Transcript Personal & Family Financial Capabilities

The New Consumer
Financial Protection
Bureau, Consumers, and
Consumer Educators
Jeanne M. Hogarth
Division of Consumer & Community Affairs
Federal Reserve Board
The analysis and conclusions set forth in this presentation represent
the work of the authors and do not indicate concurrence of the Federal
Reserve Board, the Federal Reserve Banks, or their staff. Mention or
display of a trademark, proprietary product, or firm in the presentation
by the authors does not constitute an endorsement or criticism by the
Federal Reserve System and does not imply approval to the exclusion
of other suitable products or firms.
Please note
 The slides for this webinar were accurate
as of Sept. 16, 2010 but the environment is
very dynamic – the new Bureau is evolving
daily
 Since the webinar, the date of transfer has
been announced (July 21, 2011) and Pres.
Obama has appointed Elizabeth Warren as
a special advisor to work on setting up the
Bureau
Dodd-Frank Wall Street Reform
and Consumer Protection Act
16 Titles, 848 pages, 533 new
regulations, 60 studies, 94 reports
Focus on
 Title 10 – CFPB
 Title 12 – Financial access
 Title 14 – Mortgage reform
Sources of information
 Dept. of Treasury Financial Stability website
 www.financialstability.gov/roadtostability
/facts.htm
Sources of information
 Dept. of Treasury Financial Stability website
 www.financialstability.gov/roadtostability
/facts.htm
 Congressional Research Service
 www.crs.loc.gov
 GPO – copy of Act
 www.gpo.gov/fdsys/pkg/BILLS111hr4173ENR/pdf/BILLS111hr4173ENR.pdf
Who is involved?
 All 5 federal
financial regulators
 Board, FDIC,
NCUA, OCC, OTS
 Treasury
 FTC
 SEC
 CFTC
 HUD
 Veterans Affairs
 USDA
 Rural Housing
Services
 GAO
 Comptroller
General
CFPB responsibilities
Independent within the Federal
Reserve
Supervision
Compliance with
consumer regulations
Financial institutions
over $10 billion
Enforcement
Rule-writing
What is covered?
 Deposit taking
 Mortgages
 Credit cards & other
loans
 Loan servicing
 Check guaranteeing
 Collection of
consumer report
data
 Debt collection
 Real estate
settlement
 Money
transmitting
 Financial data
processing
What financial institutions
are covered?
Deposit institutions
Non-depository institutions
Mortgage-related activities
Private student loans
Payday lending
“engaging in conduct that poses
risk to consumers with regard to
offering or provision of consumer
financial products or services”
Who’s not covered?
Merchants, retailers, sellers of
nonfinancial goods & services
Automobile dealers
Insurance
Real estate brokers & agents
Sellers of manufactured housing
Income tax preparers
Accountants
Employee benefit plans
What laws are transferred?
 Unfair & Deceptive Acts & Practices
 Truth in Lending
 E.g., Fair Credit Billing, Consumer Leasing, etc.
 Mortgage-related acts:
 E.g. HOEPA, HMDA, Home Owners Protection Act,
Alternative Mortgage Transaction Parity, etc.
 Real Estate Settlement Procedures Act
 Electronic Funds Transfer Act (some parts)
 Truth in Savings
 Equal Credit Opportunity Act
 Fair Debt Collection Practices Act
 Fair Credit Reporting Act
What else will be in the CFPB?
Units for
Research
Consumer complaints
Community affairs
Traditionally underserved areas (LMI)
Ombudsman for private student loans
Consumer Financial Civil Penalty Fund
Pays victims
Funds financial literacy & consumer
education programs
What else will be in the CFPB?
Offices of
 Fair Lending & Equal Opportunity
(Assistant Director)
 Financial Protection for Older Americans
(Assistant Director)
 Financial Education
 Service Member Affairs
Research unit & opportunities
Unit charged with studying
Market developments
Access to fair & affordable credit
Consumer awareness & use of
disclosures
Consumer awareness of costs
Consumer behavior with respect to
products & services
Experiences of underserved
Research unit & opportunities
Consumer testing requirement for all
model disclosure forms
Work with Financial Education to “conduct
research related to consumer financial
education & counseling”
Work with Financial Protection for Older
Americans to identify best practices for
education & counseling of seniors, longterm savings, retirement planning
Office of Financial Education
 “. . . developing & implementing initiatives to
educate and empower consumer to make
better informed financial decisions.”
 Specific charges – “opportunities for
consumers to access. . .”
 Financial counseling
 Information to evaluate credit
 Savings, borrowing, & services at
mainstream financial institutions
 Prepare for educational expenses
 Help with long term savings
 Wealth building during tax prep. (EITC)
Comptroller General Studies
Certification for persons
providing financial education
Potential certification process &
standards for certification
Recognition of outstanding
programs
Certifying entities
Funding resources
Cost benefit-analysis
Comptroller General Studies
Technological resources needed to
collect, evaluate, or promote literacy
& counseling programs
Effective methods for financial
education
Recommendations to improve
financial education outcomes &
empower consumers to make better
financial decisions
Service Member Affairs
Educate & empower service members
& families
Monitor complaints of SMs
Coordinate with state & federal
agencies on consumer protection
Set up regional offices
Set up MOU with DOD
Financial Protection for
Older Americans
Within 6 months of transfer
Facilitate financial literacy
Protect from unfair, deceptive &
abusive acts
Goals for programs for
Recognizing unfair/deceptive
Counseling, including long term
savings
Providing personal credit advocacy
Financial Protection for
Older Americans
Monitor certifications for those
who advise seniors
Report on best practices for
Disseminating information on
certification of financial advisors for
seniors
Identifying appropriate financial
advisors
Verifying credentials of advisors
Financial Protection for
Older Americans
Research best practices to educate
seniors on
Avoiding unfair, deceptive & abusive
practices
Planning for retirement & long-term
care
Long-term savings
Coordinate with state
agencies
Work with community
organizations
New regulations &
model disclosures
Plain language
Clear format
Succinctly explains information
Validated through consumer testing
Option for trial disclosures designed
to improve model forms
Combined TILA-RESPA disclosure for
mortgages
Regulatory
improvements
Small business loan data collection
Remittance disclosures (including
expanded ACH facilities)
Reasonable fees and rules for
payment card transactions
(interchange fees)
Report on private education loans
& lenders
Study & report on credit scores
Title 12 – Improving Access to
Mainstream Financial Institutions
Treasury authorized to
establish grants & agreements
 Help LMI individuals establish
accounts
 Improve access to accounts
Treasury authorized to
establish demonstration
programs on small dollar
loans
Title 14 – Mortgage Reform &
Anti-Predatory Lending Act
Prohibits steering incentives
Establishes an ability to pay
requirement
Prohibits single premium credit
insurance
Limits negative amortization
mortgages
Notice requirements for rate
adjustments
Title 14 – Mortgage Reform &
Anti-Predatory Lending Act
Establishes an Office of Housing
Counseling within HUD
 Headed by Director
 Establishes advisory committee
Requires CFPB to produce a booklet to
help consumers understand mortgages
& settlement services
 Highly detailed list of contents required
Title 14 – Mortgage Reform &
Anti-Predatory Lending Act
New provisions for mortgage
servicing
 Escrow accounts under TILA
 RESPA amendments
Appraisal activities & fees
regulated
Funds for neighborhood
stabilization
What happens next?
Announce
transfer date
Nomination of
director
“. . .from date
of enactment”
vs “….from
date of
transfer”
What happens next?
Job announcement for CFPB
economists at
 www.usajobs.gov
 www.treas.gov/organization/employment/
Thank you!
Any questions?