CFPB

Hensarling Message About CFPB

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In case you missed it, House Financial Services Committee Chairman Jeb Hensarling delivered a powerful opening statement at last week’s hearing with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.

Before Director Cordray presented the semi-annual report of the CFPB, Chairman Hensarling shared his thoughts about both Cordray and the CFPB. He touches on the CFPB’s impact on access to credit, pre-paid card products, credit card rates, auto loan rates, mortgages and more. Below are a few highlights of what the Chairman had to say:

CFPB Reform

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ICBA issued a call to action last week, asking community bankers to spread the word on CFPB reform through a customizable op-ed. The goal is to have as many community bankers as possible – in Texas and across the country – submit this op-ed to local media to help build support for meaningful CFPB reforms at this crucial time when Congress is considering regulatory relief.

CFPB Structure

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In October, a three-judge panel from the U.S. Court of Appeals for the D.C. Circuit ruled in the PHH v. CFPB case that the Consumer Financial Protection Bureau (CFPB) concentrates “enormous executive power” in a director who cannot be removed except “for cause.” A U.S. appellate court has now granted the CFPB’s request to rehear the case, which challenges the constitutionality of its governance structure.

Ruling Against CFPB

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A U.S. appellate court ruled against three groups – 17 Democratic state attorneys general, Sen. Sherrod Brown and Rep. Maxine Waters, and a consortium of consumer advocates – appealing a prior ruling that the Consumer Financial Protection Bureau’s (CFPB) single-director structure is unconstitutional. The October ruling of the original case, PHH v. CFPB, found that the Bureau concentrates “enormous executive power” in a director who cannot be removed except “for cause,” making him virtually unaccountable to outside authority.

Neugebauer to CFPB?

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The banking industry was atwitter last week with news that Texas’s own Randy Neugebauer was being considered by the Trump administration to run the Consumer Financial Protection Bureau.

Neugebauer, who recently retired from Congress, was a consistent critic of the Bureau’s actions, as well as its single director structure and funding during his time on the House Financial Services Committee.

Comment Letter

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Recently, the CFPB made a formal inquiry into the obstacles third parties doing business with customers of financial institutions face when accessing customer financial records. IBAT’s comments on the CFPB request addresses concerns for account security, data security, privacy, user authenticity, consent to disclosure, online banking limitations, Gramm Leach Bliley Act requirements, and Dodd Frank Act requirements that arise when financial services offered by third-party providers depends on access to consumer financi

The CFPB Issues Continue

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Despite the fact that there is no data supporting the need to modify the rules in Regulation E relating to payroll cards, which are working quite well, the CFPB amended Regulations E and Z to create consumer protections for prepaid financial products, including payroll cards. The rules also apply to government benefit cards but not to gift cards or health savings account cards.

The rules are effective October 1, 2017, although the requirement to submit account agreements to the CFPB is effective October 1, 2018. Below are the key changes with respect to payroll cards:

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