CFPB Update: Where Have They Been And Where Do They Plan To Go In 2013 And Beyond
As many politicians and pundits are fond of saying, elections have consequences, and in the case of the Consumer Financial Protection Bureau (CFPB), this old adage certainly holds true. Although much of the rhetoric of the campaign did not specifically touch on the current and future role and impact of the CFPB, an election night victory by President Obama ensured that it would continue to have the necessary support of the executive branch over the next four years to become an entrenched part of the federal government. When you take into account the Senate remaining in the hands of the democrats, it is abundantly clear that the CFPB is here to stay.
While the CFPB has only been in operation since July 21, 2011, a report just issued on December 14, 2012 by the House Oversight and Government Reform Committee reflects on the overall impact the CFPB has had on financial institutions, including credit unions along with the overall consumer credit market since its inception.[1] Specifically, the report found that the CFPB has increased the cost of consumer credit by $17 billion and has depressed job creation by approximately 150,000 jobs. In addition to the impacts on the general economy, the regulations issued by the CFPB have created a trickle down effect by substantially increasing the regulatory burden on all financial institutions, including credit unions. Despite the CFPB only having supervisory authority over financial institutions with $10 billion or more in assets, all financial institutions are bound by the regulations it issues and as such, credit unions are left to navigate through complex regulations without having the benefit of an entire compliance department like many of the larger banks.
A specific area that the CFPB focused on in 2012 was the mortgage market. Specifically, the CFPB has spent substantial time and resources on proposed changes to the current requirements of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) to the tune of 1,099 pages. In fact, the CFPB felt it necessary to post a blog on its website explaining why it took so many pages to create a three page disclosure form.[2] Unfortunately, while the CFPB believes it is reasonable to take almost 1,110 pages to make these changes, the real world impact for credit unions is that they now must wade through all of the pages just so they can ensure they are in compliance with the new rules. Onerous requirements such as these may ultimately lead credit unions to re-examine whether or not they should even be in the mortgage business, which in turn will ultimately impact a consumer’s ability to secure a competitively priced mortgage from a wide variety of lenders.
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