In December 2018, the Senate confirmed Kathy Kraninger as the new CFPB director for a five-year term. Kraninger’s confirmation followed a year of change at the CFPB. In November 2017, former Director Richard Cordray resigned from the CFPB to enter the race for Ohio governor and named his chief of staff, Leandra English, as Deputy Director. That same day, President Trump named Mick Mulvaney, then Director of the Office of Management and Budget, as the Acting Director. This sparked a lawsuit by English, which she withdrew when President Trump nominated Kraninger as CFPB director.
Under Acting Director Mulvaney, the CFPB took a different approach to rulemaking and enforcement actions than under former Director Cordray. Mulvaney aggressively pursued a number of NAFCU-supported changes at the CFPB to increase its effectiveness and transparency. Director Kraninger has indicated that she plans to take a more conciliatory approach to running the agency than her predecessor. For example, she halted Mulvaney’s effort to rebrand the agency from “CFPB” to “BCFP.” However, she plans to continue many of Mulvaney’s initiatives to promote transparency and cost-benefit analysis of burdensome regulations.
Regulatory and Legislative Priorities
NAFCU is excited to work with Director Kraninger to ensure a healthy regulatory environment in which credit unions can grow, thrive and successfully serve their membership. NAFCU has shared credit unions' concerns and priorities with Kraninger, highlighting the value of credit unions to the nation’s economy and, in particular, individuals of modest means. At a March 2019 meeting with Kraninger, NAFCU President and CEO Dan Berger discussed issues relevant to credit unions, including: implementing provisions of the NAFCU-backed Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), reporting on Home Mortgage Disclosure Act (HMDA) data, ensuring fintech competes on a level playing field with credit unions, the CFPB’s proposed changes to its Payday Rule, and compliance with the TILA/RESPA integrated disclosure (TRID) rule.
Additionally, in July 2020, NAFCU wrote to the House Financial Services Committee (HFSC) and the Senate Banking Committee preceding their semi-annual oversight hearings of the CFPB. NAFCU reiterated its support of Kraninger’s efforts to provide financial institutions with targeted relief and regulatory certainty. NAFCU has also urged Kraninger to consider keeping a modified debt-to-income ratio in regards to their qualified mortgage rulemaking and modernize the Electronic Signatures in Global and National Commerce.
In 2019, the CFPB took action on several notable rulemakings/issues, and NAFCU actively engaged to ensure credit unions’ concerns are taken into account:
- Payday Rule: The CFPB issued proposals in February to amend and delay the 2017 Payday Rule. NAFCU supported the delay of the compliance date, and the CFPB finalized the delay in June. NAFCU also commented on the proposed amendments and met with the CFPB, asking for an exemption for all iterations of the NCUA’s payday alternative loan (PAL) program.
- Home Mortgage Disclosure: In May, the CFPB issued a proposed rule to adjust collection and reporting thresholds under HMDA, as well as an advance notice of proposed rulemaking to gather information on the costs and benefits of reporting certain data points under HMDA. NAFCU wrote in support of increased thresholds. NAFCU also wrote regarding the data point proposal, recommending reducing regulatory burdens by eliminating all data points adopted pursuant to the CFPB’s discretionary authority. NAFCU reiterated its concerns in a February 2020 letter.
- Debt Collection: In May, the CFPB released a debt collection proposal and held a town hall on the issue, which NAFCU attended. NAFCU commented on the proposal in September. NAFCU also met with the CFPB in June to discuss how debt collection efforts are affected by the Telephone Consumer Protection Act (TCPA).
- QM Definition under TILA: The CFPB issued a proposal in July regarding potential revisions to the definition of qualified mortgage (QM) under the Truth in Lending Act (TILA) in light of the fact that the Temporary GSE QM loan category (“GSE Patch”) expires on January 10, 2021. NAFCU commented on the proposal, highlighting the importance of the GSE Patch to credit unions and asking the CFPB to grant an extension of the GSE Patch until revisions to the QM definition are finalized to alleviate market disruptions. In January 2020, NAFCU signed onto a joint trades letter encouraging the CFPB to maintain the debt-to-income (DTI) standard with additional compensating factors and not adopt the average prime offer rate (APOR) as its underwriting standard. In March 2020, NAFCU met with Federal Housing Administration (FHA) Commissioner Brian Montgomery to discuss CFPB’s potential move away from DTI and toward APOR. While Director Kraninger intended to release new QM guidance by May 2020, with the advent of the coronavirus, it is unclear when Director Kraninger will provide guidance.
- Remittance Rule: In April, the CFPB issued a request for information on its remittance rule, which is a positive sign for the industry. NAFCU commented, reiterating long-expressed concerns with the rule’s highly burdensome compliance costs, which has resulted in many credit unions ceasing to offer remittance transfer services due to prohibitively high costs. In December, the CFPB issued a proposed rule that would increase the safe harbor threshold. NAFCU again commented, noting the proposal is a step in the right direction.
- Overdraft Rule: In May, the CFPB issued a request for comment on the overdraft rule as part of its compliance with the Regulatory Flexibility Act. NAFCU submitted comments, voicing support for efforts to relieve burdens on credit unions and encouraging the CFPB to objectively consider the value of overdraft services to credit union members.
- UDAAP: In June, the CFPB held a symposium, which NAFCU attended, focused on clarifying “abusive” under unfair, deceptive or abusive acts or practices (UDAAP). In March 2020, NAFCU held a call with CFPB staff to discuss the "abusive" prong of UDAAP after CFPB’s January 2020 Policy Statement. NAFCU has long advocated for the CFPB to issue specific guidance on prohibited practices so that financial institutions have more clarity on this issue.
- Regulatory Flexibility Act Plan: The CFPB issued a request for comment in May to get input on how it should develop plans to conduct reviews of its rules. NAFCU commented, urging the CFPB to more frequently review significant rulemakings to identify ways to reduce burdens on small entities like credit unions.
- TRID Rule: The CFPB issued a request for comment in November regarding its plans to assess the TRID Rule, and NAFCU offered comments. NAFCU has worked to provide credit unions with greater clarity under some aspects of the rule, and recently met with the CFPB to discuss the costs and benefits of implementing the rule, as well as credit unions’ concerns and recommendations for more guidance.
In its Fall 2019 rulemaking agenda, the CFPB indicated that implementation of S. 2155, which was signed into law on May 24, 2018, remains a priority. NAFCU has made recommendations to the CFPB as to what regulatory actions should be pursued to properly implement S. 2155. NAFCU recently met with CFPB staff to discuss the implementation of S. 2155 and share credit union concerns about various provisions of the new law.