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Senate Confirms Cordray to head Consumer Financial Protection Bureau
The Washington Post (07/16/13) Lam, Kevin

The Senate confirmed Richard Cordray as Director of the Consumer Financial Protection Bureau (CFPB) for a five-year term, after a deal brokered by Senate Majority Leader Harry Reid and Sen. John McCain (R-AZ) brokered a deal to avoid Reid using the nuclear option. The threatened plan would have removed the ability of the minority to filibuster presidential nominations, requiring only a simple majority for approval as opposed to the usual 60 votes.

A bipartisan group of senators voted 66-34 to confirm Cordray, highlighting that the issues Congressional Republicans had with Director Cordray where with the structure of the CFPB itself and not with the man. Still, Congressional Republicans said following the vote to confirm Cordray that they will continue to push for structural changes to the agency. “Those who are trying to portray Republican demands as being another attempt to water down consumer protection need to realize that consumer protection divested from safety and soundness does not make for a better financial system or greater benefit to consumers,” said Senator Mike Crapo (R-ID). Republicans have pushed for the agency to be led by a commission instead of a single director and to have its funding fall under the oversight of Congress.

“Questions remain about several Bureau practices — such as the methodology it uses to determine discrimination through disparate impact and the scope and purpose of its vast collection of consumer account information,” said Chris Stinebert, president and chief executive of American Financial Services Association.

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AFSA News
Warren Discusses CFPB, Director, on Anniversary of Bureau

AFSA staff attended a Capitol Hill policy forum entitled “Examining the Impact of the CFPB” on July 17 held to mark the second anniversary of the creation of the Consumer Financial Protection Bureau (CFPB). The event also coincided with the confirmation of CFPB Director Richard Cordray by the U.S. Senate the day before, which pervaded keynote speaker Sen. Elizabeth Warren’s remarks. She noted that this week in the history of country if a monumental one, as the consumers of the United States prevailed over the big banks and special interests. “This is the week that the CFPB is here to stay. We’re counting on this agency. It’s a true David and Goliath story.”

Senator Warren also highlighted the many areas where the agency has already written and issued rules as it continues its implementation of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Warren noted that when she set out to find a solution to a broken financial services system, she thought it should and could be done without government. Eventually, however, she found that the damage was so great in both the financial system and the current regulatory structure that an entire new, independent enforcement body had to be erected to deal with the systemic issues in the financial system.

AFSA Executive Vice President Bill Himpler clarified AFSA’s position on the CFPB in a July 17 interview with Fox News Radio.  “What we’d like to see is hard data from the bureau to demonstrate where the fire is that they’re trying to put out,” Himpler said. AFSA continues to have constructive conversations with both Director Cordray and the bureau and will continue working to ensure access to credit for consumers.

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Recent Vehicle Titling & Lien Release Issues Highlighted in Newest AFSA White Paper

On July 15, AFSA released a white paper on recent state developments in issuing and releasing liens and titles on motor vehicles, including Electronic Lien and Title (ELT), electronic titling, and other lien and titling issues, such as New York’s new lien release law. At least twenty-five states have implemented mandatory or voluntary ELT programs, have efforts underway to do so, or do not use paper titles. The paper provides an overview of states that have implemented or are considering these programs and outlines their benefits to states, lienholders, and consumers, including increased efficiency, improved data accuracy, lower costs and reduced fraud in the vehicle titling and lien release process. It also summarizes legislation in the 2012-2013 session relating to ELT, electronic titling and/or lien notification. State legislation and regulations with provisions affecting motor vehicle lien release are also discussed in the paper, including a summary of New York’s new law allowing the release of a lienholder’s security interest in a motor vehicle without the involvement of the lienholder, and the law’s potentially negative consequences, such as the possibility of inappropriate lien releases.

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Inside the Beltway
GAO to Investigate CFPB Data Collection
PoliticoPro (07/18/13) Cirilli, Kevin

The Government Accountability Office (GAO) has announced that it will investigate the Consumer Financial Protection Bureau’s (CFPB) massive data collection effort after a request from Senator Mike Crapo (R-ID), who serves as the ranking member of the Senate Banking Committee.

The CFPB has been collecting troves of user data from several different markets, including credit cards, mortgages, banking, personal loans and student loans. Senator Crapo requested the investigation in a letter on July 2. The GAO replied via letter early Thursday morning.

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CFPB Finalizes Changes to Mortgage Rules
American Banker (07/12/13) Witkowski, Rachel

The Consumer Financial Protection Bureau (CFPB) issued final clarifications to its ability-to-repay and mortgage servicing rules on July 10. The rules, which were first proposed in April, clarify what lenders can use to calculate a borrower’s debt-to-income ratio and what loans fall under the protection of the qualified mortgage rule. "We know that effective implementation helps our rules deliver their intended value to consumers," said CFPB Director Richard Cordray. "We are listening closely to feedback on our rules, and today's clarifications show our willingness to make appropriate adjustments to achieve that goal."

The agency made a number of items clear in its finalized rules, including that servicers who primarily deal with charitable mortgages will not be considered under servicing rules and that the Real Estate Settlement Procedures Act does not preempt state legislation.

On the ability-to-repay front, the CFPB announced that the final rule concerning the debt-to-income ratio would take into account other forms of income, such as businesses. The agency also revealed that it plans to announce the first wave of examination processes for the ability-to-repay rule soon.

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Housing Plan Must Be Clear About Government's Role says Bernanke
American Banker (07/17/13) Borak, Donna

Housing finance reform has been a hot topic on Capitol Hill for the past several weeks and the attitude was no different on Wednesday, as Federal Reserve Board Chairman Ben Bernanke testified before the House Financial Services committee. Bernanke, who has a second hearing on Thursday with the Senate Banking Committee, was asked his opinion on the many draft bills circulating the Capitol, which would change the mortgage marketplace permanently. The Fed chairman refused to endorse any of the bills, but made it clear whatever route legislators choose to take must make explicitly clear to the private sector what role the government will play in backstopping loans, if any.

"If the government does play a role then it should be fairly compensated," said Bernanke. "Instead of having an implicit guarantee that it ended up having to make good on, like the [Federal Deposit Insurance Corp.] or some other similar institution it should receive some kind of insurance premium." Debate has centered on how to reform mortgage giants Fannie Mae and Freddie Mac which remain in government conservatorship. House Republicans, led by Financial Services Committee Chairman Jeb Hensarling (R-TX) have put forth a plan that would put the government out of the mortgage business entirely. The bill would unwind Fannie and Freddie in five years, would reduce the portfolios of the two companies by 15 percent annually and would create a new National Mortgage Market Utility.

Democrats have argued that the plan would make mortgages more expensive and essentially do away with the 30-year fixed rate mortgage. Either way, Mr. Bernanke in his testimony on Wednesday, noted that there is no question the government must take several steps back from its current position. "Everyone agrees that one of the key questions is what role, if any, the government should play," said Bernanke. "It seems pretty clear that the private sector should be playing more of a role than it is now."

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Warren, McCain Push for Return of Glass-Steagall
American Banker (07/12/13) Borak, Donna

U.S. Senators introduced a bill last week that would reinstate the Glass-Steagall Act, which separated traditional banking activities – deposits backed by the Federal Deposit Insurance Corporation (FDIC) – from other activities that are viewed as riskier. These activities include investment banking, insurance, swaps and hedge funds. Senators Elizabeth Warren (D-MA), John McCain (R-AZ), Maria Cantwell (D-WA) and Angus King (I-ME) introduced the bill because it would help minimize the likelihood that “too big to fail” banks would require future bailouts.

"The four biggest banks are now 30 percent larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices," Warren said during a Senate Banking Committee hearing on Dodd-Frank. The Glass-Steagall Act was repealed as part of the Gramm-Leach-Bliley Act in 1999.

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National and State News
U.S. Economy Looks Weaker after Subpar Retail Sales
Associated Press (07/15/13) Crutsinger, Martin

Highlighted by lower than expected retail spending in June, a July 13th report showed that the U.S. economy appears to be weaker than many economists first thought. Economists surmise that the sluggish retail sales could slow economic growth to an annual rate below 1 percent, which is far lower than the 1.8 percent expected.

Americans bought far more cars, trucks, furniture and clothes, but refused to buy in almost every other sector, including restaurants, bars, home improvement stores and computer electronics, which tend to be strong sectors. Despite the tepid growth, economists expect a second half growth rate of about 2.5 percent.

The general decline is explained, according to many economists, by an increase in the Social Security taxes that took effect at the beginning of the year. The most encouraging sign, though, is that what money American do have they tend to spend purchasing new cars and trucks, the rate of which rose by about 1.8 percent since November. Wider availability of credit and well-designed vehicles has led to greater demand.

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Nixon Lets Bill Eliminating Foreclosure Mediation Programs Go into Effect
St. Louis Beacon (07/12/13) Rosenbaum, Jason

Missouri HB 446 and 211 were allowed to go into effect without Governor Jay Nixon’s signature. Both bills will essentially eliminate foreclosure mediation requirements in both the city of St. Louis and St. Louis County that would have required lenders to pay for the mediation.

Proponents of the legislation were thrilled to learn that the governor had chosen not to veto the legislation and legislators who supported it – Representative Stanley Cox and House Majority Leader John Diehl – noted that the city and county ordinances could have added another burdensome layer of regulation and cost for banks.

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People
CFPB Replaces Chief of Staff, COO, Promotes from Within
PoliticoPro (07/15/13) Davidson, Kate

The Consumer Financial Protection Bureau (CFPB), which has dealt with a number of its high caliber officials leaving the agency of late, has replaced both its chief of staff and chief operating officer. Christopher D’Angelo has replaced Garry Reeder in the chief of staff role. Reeder left in May to join a consulting firm started by former Deputy Director Raj Date. D’Angelo began his tenure as a senior advisor to Director Cordray.

The bureau also filled the vacancy left by Victor Prince, who also left the CFPB and his COO position in May, with Sartaj Alag, who helped oversee the launch of the CFPB’s Office of Consumer Response. Laurie Maggiano has been named to head up the CFPB’s program for mortgage servicing and securitization – she moves from Treasury and replaces Chris Haspell, who also left for Raj Date’s firm. Nora Dowd Eisenhower has joined the bureau from the National Council on Aging as the head of the Office for Older Americans, replacing Skip Humphrey.

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July 18, 2013

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About
AFSA Newsbriefs


AFSA Newsbriefs is a weekly executive summary of AFSA initiatives and consumer credit articles. AFSA Newsbriefs is free for members. Send an email to newsbriefs@afsamail.org to subscribe.

AFSA's mission is to protect and improve the consumer credit business, maintain a positive public image, and create a legislative climate in which reasonable credit regulation can and will be enacted. The association operates in the public interest, encourages and maintains ethical business practices, supports financial education for consumers of all ages, and provides other assistance in related fields on an as-needed basis.

The American Financial Services Association has provided services to its members for over ninety years. The association's officers, board, and staff are dedicated to continuing this impressive legacy of commitment through the addition of new members and programs, and increasing the quality of existing services.