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The CFPB's recent guidance on so-called "unfair" bank fees has created legal turmoil for banks and financial firms after the White House claimed the bureau's actions were settled law.
The Consumer Financial Protection Bureau's revocation of a Trump-era policy on abusive practices could mean higher fines and penalties for violators. But it still isn't clear what makes a practice abusive.
A recent statement by acting Director Dave Uejio is the clearest signal that the agency plans to revive strong underwriting standards that the Trump administration eliminated.
The agency's new leadership, which has already unwound numerous actions from the prior administration, said the January 2020 guidance implementing criteria for punishing firms that mistreat customers was “inconsistent with the bureau’s duty to enforce Congress’s standard.”
A proposal to expand consumer protections in the state was added to a budget bill after being dropped in June. Financial institutions say the measure conflicts with federal law and are working behind the scenes to stop it.
Think Finance, which had teamed with tribal lenders to offer high interest installment loans, could no longer make or collect on loans in states that have caps on interest rates, under terms of a proposed settlement with the Consumer Financial Protection Bureau.
In the past, the agency cited the legal term in enforcement actions without stating what it meant, but Director Kathy Kraninger has sought to give the industry clearer guidance.
It should offer some form of guidance to spur innovation, a former official with the bureau says.
The agency announced the series in April as an effort to encourage public dialogue on policy issues.
The AGs say the agency's plan to rescind ability-to-repay requirements for payday loans would undermine states' ability to enforce their own laws.
The official told lawmakers Thursday that the research underlying the bureau's 2017 payday rule proposal did not support strict underwriting requirements of small-dollar loans.
A panel of federal judges determined that Think Finance and an online tribal payday lender must comply with state interest rate and licensing laws.
The proposed rollback of underwriting requirements for small-dollar lenders could redefine a legal doctrine that governs rules affecting other companies as well.
In a major victory for small-dollar lenders, the agency plans to rescind underwriting requirements that were the centerpiece of the rule drafted by a Democratic appointee.
Acting Consumer Financial Protection Bureau Director Mick Mulvaney announced a trio of significant changes to the CFPB.
Under Richard Cordray, the consumer bureau had questioned whether affiliations between small-dollar lenders and sovereign tribes are exempt from state laws, but observers say the agency’s acting chief has signaled a more welcoming approach.
The lawsuit against Navient Corp. demonstrates that despite the recent appointment of more industry-friendly regulators in Washington, financial services companies still face significant legal threats from state capitals.
