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On July 21 the new Consumer Financial Protection Bureau (CFPB) officially takes over enforcement of the existing federal consumer protection regulations (Regs DD, E, Z and RESPA, FCRA, etc.) from other federal agencies. But the standoff on appointing a new director continues as the Administration and Senate stand on opposite sides of a confirmation battle. The administrations choice Elizabeth Warren busily constructing the bureau while Senate Republicans vowing that she will never be confirmed. So what do banks do in the meantime?
In January, the Fed and Treasury Department weighed in with their interpretation of the Bureau’s authority assuming it lacks a director by July 21. It was their opinion that the CFPB, even without a director, will be able to carry out all existing powers and authorities under the rules it inherits from the other agencies.
However, the Dodd-Frank Act does not give a leaderless CFPB the authority to enforce any of its new powers. The Bureau may not issue rules and require disclosures to ensure that consumer financial products are fair, accurate and effectively disclosed. It also may not take any steps to prohibit unfair, deceptive, or abusive acts or practices (under UDAAP) in connection with consumer financial products and services.
Circling back to what all this means for bankers, we can say this: when it comes to day-to-day compliance efforts, clearly you can’t ignore any new rules the CFPB finalizes. On the other hand, you can count on vigorous debate and likely litigation over whether the Bureau can rightfully and lawfully finalize any regulatory amendments that impose new requirements on financial institutions.
For more details read the story in Banking Strategies: