July 30, 2020

Kraninger addresses several CU issues at hearing; NAFCU reiterates priorities to House committee

Capitol HillCFPB Director Kathy Kraninger will testify before the House Financial Services Committee (HFSC) today, following yesterday's testimony before the Senate Banking Committee. Ahead of today’s hearing, NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the committee to again voice credit unions' perspective on CFPB issues impacting the industry, including its qualified mortgage (QM) rule, leadership structure, and more.

During her testimony before the Senate Banking Committee, Kraninger noted that the CFPB is taking steps to make changes in the financial system for minorities to have equal opportunities and pointed to the 70 blogs and videos issued by the CFPB to expand outreach to consumers and provide valuable information about their rights in the marketplace.

Read Kraninger’s prepared testimony here.

When questioned by Sen. Bob Menendez, D-N.J., on what the CFPB was doing to ensure that minority homeowners were taking advantage of mortgage forbearance and loan modification options, Kraninger said the CFPB is making sure servicers are held to the requirements brought on by the CARES Act and that the bureau has worked on prepared scripts with servicers to ensure borrowers have clear information about their rights.

On data privacy, Kraninger was questioned about nontraditional financial services providers and how the bureau is aggregating data from financial institution websites after authorization from the customer by Sen. Jerry Moran, R-Kan. Moran also noted that Section 1033 of the Dodd-Frank Act ensures consumers have access to their data, and questioned the bureau’s rulemaking process on data privacy.

Kraninger responded and noted that Section 1033 expressed that consumers should have the ability to authorize access, and that the CFPB has principles that remain true today but are moving forward toward the possibility of a rulemaking on this “challenging area.”

On QM, Sen. Mark Warner, D-Va., asked Kraninger how the bureau will make sure responsible credit is available for low income communities and gig workers, to which she replied that the CFPB is looking at what verification and consideration of debt and income will look like for those types of workers and what standards that stakeholders in the industry can agree on.

In addition, Kraninger noted that the bureau is aiming to get a new feedback mechanism that would allow financial institutions to provide feedback on their exams in place in the fall.

In the letter, sent to Chairwoman Maxine Waters, D-Calif., Ranking Member Patrick McHenry, R-N.C., and committee members ahead of today's hearing, Thaler reiterated NAFCU’s call to discourage the CFPB from pursuing a QM definition that uses the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) as a proxy for underwriting requirements, in light of the expiration of the government-sponsored enterprise (GSE) patch and the CFPB’s subsequent ongoing rulemaking to revise the definition of a QM under the ability-to-repay/QM rule.

Thaler also called for modernizing provisions in the Electronic Signatures in Global and National Commerce (E-SIGN) Act. The NAFCU-backed E-SIGN Modernization Act, S. 4159 aims to streamline how consumers consent to receiving electronic documents and will help credit unions better meet the needs of members, while respecting social distancing requirements.

In addition, Thaler noted NAFCU’s long held position that the CFPB's leadership structure should be reformed to a commission-based model to ensure transparency and accountability and the association’s continued support of legislative efforts to do so.

NAFCU will monitor the hearing, slated to begin at 12:30 p.m. Eastern. The hearing will be available via livestream.