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CFPB UPDATE:Credit Union Expectations for 2013
Jonathan L. [email protected]
202.344.4383
National Association of Federal Credit Unions(NAFCU)December 12, 2012, 2:00-3:30 pm ETWebcast
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Agenda
What does the CFPB mean to CUs in
terms of:
Supervision
Regulations
Enforcement
Other Notable CFPB Developments
and Outlook
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SUPERVISION
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How does the CFPB obtainsupervision?
• Asset Size
• Industry
• Larger Participants
• “Risky” NonBanks
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Supervision – Asset Size
• $10 Billion or Greater
• Asset Size Calculations Prescribed by
CFPB
• Some Large CUs fall within supervision
of NCUA and CFPB
• NCUA retains safety and soundness authority
• CFPB has authority regarding consumer protectionlaw compliance
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Supervision – Nondepositories
• Relevant for Non-Depository Entities:
• Industry• Mortgage• Private Education Loans• Small Dollar Loans
• Larger Participant
• Credit Bureaus• Debt Collectors
• Risky NonBanks
• Complaints• “Other Information”
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Supervision – Relevance?
Does the CFPB matter to CUs even if they do not
have direct supervision?
– Yes! For several reasons:
• Guidance documents are binding on all
• CFPB retains jurisdiction over regulations
• CFPB retains enforcement authority
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Supervision – Key Guidance
If your CU doesn’t read anything else, read
these:
•Disparate Impact – April 18, 2012– http://files.consumerfinance.gov/f/201404_cfpb_bulletin_lending
_discrimination.pdf
• Service Providers – April 12, 2012– http://files.consumerfinance.gov/f/201204_cfpb_bulletin_service
-providers.pdf
• “Add On” Products – July 18, 2012– http://files.consumerfinance.gov/f/201207_cfpb_bulletin_marketi
ng_of_credit_card_addon_products.pdf
• Supervisory Appeals – October 31, 2012– http://files.consumerfinance.gov/f/201210_cfpb_bulletin_supervi
sory-appeals-process.pdf
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Supervision – Examination Process
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REGULATIONS
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Regulatory Highlights
• Remittances
• Mortgage Proposals
• Next Year’s Agenda?
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Regulations - Remittances
• Remittance rule in a state of flux
• Helpful links available here containing:
• http://www.consumerfinance.gov/regulations/final-remittance-rule-amendment-regulation-e/
• Copies of final rules
• Webinar
• Bulletin
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Regulations - Remittances
• Three Remittance Rules:• General Remittance Rule
• Technical Corrections
• Normal Course of Business Safe Harbor/TransfersScheduled in Advance
• All Scheduled to be Effective
February 7, 2013
• Effective Date will be delayed
following rule proposal this month
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Regulations: Remittances
• “Remittance Transfer:”
Electronic transfer of funds requested by a sender to a
designated recipient that is sent by a remittance
transfer provider.
• Covered:
• Consumer to consumer transfers
• Consumer to business transfers
• Not Covered:
• Business to consumer transfers
• Business to business transfers
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Regulations: Remittances
• Are all CUs remittance providers?• Maybe not, depends on volume.
• If your CU provides:• 100 or fewer remittance transfers in prior calendar
year, and• 100 or fewer remittance transfers in current
calendar year,
• Then your CU is not providing remittance
transfers in the normal course of business
• Transition period if you exceed the safe
harbor
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REGULATIONS: REMITTANCES
What are the obligations for CUs that
are remittance providers?
• Disclosure
• Prior to Payment
• Payment Made
• Foreign Language
• Cancellation
• Error Resolution
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Regulations: Remittances
• Bulletin 2012-08: Remittance Rule
Implementation
• Proposed Rule to refine:
• Errors resulting from incorrect account numbersprovided by senders of remittance transfers
• Disclosure of certain foreign taxes and third partyfees;
• Disclosure of sub-national foreign taxes
• Delay effective date to Spring 2013
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Regulations: Mortgage
• What did the CFPB accomplish in
2012?
• What should we expect for CUs in
2013?
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Regulations: Mortgage
• CFBP 2012 Accomplishments:
• Proposed TILA/RESPA integration
• Delay for certain Title XIV disclosures:
• Final Rule
• http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-extends-effective-date-for-new-mortgage-disclosures/
• Other proposals
• LO Comp
• High Cost Mortgages
• Appraisals
• Re-Codification of CFR
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Regulations: Mortgage
• CFPB 2013 Mortgage Agenda:
• HMDA (April 2013)
• Escrow Accounts (December 2012)
• Ability to Repay (January 2013)
• Qualified Mortgage
• Qualified Residential Mortgage
• Alternative Mortgage Transaction Parity Act (June2013)
• TILA Mortgage (Miscellaneous) (2013)
Rescission
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Regulations: Next Year
• What Will 2013 Look Like for CFPB
Rulemakings?
• Specific Rules the Agency Will Address:• Registration of NonBanks (January 2013)
• Supervision of Larger Depositories (ongoing 2013)
• Prepaid Cards (June 2012)
• Business Lending Data (June 2013)
• General Efforts• Other lending channels:
• Auto
• Installment
• Small Dollar (PALs)
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Regulations
• Why should CUs care about CFPB regulatory
efforts?
• Need to remain compliant with the law
• CFPB’s rulemakings need to take intoconsideration size, capacity for compliance
• Compliance becoming increasingly burdensome,CUs need a voice re: systems and personnellimitations
• CUSO relationships will be a focus for CFPBbecause they are service providers
• Compliance will be a competitive selling point
• Few CFPB complaints will be competitive sellingpoint
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ENFORCEMENT
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Enforcement: Authority
CFPB may investigate, issue subpoenas and civil
investigative demands, and compel testimony
CFPB may conduct hearings and adjudications to enforce
compliance, including issuing cease-and-desist orders
CFPB may initiate actions for civil penalties or an
injunction
Penalties up to $1M per day for knowing violations
No exemplary or punitive damages
Criminal referrals to DOJ
Whistleblower protection
State attorneys general may also enforce the CFPA with
notice to the CFPB
May enforce rules issued by the FTC to the extent such
rules apply to a covered a person or service provider
No express private right of action under the CFPA
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Enforcement: Investigations
Since the CFPB’s launch, the Office of Enforcement
has been conducting research and investigations of
potential violations of federal consumer financial laws
identified by CFPB staff, transferred to the Bureau by
the prudential regulators and HUD, or referred to the
Bureau by consumers and others.
Enforcement has endeavored to focus its investigative
resources on the violations of law that cause the
greatest harm to consumers.
The investigations currently underway span the full
breadth of the Bureau’s enforcement jurisdiction.
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Enforcement: Highlights
July 18, 2012 - Capital One Bank (U.S.A.), N.A. –
CFPB required refund of approximately $140
million to two million customers and pay an
additional $25 million penalty.
– This action results from a CFPB examinationthat identified alleged “deceptive marketingtactics used by Capital One’s vendors topressure or mislead consumers into paying for“add-on products” such as paymentprotection and credit monitoring when theyactivated their credit cards.”
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Enforcement: Highlights (cont’d)
Sept 24, 2012 – FDIC and CFPB announced a
joint public enforcement action with an order
requiring Discover Bank to refund approximately
$200 million to more than 3.5 million consumers
and pay a $14 million civil money penalty.
– This action results from an investigationstarted by the FDIC which the CFPB joinedlast year. The joint investigation concernedalleged deceptive telemarketing and salestactics used by Discover to misleadconsumers into paying for various credit card“add-on products” – payment protection, creditscore tracking, identity theft protection, andwallet protection.
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October 1, 2012 - Three American Express
subsidiaries ordered to refund an estimated $85
million to approximately 250,000 customers for
alleged illegal card practices.
– This action is the result of a multi-part federalinvestigation which allegedly “found that atevery stage of the consumer experience, frommarketing to enrollment to payment to debtcollection, American Express violatedconsumer protection laws.”
– Areas covered include compliance plans,advertising and marketing, and debt collection
Enforcement: Highlights (cont’d)
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Nov. 17, 2012 – CFPB v. Gordon et al.
– Preliminary injunction against Gordon LawFirm PC and two loan processing companiesin a suit over an alleged loan modificationscam, barring them from misrepresentingservices or destroying records of theirbusiness practices.
– Defendants subject to asset freeze andreceivership since July
– Alleged violations of MARS Rule (RegulationO) and Consumer Financial Protection Act(UDAAP)
Enforcement: Highlights (cont’d)
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Other Notable CFPB Developmentsand Outlook
Supervisory
Highlights
Private Student Loan
Initiatives
Servicemember
Affairs Initiatives
Older American
Initiatives
Consumer Outreach
/ Financial
Empowerment
Consumer
Complaint
Databases
Reports to
Congress
Project Catalyst
Start-up Mentality
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QUESTIONS AND DISCUSSION
Jonathan L. Pompan, Esq.
(202) 344-4383
Venable LLP
575 7th Street, N.W.
Washington, DC 20004
www.Venable.com
1-888-Venable
To view Venable’s index of articles and PowerPoint presentations on
related legal topics, see www.Venable.com/cfpb/publications.
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IMPORTANT INFORMATION ABOUT THIS
PRESENTATION
This presentation is for general informational purposes only and
does not represent and is not intended to provide legal advice or
opinion and should not be relied on as such. Legal advice can
only be provided in response to specific fact situations.
This presentation does not represent any undertaking to keep
recipients advised as to all or any relevant legal developments.