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CFPB Calls off Consumer Complaint Portal Agreement Proposal
The Consumer Financial Protection Bureau (CFPB) has decided not to proceed with a proposed Company Portal Services Agreement, which would have required companies registered with the CFPB’s Consumer Complaint Portal to get prior authorization from the Bureau before sharing the consumer’s complaint data in the portal with third parties. The agreement would have slowed down interactions between companies registered in the portal and third parties, such as state regulators during state audits, and third-party litigation. In addition, the industry did not see a need for an agreement as they are already required under the Graham-Leach-Bliley Act to protect the consumer’s personally identifiable information. AFSA communicated its serious concerns to the CFPB about the agreement both in writing and in-person, and has been closely tracking this issue for several months. Although the CFPB is not proceeding with the agreement approach, they stated they will continue to work on this issue. AFSA will continue to track any movement by the CFPB with regards to its Complaint Portal and Complaint Data.
For more information, please contact AFSA Director of Operations Compliance Alejandra Krasnow at [email protected].
Dos and Doníts Highlighted in AFSA Ancillary Products Webinar
The latest webinar in AFSA’s Compliance Outlook series had a high level of participation and is a valuable resource for AFSA members that offer ancillary products to its customers. More than 150 AFSA member company executives attended the association’s July 16th Compliance Outlook: Ancillary Products webinar sponsored by Experian.
AFSA Comments on Amendments to Annual Privacy Notice Requirements
Citigroup Settles Mortgage Inquiry for $7 BillionNew York Times (07/14/14) Corkery, Michael
On July 14, Citigroup agreed to a $7 billion settlement with the U.S. Department of Justice over mortgage securities it packaged before, during and after the financial crisis. The deal involves the largest cash penalty – $4 billion – ever paid to settle a federal inquiry.
The deal also includes $180 million to build affordable housing, $2.5 billion for the financing of rental housing, mortgage modifications, down payment assistance and donations to legal aid groups and about $208 million to the Federal Deposit Insurance Corporation. The deal involves several states, including California, Illinois, Massachusetts, New York and Delaware, which will receive a total of $291 million. The deal forgoes potential cases against Citi for collateralized debt obligations.
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Op-Ed: Congress Needs to Choke Off Operation Choke PointThe Hill (07/14/14) Isaac, William M.
“Operation Choke Point is one of the most dangerous programs I have experienced in my 45 years as a bank regulator, attorney and consultant,” said William Isaac, former chairman of the Federal Deposit Insurance Corporation and senior managing director and global head of Financial Institutions at FTI Consulting, in this opinion piece. Unelected officials, who have no legal authority, are discouraging banks from providing basic banking services. Working in concert with a variety of federal agencies, the Department of Justice (DOJ) launched Choke Point in 2013 to sensitize the banking industry to the risk of doing business with “legal but undesirable businesses,” according to a House Oversight and Reform Committee report.
These businesses are highlighted by the DOJ as ammunition dealers, producers of adult films, check cashers, short-term unsecured loans (commonly called “payday loans”), telemarketers, firearms/fireworks vendors, raffles, pharmaceutical firms, life-time guarantees, surveillance equipment firms, and home-based charities. Operation Choke Point is, in its very nature, unfair to the banks and legal businesses it is attempting to cut off, Isaac stated. The Department of Justice claims that it is only interested in cutting of fraudulent behavior, but instead of going after criminals, they are targeting legitimate businesses.
The House Committee on Financial Services is holding a subcommittee hearing on Operation Choke Point and H.R. 4986, the End Operation Choke Point Act of 2014. This bipartisan proposal has several provisions that would stop the DOJ from skirting the law. The bill is an extremely important step in reining in government agencies that are greatly overstepping their authority and breaching the constitution.
Lyft Delays New York City Start as Judge Keeps Status QuoBloomberg (07/15/14) Larson, Erik
Lyft, which uses smartphones to allow consumers to hail a ride, has agreed to postpone its start of service in New York City in order to avoid a court-ordered shut down by the state. Uber Technologies is vying for business in the city as well. State officials argue that Lyft is failing to comply with state and local regulations as well as insurance laws, according to a July 11 court complaint. The complaint stated that Lyft does not require drivers to have commercial driver’s licenses, go through safety inspections and drug screenings or take driving courses that are required of normal taxi drivers.
Lyft previously agreed to use only commercially licensed drivers and vehicles. The complaint was originally filed by New York Department of Financial Services Superintendent Benjamin Lawsky, who oversees insurers in the state.
Lynn Proceeding as Usual with Foreclosure OrdinanceThe Daily Item (07/15/14) Stevens, Chris
Seven banks have joined together to ask the U.S. District Court in Worcester to declare the foreclosure ordinances in both Worcester and Lynn unconstitutional. The town of Lynn, however, is continuing with business as usual, as it waits to receive an injunction from the court. The ordinance, which was approved in 2013, requires banks to reach out to property owners and provide mediation services before initiating foreclosure proceedings.
Wells Fargo's Architect of Credit-Card, Auto Expansion to RetireWells Fargo's Architect of Credit-Card, Auto Expansion to Retire (07/16/14)
Tom Wolfe, who joined Wells Fargo in 2008 after it purchased Wachovia, will leave the bank later in 2014 according to a memo released yesterday by Avid Modjtabai, Wells Fargo head of consumer affairs. Wolfe currently oversees Wells’ credit card and auto lending businesses and has been instrumental in growing the two marketspaces since his arrival. Wolfe’s duties will be split by Dawn Martin Harp and another executive yet to be named. Harp will expand her responsibilities within auto dealer services.
"Tom has been instrumental in building our market leadership position in the auto lending business and has used his 31 years of industry experience to successfully integrate our consumer-credit businesses," Modjtabai said. Wolfe led several key initiatives during his time with both Wachovia and Wells Fargo, including developing relationships with General Motors and Tesla, as well as increasing credit card penetration rates.
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July 17, 2014
AFSA Newsbriefs is a weekly executive summary of AFSA initiatives and consumer credit articles. AFSA Newsbriefs is free for members. Send an email to [email protected] to subscribe.
The American Financial Services Association, or AFSA, is the national trade association for the consumer credit industry, protecting access to credit and consumer choice. The association encourages and maintains ethical business practices and supports financial education for consumers of all ages.