CFPB

3 03, 2025

Karen Petrou: The Casualties of Slash-and-Burn Regulatory Rewrites

2025-03-03T10:54:41-05:00March 3rd, 2025|The Vault|

There’s no doubt that many U.S. institutions have grown such long teeth over the years that they bit themselves in the foot.  As a result, radical reform challenging conventional wisdom is long overdue.  But, there are two ways to do this:  the break-first/fix-later approach taken by the Trump Administration in biomedical research and other vital arenas; the other is to think first, then act decisively within the boundaries of current law or the better ones you demand.  Radical reform to U.S. biomedical research is already leaving near-term treatments and cures on the cutting-room floor.  If slash-and-burn transformation is also applied to financial-services supervision and regulation, systemic-risk guardrails could be unintentionally, but dangerously, dismantled.

The risks to biomedical research are not so much in what the Trump Administration has done, but that it’s more often than not done retroactively regardless of contractual commitments for continuing funding authorized under longstanding appropriations and by frenetic, indiscriminate firings of well-performing staff.  You simply can’t suddenly stop a clinical trial without endangering patients and putting treatments years behind, if they continue at all.  You also can’t stop basic biomedical research all of a sudden without leaving labs with a lot of mice, dogs, and primates to feed and no money for kibble.  It also takes years to train good biomedical researchers; suddenly firing thousands of them endangers this pipeline and, with it, treatments and cures.

Biomedical research and financial-system governance have little in common, but leaving financial policy in tatters will also have unintended consequences …

23 01, 2025

FedFin on: Consumer-Data Monetization

2025-01-24T16:55:52-05:00January 23rd, 2025|The Vault|

Shortly before the inauguration, the CFPB released a request for information (RFI) on how consumer-finance companies handle consumer data, focusing in particular on data monetization.  As an RFI, this request is not directly subject to President Trump’s order affecting pending rulemakings, but a new CFPB director could withdraw or revise it.  Should that not be the case, the RFI could lead the new director to reopen the agency’s open-banking rule and/or mandate new privacy opt-out notices for nonbanking entities offering consumer financial services…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.

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3 12, 2024

FedFin on: Nonbank-Payment Provider Regulation

2024-12-03T16:48:27-05:00December 3rd, 2024|The Vault|

Continuing its efforts to advance controversial actions before the end of the Biden Administration, the CFPB has finalized proposed supervisory standards for large nonbank providers of general-use digital-payment-platform services.  The new standard brings these companies under CFPB supervision as well as regulation and enforcement actions, better aligning their governance with rules applicable to bank payment providers and addressing the Bureau’s deep concerns about digital marketing.  However, this new framework depends on voluntary compliance in anticipation of or as the result of rigorous CFPB supervision…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

8 11, 2024

FedFin Assessment: Are Crypto’s Wins the Banks’ Losses?

2024-11-08T14:57:19-05:00November 8th, 2024|The Vault|

One of the more striking results of the election is the enormous win crypto firms got for their $135 million of Congressional-campaign spending: victories so far in every race it entered.  Much of this is due not just to crypto’s lure; instead, it reflects choices based not only on a candidate’s crypto sentiments, but also on the opponent’s vulnerability.  As a result, at least some of crypto’s luster could fade when Congress gets back to work.  However, Donald Trump campaigned on a pro-crypto platform, endorsing legislation such as the Lummis (R-WY) bill to create a “strategic reserve” for bitcoins…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

6 11, 2024

FedFin Assessment: Trump II Financial-Policy Outlook

2024-11-06T10:55:18-05:00November 6th, 2024|The Vault|

Given the likelihood of a Trump win, we turn in this report to our outlook for federal financial policy in a very different Administration than the one that has set it for the last four years.  We will refine this outlook when final tallies determine Congressional control, but slim margins will dog both parties and thus significantly complicate the legislative outlook.  Congress, like the White House, will also be preoccupied with nomination battles, immigration, geopolitical risk, and acute fiscal-policy challenges in areas such as the new president’s budget, planned tax breaks, and tariffs.

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.

 …

26 08, 2024

Karen Petrou: Next Up: Federal Preemption Standards for Elder-Fraud Prevention

2024-08-26T12:13:45-04:00August 26th, 2024|The Vault|

As we noted before the August recess, Senate Democrats have pressed a new bill designed to make the CFPB Director’s wish the command of law:  banks would be clearly accountable for many instances in which consumers fall prey to those impersonating bankers, FBI agents, the CIA, and anyone else they think will persuade a customer, often elderly, to part with a whole lot of cash.  Nothing will come of this bill in this Congress, but it will surely be back in the next.  With it will come measures also to create a federal framework for the patchwork of state laws holding banks accountable for elder fraud.  This sounds good, but drafting here is devilishly difficult.

There is no question that elder fraud is a grievous concern.  I saw it firsthand as my father slipped farther and farther from being able to discern that the “nice” people happy to talk to him for hours were not beguiled by his avuncular charm – they wanted his bank account number.  Washington media is full of stories of the “gold-bar” fraud stealing millions from local retirees and this is, of course, just a tiny sample of a problem estimated to cost at least $3.4 billion a year.

Is there a need for federal preemption?  Last week’s American Banker had a helpful run-down of various state approaches.  In general, state laws or pending measures seek remedies such as notifications to adult protective services or law enforcement, mandatory holds on suspect transactions, or at the …

8 07, 2024

Karen Petrou: What MAGA Republicans and Rohit Chopra Both Want

2024-07-08T13:20:21-04:00July 8th, 2024|The Vault|

Following last week’s celebration of American independence, my thoughts turned to the confluence of concern from both sides of the political spectrum about an issue at the heart of the Bill of Rights:  “financial censorship.”  When Florida Gov. Ron DeSantis and CFPB Director Chopra agree – as they do – on a hot-button point such as freedom of thought as it may be expressed in financial transactions, a new framework is upon us no matter who wins in November.  Virtuous as this ideal is, putting it into practice is fraught with consequences, more than a few unintended.

That Mr. Chopra chose to address the Federalist Society is notable in and of itself.  I’ve done this more than a few times and emerged not only unscathed, but often enlightened.  But that was before Democrats viewed the Society as a cabal meant to subvert rules such as those Mr. Chopra is fond of issuing.  But the CFPB director knew his crowd – he and even super-MAGA conservatives fear that powerful financial companies threaten freedom of thought because giant platforms have undue control over each of our wallets.  This may not be true, but at least one such company gave it a try and those taking aim at financial censorships think that once is enough, and they are right.

However, the focus on financial censorship goes beyond what payment companies allow us to express via what we purchase.  The debate is over a decade old, beginning as it did when Obama Administration banking …

5 06, 2024

FedFin on: Closing In on Closing Costs

2024-06-05T11:21:39-04:00June 5th, 2024|The Vault|

As anticipated, the CFPB has advanced its campaign to quell mortgage closing costs.  But, unlike our forecast, the usually-aggressive agency is sliding into this debate with only a request for information (RFI) asking lots of questions we though the CFPB had already answered to its own satisfaction given a prior study and much ancillary “junk fee” commentary from Director Chopra and even the White House NEC Director.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.…

13 05, 2024

FedFin on: FSOC’s Analytical Methodology

2024-05-13T16:52:29-04:00May 13th, 2024|The Vault|

Never Mind…

When FSOC released its systemic-designation methodology last year, the Council made it clear that nonbank mortgage companies faced top-down federal regulation.  Never mind.  As with so many other FSOC-declared systemic risks – see, for example, stablecoins – federal regulators have decided not to use the prudential tools they have in favor of asking for statutory change they know they won’t get.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.

 …

22 04, 2024

Karen Petrou: Credit-Card Surcharges: One Inflationary Culprit the CFPB Could Catch

2024-04-22T09:29:18-04:00April 22nd, 2024|The Vault|

One could go on – indeed many do – about whether inflation is showing enough signs of a slow-down to warrant lower interest rates.  I’ve said before that lower rates won’t have the housing-affordability benefits advocates expect, but this doesn’t address the underlying issue of just how hot inflation may be running.  I’m not sure if anyone – including the Fed – really knows, but battles on my neighborhood listserv validated by growing data make clear that federal data overlook one hidden price hike driving more and more Americans flat-out crazy:  credit-card surcharges that are nothing but shadow price hikes of as much as four percent.

In fact, card surcharges are the epitome of the “junk” fees the CFPB has vowed to quash.  The credit-card late fees the Bureau lambasts are due to consumer sins of omission or commission – i.e., consumers have the ability – I would say obligation – to keep their card debt within amounts they can honor as well as the choice to pay on time.  How much should be charged for paying late is obviously a point of discussion, but that consumers have a duty to pay on time is indisputable.

In sharp contrast, card surcharges are often unavoidable and ill-disclosed.  The neighborhood listserv is something of a group rant, but it does include interesting illustrations of hidden credit-card surcharges that are often – think car-repair shops – meaningful and material add-on prices discovered only after the fix, quite literally, is in.

D.C. is an …

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