing
compliance with federal consumer laws Obtaining info about
activities and compliance systems Detecting and assessing risks to
consumers and to markets for consumer financial products/services
CFPB will coordinate supervisory activities with prudential and
state bank regulators including consultation on respective
examination schedules and reporting requirements this provision is
effective on date of enactment (July 21, 2010). 28
Slide 29
CFPB Supervision of Very Large Banks, Savings Associations,
Credit Unions (sec 1025) (continued) CFPB has primary enforcement
authority for Federal consumer financial law to the extent that the
CFPB and another Federal agency are authorized to enforce a Federal
consumer financial law. Any Federal agency that is authorized to
enforce a Federal consumer financial law (except the FTC) can
recommend that the CFPB initiate an enforcement proceeding. If CFPB
does not initiate enforcement proceeding within 120 days, the
agency may initiate an enforcement proceeding. 29
Slide 30
CFPB Coverage of Smaller Banks (sec 1026) Covers insured banks
and credit unions with assets < $10 billion. CFPB, to fullest
extent possible, will use reports that have been provided to a
federal/state agency and information that has been reported
publicly. CFPB can include examiners on sampling basis of
examinations performed by prudential regulator. Prudential
regulator must provide all reports, records, documentation included
in the sample to the CFPB, involve CFPB examiner in entire process,
consider CFPB input. Prudential regulator will have exclusive
authority to enforce compliance. CFPB must notify prudential
regulator if it has reason to believe that a smaller bank or credit
union has engaged in a material violation of a federal consumer
financial law and recommend appropriate action. Prudential
regulator must provide written response to CFPB within 60 days.
30
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Limitations on Authorities of CFPB (sec. 1027) No CFPB
authority over; Merchants, retailers, sellers of non-financial
goods/services and merchant is engaged in sale/brokerage of
nonfinancial good /service. Exception for merchant engaged in
offering /providing any consumer financial product/service or
merchant is otherwise subject to any enumerated consumer law.
Merchant that extends credit directly to a consumer, but the
good/service is not a consumer financial product/service,
exclusively for enabling consumer to purchase goods/services from
merchant. Debt collection directly or through an agreement with
another person by the merchant or merchant sells/conveys debt that
is delinquent or otherwise in default. 31
Slide 32
Exemptions from CFPB (sec 1027) Merchants are excluded if they
offer credit solely for the purpose of enabling a consumer to
purchase a nonfinancial good or service. Merchants are covered if,
when they extend credit, it is: Sold or conveyed to another person,
Significantly exceeds the market value of the good or service, or
Is subject to a finance charge. If merchants offered credit just
includes a finance charge, then the merchant is excluded so long as
s/he is not engaged significantly in offering consumer financial
products or services. 32
Slide 33
Limitations on Authorities of CFPB (sec. 1027) Small Businesses
Merchant that extends credit and credit is subject to a finance
charge not covered if - Only extends credit for the sale of
nonfinancial goods/services; Retains such credit on own accounts
(except to sell or convey such debt that is delinquent or otherwise
in default); and Meets the relevant industry size threshold to be a
small business, based on annual receipts under SBA Act. 33
Slide 34
Exemptions from CFPB (sec 1027) Exclusion for: real estate
brokers/agents, manufactured and mobile home retailers, accountants
and tax preparers, lawyers, persons regulated by state insurance
regulator or state securities commission, employee benefit and
compensation plans, charitable contributions unless engaged in the
offering or provision of any consumer financial product/service or
subject to another consumer law 34
Slide 35
Usury (sec. 1027) No authority for CFPB to impose usury limit.
35
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Exclusions for Auto Dealer-Lenders (sec. 1029) No rulemaking,
supervisory, enforcement or any other authority over auto dealer
that is primarily engaged in sale and servicing of autos, including
motorcycles, boats, motor homes. FTC given the authority to write
rules under the Administrative Procedures Act on auto
dealer-lenders. Federal Reserve and FTC must coordinate with Office
of Service Member Affairs to ensure that - Service members and
their families are educated/ empowered to make better decisions
regarding consumer financial products/services offered by auto
dealers; and Service member complaints are effectively monitored
and responded to, and where appropriate, enforcement action is
pursued by authorized agencies. 36
Slide 37
Mandatory Arbitration (sec. 1028) CFPB to conduct study/report
to Congress on use of pre-dispute arbitration agreements CFPB, by
regulation, may prohibit or impose conditions/limitations on use of
mandatory pre-dispute arbitration if it is in the public interest
and protects consumers. Findings in rule must be consistent with
the study. 37
Slide 38
38 Subtitle C Specific Bureau Authorities Takes effect on
designated transfer date.
Slide 39
Prohibiting Unfair, Deceptive, Abusive Acts/Practices (sec.
1031) CFPB: authorized to take action to prevent unfair, deceptive
or abusive act or practice; may write rules identifying as
unlawful, unfair, deceptive, or abusive acts/practices. Unfairness
Act or practice causes/likely to cause substantial injury which is
not reasonably avoidable; Substantial injury not outweighed by
countervailing benefits to consumers or competition; Abusive
Materially interferes with ability of a consumer to understand a
term/condition of product/service; Takes unreasonable advantage of
- lack of understanding of risks, costs, conditions of
product/service; Inability of consumer to protect the interests of
the consumer in selecting/using product/service; Reasonable
reliance to act in the interests of the consumer. CFPB will consult
with banking and other agencies on consistency of proposed rule
with the prudential, market or systemic objectives of such
agencies. 39
Slide 40
Disclosures (sec. 1032) Regulations to ensure the features of
any product/service, both initially and over the term of the
product/service, are fully, accurately, and effectively disclosed
so that consumers understand costs, benefits, and risks. Final rule
may include a model form to be used at the option of the lender.
Model form must contain clear and conspicuous disclosure that
minimally, Uses plain language comprehensible to consumers;
Contains a clear format and design, such as an easily readable type
font; Succinctly explains the information that must be
communicated. Any model form must be validated through consumer
testing. Any covered person that uses a model form included with a
rule shall be deemed in compliance with the disclosure
requirements. Not less than 1 year after the designated transfer
date, CFPB shall propose rules and model disclosures for public
comment that combine Truth in Lending and Real Estate Settlement
Procedures Act into a single, integrated disclosure for mortgage
loan transactions, unless CFPB determines the Fed and HUD have
developed a form that fulfills the same purpose. 40
Slide 41
Consumer Rights to Access Information (sec. 1033) Subject to
CFPB rules, a covered person is required to make information
available to a consumer, upon the consumers request, relating to
any transaction, series of transactions, or account costs, charges,
and usage data. CFPB by rule shall prescribe standards applicable
to covered persons to promote the development and use of
standardized formats for information to be made available to
consumers. 41
Slide 42
Response to Consumer Complaints/Inquiries (sec. 1034) CFPB will
establish, in consultation with Federal banking agencies and FTC,
procedures to provide a timely response to consumers, in writing
where appropriate, to complaints /inquiries concerning Steps that
have been taken in response to the complaint or inquiry; Any
responses received by the CFPB from the subject of the complaint;
Any follow-up actions or planned follow-up actions in response to
the complaint or inquiry. Any subject of a complaint that is
subject to CFPB supervision and primary enforcement must provide
response to the CFPB, prudential regulator, and any other agency
with jurisdiction, concerning a consumer complaint or inquiry.
42
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Private Education Loan Ombudsman (sec. 1035) Establish Private
Education Loan Ombudsman to: Provide timely assistance to borrowers
of private education loans; Receive, review and attempt to resolve
complaints in collaboration with Dept. of Education; Compile and
analyze data on borrower complaints. Submit recommendations and
annual report to the CFPB, Dept of Education, and Congressional
committees of jurisdiction. 43
Slide 44
Prohibited Acts (sec. 1036) Unlawful to: Offer or provide
product/service not in conformity with Federal consumer financial
law or commit act or omission in violation of Federal consumer
financial law. Engage in unfair, deceptive, abusive act/practice.
44
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45 Subtitle D Preservation of State Law Effective on designated
transfer date.
Slide 46
Relation to State Law (sec. 1041) Must comply with laws,
regulations, orders, in effect in any state, except to the extent
that the law is inconsistent with this act. If the protection in
state law affords consumers greater protection than in this law,
then the law is not inconsistent. CFPB will issue NPRM when a
majority of states have enacted a resolution supporting
establishment or modification of a consumer protection regulation
by the CFPB. 46
Slide 47
Preservation of State Enforcement Powers (sec. 1042) State AG
may enforce the CFP Act generally and CFPB regulations, except as
to national banks and federal thrifts. State AGs may enforce CFPB
regulations against national banks and federal thrifts, but not the
general provisions of the Act. State regulators may enforce CFP Act
and CFPB regulations as to state-chartered entities under their
jurisdiction. Before initiating an action, state AG must provide a
copy of the complaint to the CFPB and prudential regulator, if any.
State authority to enforce enumerated statutes is status quo as
provided in those statutes. 47
Slide 48
Preemption Standard (sec. 1044) State consumer financial laws
only preempted if- Application of state law would be discriminatory
for national banks in comparison with effect on state banks State
consumer financial law is preempted by the legal standard of
Supreme Court Barnett Bank decision, in which the state consumer
financial law prevents or significantly interferes with the
exercise by the national bank of its powers. State consumer
financial law is preempted by a provision of federal law other than
this title. Any preemption determination may be made by a court or
by regulation or order of OCC on a case-by-case basis. OCC must
first consult with CFPB and take its views into account when making
a determination. 48
Slide 49
OCC Periodic Review of Preemption (sec 1044) OCC required to
conduct a review through notice and public comment, of each
determination that a provision of federal law preempts a state
consumer financial law. Conduct within 5 years after determination,
and at least once every 5 years thereafter. OCC must publish
decision to continue/ rescind/amend the determination. 49
Slide 50
Preservation of Powers Related to Charging Interest (sec 1044)
No provision of law shall alter or otherwise affect the laws for
charging interest by a national bank at the rate allowed by the
laws of the state where the bank is located. 50
Slide 51
Visitorial Powers for National Banks & Savings Associations
(sec. 1047) In accordance with Cuomo decision no provisions shall
be construed as limiting or restricting the authority of any state
AG to bring an action against a national bank to enforce applicable
law and seek relief authorized by the law. Ability of OCC to bring
an enforcement action does not preclude any private party from
enforcing rights granted under federal or state law in the courts.
51
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52 Subtitle F Transfer of Functions and Personnel; Transitional
Provisions
Slide 53
Transfer of Consumer Financial Protection Functions (sec. 1061)
Consumer financial protection functions will be transferred from
the following to the CFPB: Federal Reserve FDIC FTC NCUA OCC OTS
HUD Transfer will occur on designated transfer date or day before
depending on agency. 53
Slide 54
Designated Transfer Date (sec. 1062) Not later than 60 days
after date of enactment (7/21/10), Treasury Secretary shall, in
consultation with Fed Chair, Chairperson of the FDIC, Chair of FTC,
Chair of NCUA, Comptroller of the Currency, Director of OTS, HUD
Secretary, OMB Director, designate a single calendar date for the
transfer of functions to the CFPB Date cannot be earlier than 180
days nor later than 12 months Date can be extended by an additional
6 months if Treasury Secretary transmits to Congress Determination
that transition is not feasible within 12 months Explanation of why
extension is necessary Description of steps to be taken to effect
an orderly transition within the extended time period 54
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Interim Authority of the Secretary (sec. 1066) Treasury
Secretary is authorized to perform the functions of the Bureau
under this subtitle until the Director of the Bureau is confirmed
by the Senate. Department of the Treasury may provide
administrative services necessary to support the CFPB before the
designated transfer date. 55
Slide 56
56 Subtitle G Regulatory Improvements
Slide 57
Treasury Dept Study on Ending Conservatorship of Fannie Mae
& Freddie Mac (sec 1074) Treasury Secretary will conduct study/
develop recommendations on options for ending the conservatorship
of Fannie Mae and Freddie Mac, while minimizing costs to taxpayers,
including options such as: Gradual wind-down and liquidation
Privatization Incorporation of functions into a federal agency
Dissolution into smaller companies Any other measures determined
appropriate 57
Slide 58
Interchange Fees (sec. 1075) Interchange fees must be
reasonable and proportional to the cost incurred by the issuer for
the transaction. CFPB will issue regulations no later than 9 months
after enactment to establish standards for assessing whether
interchange fees is reasonable and proportional to the cost Any
issuer that has less than $10 billion in assets is exempt
Government-administered payment programs and reloadable prepaid
cards are exempt 58
Slide 59
Interchange Fees (sec. 1075) (continued) A payment card network
is prohibited from inhibiting a discount or in-kind incentive for
payment by the use of cash, checks, debit cards or credit cards to
the extent that Discounts or in-kind incentives for debit-card
payment on the basis of the issuer or payment card network in the
case of the use of debit or credit cards and Federal law and
applicable state law require such discount or in-kind incentive is
offered to all prospective buyers and disclosed clearly and
conspicuously. A payment card network shall not inhibit the ability
of any person to set a minimum dollar value for the acceptance by
that person of credit cards to the extent that Such minimum dollar
value does not differentiate between issuers and between payment
card networks and Such minimum dollar value does not exceed $10.00
Payment card network shall not inhibit the ability of any federal
agency or university to set a maximum dollar value for the
acceptance of credit cards, to the extent that such maximum dollar
value does not differentiate between issuers or between payment
card networks. 59
Slide 60
Reverse Mortgage Study and Regulations (sec. 1076) Not later
than 1 year after the designated transfer date, CFPB shall conduct
a study on reverse mortgage transactions. If CFPB determines
through the study that conditions or limitations on reverse
mortgage transactions are necessary to protect borrowers for
funding investments, annuities and other investment products and
the suitability of the borrower in obtaining a reverse mortgage.
The regulations may identify any practice as unfair, deceptive or
abusive in connection with a reverse mortgage transaction and
provide for an integrated disclosure standard and model disclosures
required under TILA and RESPA. 60
Slide 61
Report on Private Education Loans and Lenders (Sec. 1077) Not
later than 2 years after enactment, CFPB and Dept of Education, in
consultation with FTC and AG, shall submit a report to House and
Senate Banking and Education Committees on private education loans
and lenders. Report will examine, at a minimum Growth and changes
of private education loan market in the US; Factors influencing
such growth and changes; Extent to which students and parents rely
on private student loans to finance postsecondary education and the
private education loan indebtedness of borrowers; The
characteristics of private education loan borrowers, including,
types of institutions attended, socioeconomic characteristics
(income, education level, race, geographic background, age,
gender); Other forms of financing used; Whether federal loan
options are exhausted prior to taking out private loans; Whether
borrowers are dependent or independent students; Whether borrowers
are enrolled in program leading to a certificate, degree, BA,
graduate or professional degree; and 61
Slide 62
Report on Private Education Loans and Lenders (Sec. 1077)
(continued) If practicable, employment and repayment behaviors;
Characteristics of the lenders (for-profit, non-profit, or
universities); Underwriting criteria used by private lenders;
Terms, conditions and pricing of private education loans; Consumer
protections available, including effectiveness of current
disclosures and borrowers awareness and understanding about terms
and conditions of various financial products; Whether federal
regulators and the public have access to ensure that loans are
provided in accordance with fair lending laws and that allows
public officials to determine lender compliance with fair lending
laws; and Any statutory or legislative recommendations to improve
consumer protections for private education loans. 62
Slide 63
Study on Credit Scores (sec. 1078) CFPB will study the nature,
range and size of variations between credit scores sold to
creditors and those sold to consumers by consumer reporting
agencies that compile and maintain files on consumers on a
nationwide basis and whether such variations disadvantage
consumers. CFPB will submit the report to Congress not later than 1
year after date of enactment. 63
Slide 64
Small Business and CFPB Rules (sec. 1100G) CFPB must identify
representatives of small entities in consultation with the Small
Business Administration CFPB must collect advice and
recommendations from these representatives CFPB must conduct
regulatory flexibility analysis including Any projected increase in
cost of credit for small entities Any significant alternatives to
the rule which accomplishes the stated objectives and minimize any
increase in cost of credit for small entities Advice and
recommendations of the above representatives of small entities.
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