I recently returned from the annual training event at which over 900 consumer lawyers shared their successes and challenges and were brought up to date on the latest rules, court cases, and public policy issues in the world of consumer protection.
One thing that stood out for me at this year’s conference was the prominent mention of the activities of the Consumer Financial Protection Bureau. The CFPB, of course, was created by the Dodd-Frank financial reform law in the wake of the mortgage foreclosure crisis back in 2010. From the popular media, most of what I remember hearing about it was the knock-down-drag-out fight to get the Senate to stop filibustering the appointment of its executive director, Richard Cordray. Mr. Cordray was finally confirmed just four months ago.
So I was somewhat surprised to learn that while that high-profile fight was going on, the CFPB hit the ground running, and has already achieved major successes on behalf of consumers. Here are just a few of them:
Rule-making: There is no higher calling than to stop the predatory lending and oppressive servicing practices affecting home mortgage lending. New rules take effect in January that will, among other things, require mortgage servicers to explore modification and other loss mitigation options before beginning to foreclose; make monthly mortgage statements more informative to customers; and require prompter payoff statements. Another set of rules strengthens lenders’ obligation to document that they are not writing mortgages that the borrower will obviously be unable to repay.
Enforcement: The CFPB has made lenders refund $750 million in overcharges to almost 8 million consumers in mortgage settlements. Other settlements have returned overcharges in credit card payments and payday loans. All lenders are now on notice that inspection of their operations may also lead to disgorgement of ill-gotten gains.
Education: The CFPB set up special units for populations targeted for specific kinds of fraud and abuse, including older Americans, members of the armed forces, immigrants, and college students. One area of emphasis is consumer education. The Office of Military Affairs, headed by Holly Petraeus, has visited 66 military bases and completely reorganized the training given to young enlistees so that they can avoid high-cost car loans and payday loans. The Office of Older Americans publishes easy-to-read fact sheets on such topics as the responsibilities of representative payees and other fiduciaries. The student financial aid “shopping sheet” adopted by many colleges enables students to make intelligent comparisons of actual costs to attend these institutions. A recent fact sheet targeted at immigrants summarizes the rules on remittances or wire transfers abroad and notes that there is a special CFPB phone line offering translation into more than 180 languages.
Investigations: The CFPB holds hearings around the country at which all stakeholders can testify. One issue under investigation now is whether car dealers discriminate against customers on the basis or race or national origin in marking up the interest rate for dealer-arranged financing. Another pending investigation explores whether disclosure rules are needed for credit card “rewards” programs to prevent confusing and misleading customers.
Web site: While the talking heads fume over the woes of the launch of healthcare.gov, the CFPB’s site is a roaring success. According to Melissa Threadgill, a student at the Harvard Kennedy School of Government, the CFPB solved the problem of recruiting top-notch IT staff on a government salary by offering two-year fellowships to talented private-sector web developers. The results can be seen at consumerfinance.gov: a visually inviting, easy-to-navigate site (active in English and Spanish), with links to post a complaint, offer a personal story, view infographics summarizing the data accumulated by the Bureau, and participate in rule-making proceedings. A separate drop-down menu leads to the technical information needed for industry lawyers for compliance with the rules. And the logo, a stylized searchlight, symbolizing the bureau’s mission, is downright lovely.
Check out your federal government doing its job at consumerfinance.gov.