The CFPB’s 3 New Goals and What They Mean for Your Institution
On February 12th, CFPB director Mick Mulvaney released his strategic plan for the next four years. The plan was composed of three main goals that outlined exactly how the CFPB would be conducting itself over the next four years.
Here is a brief summary of each goal:
Goal 1: Ensure that all consumers have access to markets for consumer financial products.The purpose of this is to “create transparent, competitive markets that can respond to consumer demand.” Institutions can expect some rollbacks of regulations at the discretion of the CFPB. The Bureau will “regularly identify and address outdated, unnecessary, or unduly burdensome regulations in order to reduce unwarranted regulatory burdens.” While this doesn’t mean Dodd-Frank is going away, regulations will be perceived as being more business friendly. For example, rules that govern maximum fees and the interest rates lenders can charge for services will likely be relaxed. The Bureau has already proved this by announcing it would reconsider its payday lending rules. These rollbacks are meant to increase competition and access to credit by enabling institutions to provide more products to consumers, who would not normally qualify for traditional loans.
Goal 2: Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive.The CFPB has stated that it will cease to treat banks and non-depository institutions differently. In order to promote fair competition, the CFPB will “enforce laws without regard to the status of a person as a depository institution.” Since the 2008 financial crises, the Bureau frequently targeted large banks for compliance violations in an effort to reign in these “out of control” banks. The result was increased compliance costs and the closure and merger of hundreds of banks. Now the Bureau will take a more seemingly even-handed approach. They will “focus supervision and enforcement resources on institutions and their product lines that pose the greatest risk to consumers based on the nature of the product, field and market intelligence, and the size of the institution and product line.” The CFPB will turn its attention to enforcement in areas where it receives the most consumer complaints.
Goal 3: Foster operational excellence through efficient and effective processes, governance and security of resources and information.This goal is focused on the agency itself and outlines how it plans to secure its data, engage its workforce and remain accountable. Institutions and advocacy groups were both concerned with how the expanded HMDA data collection would be handled and published. The CFPB announced that it would participate in annual Federal Information Security Management Act (FISMA) reviews to ensure its information is secure from potential data breaches. While the CFPB may seem like it is rolling back its aggressive enforcement, state regulators are starting to ramp up enforcement. Information requests from state examiners have already started to increase and state exams are starting to closely imitate CFPB exams. Institutions will have to continue to invest in compliance as they continue to navigate todays regulatory environment, because no one wants another 2008!
Click Here to read the CFPB’s full strategic plan.