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CFPB receives authority without a director in place

The Consumer Financial Protection Bureau (CFPB) officially received authority to oversee and enforce 18 consumer protection laws on July 21. Promptly thereafter, President Obama nominated former Ohio Attorney General Richard Cordray to be the first director of the CFPB, ending speculation about whether he would nominate Harvard Professor Elizabeth Warren. However, Cordray’s confirmation by the Senate seems uncertain until structural changes to the CFPB’s authority and accountability are in place.

This means that without an official director in place, the CFPB can enforce the laws already on the books but may be limited in writing new rules or in supervising nonbank entities. Nonetheless, the new bureau is expected to move forward with an aggressive and broad agenda as it exercises oversight of financial institutions and the financial products and services they offer. One of the CFPB’s first steps was to release a preliminary report on the differences between credit scores provided to consumers and those that are provided to lenders. The report provides background on the issue, including how scores are obtained and used, as well as any potential harms to consumers that may arise from variations in scoring models. The CFPB plans to conduct further research and analysis on this issue over the next year and issue a report quantifying the differences among scores and how and whether these differences affect consumers. In addition, the CFPB has signaled that it intends to work to shorten and simplify mortgage disclosure forms, and it has released three draft mortgage disclosure forms and sought public comment on its Website.

As Congress continues to consider the confirmation of a director or alteration of the CFPB’s structure, it will be important to continue to monitor the studies and draft rule proposals that the new regulator engages in to learn what areas it intends to focus on.


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