Transcript Document

BANK COMPLIANCE ASSOCIATION
REGULATORY UPDATE
December 15, 2011
By David J. Wiese
Hinckley, Allen & Snyder LLP
20 Church Street
Hartford, CT 06103
(860) 331-2714
[email protected]
Let’s Start With The New Regulator That Will Shape The
Future of the Financial Services Industry
The Consumer Financial Protection Bureau (the “Bureau”)
• July 21, 2011 Transfer Date
 Bureau Comes To Life
 Inherits Rulemaking & Enforcement Power With
Respect to Many Existing Consumer Compliance
Regulations
 New Supervisor for Banks Over $10 Billion
• Trickle-Down Impact on Smaller Banks
 New “Cop on Beat” For Other Institutions
• Nondepository Lenders & Brokers?
• Direct Education Lenders, Payday Lenders and
Other “Large Market Participants”
 New Enforcement Powers With Respect to UDAAP
 Until Director is Confirmed by Senate, Many Powers
Are Limited
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Developments With The Bureau
• Elizabeth Warren Steps Aside
• Raj Date Appointed to Lead Bureau in Interim
• President Obama Nominates Richard Cordray on July
24
 Former Ohio Attorney General
• Senate Republicans Pledge to Fight Confirmation
Unless Bureau Structure is Reformed
 Senate Banking Committee Approved Nomination on
October 6, But Full Confirmation Has Since Been
Delayed
• Will We See Something Before Next Election?
• Impact on Bureau’s Agenda
2
Developments With The Bureau (cont.)
• Elizabeth Vale – Assistant Director For Community
Banks and Credit Unions
 Rumors?
• “Know Before You Owe” Project
 First Phase – Development of Combined Initial TILA
and GFE Form Still Ongoing
 Second Phase Announced November 8 – Combined
Final TILA and HUD-1
 Official Publication of Proposal Required by July 21,
2012
3
Developments With The Bureau (cont.)
• Bureau Requests Information on Products Offered to
Servicemembers (September 6)
 Knowledge Base to Inform Bureau As It
• Develops Education and Outreach Initiatives
• Monitors Consumer Complaints
• Develops “Other Consumer Protection Measures”
 Coincidentally, DOJ Submitted Legislative Proposals to
Congress (on September 20) Regarding
Servicemembers
• Would Strengthen SCRA (including increased
penalties)
• Would Also Strengthen Fair Lending Enforcement
Under FHA and ECOA
4
Developments With The Bureau (cont.)
• First Edition of the Bureau’s Supervision and
Examination Manual Released (October 13)
 Incorporates Many of the Exam Procedures Developed
by FFIEC For Transferred Consumer Compliance Laws
(TILA, RESPA, etc.)
 New Exam Procedures For Entities Conducting
Mortgage Servicing Activities
 Recites Statutory Prohibition Against “Abusive”
Practices
• But Bureau Cannot Engage in Rulemaking On This
Topic Until Director Appointed
• Will the Bureau Develop Interpretations Through
Enforcement (and Circumvent the Administrative
Protections Afforded by the Rulemaking Process)?
5
Developments With The Bureau (cont.)
• Bureau Seeks Comments On Proposed Information
Collection Process (November 2)
 Information to Be Collected to Provide Qualitative
Feedback on Disclosures and Model Forms
• Bureau Requests Information on Private Education
Loans (November 16)
 Report Due to Congress Next Summer
• Federal Agencies (Including Bureau) Issue Joint
Statement on Their Respective Roles in Enforcing
Federal Consumer Financial Laws (November 17)
 Includes Clarifications on When and How to Calculate
Total Assets For Purposes of $10 Billion Threshold
6
Developments With The Bureau (cont.)
• Bureau Requests Information on How to Streamline
Regulations (November 29)
 Dodd-Frank Calls for Bureau to Reduce Outdated,
Unnecessary and Unduly Burdensome Regulations
 Bureau’s Notice Seeks Comments On
• What Are the Highest Priorities?
• Specific Opportunities For Streamlining?
 Bureau Will Soon Begin to “Republish” Inherited
Regulations
• Limited to Conforming and Technical Changes
7
Developments With The Bureau (cont.)
•
•
Bureau Publishes Interim Report on Credit Card Complaints
(November 30)
 First Report Based on New Centralized Complaint System
(Using Complaints From July to October)
 Customer Confusion Continues to Be Evident
• But Many Complaints Resolved By Issuers
At the Same Time, Bureau Publishes Proposed Policy
Statement on Sharing Complaints Through Public Databases
 Personal Data to Be Excluded
• But Would Include Name of Issuer
 Data Could Be Searched, Filtered, Aggregated and
Downloaded
• Available to Your Customers, Consumer Groups, the
Media, etc.
 Creditors Would Have 30 Days to Respond Before Complaint
Information Is Added to Database
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Developments With The Bureau (cont.)
• Bureau Begins Collection of Complaint Information
Regarding Home Mortgages (December 1, 2011)
 Also Announces That It Will Be Prepared to Handle
Complaints For All Products By End of 2012
• Bureau Issues Two-Page “Prototype” Credit Card
Agreement (December 7)
 To Be Tested by Pentagon Federal Credit Union
• Bureau Establishes Ombudsman Office (December 8)
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Other Concerns Related To Transfer of
Power to Bureau
•
In Two Years Leading Up to Transfer Date, Fed, HUD and Other
Agencies Rush to Design and Implement Many New Rules,
Including
 RESPA Reform
 TILA
• Credit Card Rules
• New Open-End Disclosures and Substantive Protections
• Mortgage Transfer Notices
• Escrow Requirements for Jumbo Mortgages
• New MDIA Tables in Fed-Box Disclosures
• Higher Limits for TILA Exemptions
• New Appraiser Independence and Compensation Rules
• New MLO Compensation Restrictions
• Plus Several Other Massive Reform Proposals
 FCRA (Adverse Action and Risk-Based Pricing Notices)
 Overdraft Protection “Guidance” and “Opt-In” Requirements
 Just to Name a “Few”
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Other Developments Related To Transfer of
Power to Bureau (cont.)
•
•
Transition to Bureau Leaves Industry Hanging on Hundreds of
Unanswered Questions and Concerns
 Informal Interpretations By Agency Staff Are Numerous
• But Lack Reliability As a Matter of Law
• And Uniformity is Often a Problem
 Migration of Agency Staff to Bureau
 Will the Bureau Have the Same Interpretations?
 When Will the Bureau Respond?
Problem Illustrated With MLO Compensation Rules
 Rules Arise Out of Power to Prohibit Unfair and Deceptive Acts
(So Uncertainty Involves Significant Compliance Risk)
 Bonuses and Benefit Program Concerns Highlighted by ABA
 Also Note That CSBS and AARMR Published Guidelines For
State Examiners to Use When Examining Nondepository
Originators and Creditors for MLO Rule Compliance (October
1)
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Anticipating July 21st Effective Date Under
Dodd-Frank
• HUD Publishes “Technical and Clarifying” Amendments
to RESPA’s Regulation X (July 11)
• FTC Publishes FCRA Staff Report and Summary of
Previous Interpretations (July 20)
 Staff Commentary Repealed
• OCC Publishes Final Rule to Implement Assorted DoddFrank Provisions
 Addresses OCC’s New Role as Regulator of Federal
Thrifts (Replacing OTS)
 Revises OCC Rules on Preemption and Visitorial
Powers
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Other Developments
• SEC Publishes Guidance on Disclosure of
Cybersecurity Risks by Public Companies (October 13)
• U.S. Supreme Court Agrees to Hear RESPA Section
8(b) Case (October 11)
• Federal Agencies Publish Revisions to Flood
Insurance Q&A’s (October 14)
 Allows Different Methods For Identifying Replacement
Cost Value
 Discusses Delays During 45-Day Period
 Also Proposes Several New Interpretations
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Other Developments (cont.)
• Occupy Wall Street Prompts Bank Transfer Day
 North Carolina Congress Introduces “Freedom and
Mobility Banking Act”
 Vendors Respond With Technology Solutions
• Retailers Sue the Fed Alleging That Fed Overstepped
Rulemaking Authority With Interchange Fee Rule
(November 22)
• FTC Issues a Final Rule on Mortgage Advertisements
(July 19)
14
• Concluding Remarks
• Question & Answers
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