Consumer Financial Services Watch

News and developments related to consumer financial services, litigation, and enforcement.

 

1
California Governor Vetoes Burdensome Payroll Card Bill
2
Is the CFPB a Step Closer to Having a Leader?
3
And the Plot Thickens: the CFPB Issues a Quartet of Interim Final Rules Laying Out Its Investigatory and Enforcement Procedures
4
Bureau Asks for Help Deciding Whom to Supervise
5
Consumer Financial Services Industry, Meet Your New Regulator
6
Analysis of the Consumer Financial Protection Agency Legislation: Top Ten Issues
7
Million Dollar Baby: The Consumer Financial Protection Agency Act of 2009
8
Singularity of Purpose: Is Looking Out for Consumers Too Narrow a Mission?
9
Fifty Ways to Need a Lawyer: Congress Proposes to Establish Financial Services Watchdog Agency
10
No posts on Personal Property Financing yet. Check back soon.

California Governor Vetoes Burdensome Payroll Card Bill

By: David L. Beam, Steven M. Kaplan, Kathryn M. Baugher

The effort to impose demanding new requirements on payroll cards in California just lost some steam. On Sunday, October 9, California Governor Jerry Brown vetoed a bill that would have imposed an onerous set of requirements and restrictions on employers who want to pay employees by payroll card (and, by extension, the financial institutions that provide payroll card programs to employers). The provisions of the Bill were vastly more burdensome than the requirements imposed by federal law and many other state wage and hour laws. Fortunately, Governor Brown recognized that the Bill went too far.

To view the complete alert online, click here.

Is the CFPB a Step Closer to Having a Leader?

By: Stephanie C. Robinson

Richard Cordray’s nomination to become the director of the Consumer Financial Protection Bureau will be in the hands of the full Senate now that the Senate Banking Committee has approved his nomination along a 12-10 party-line vote. But will the CFPB ever have an official leader in place? Not at this rate.

It has been fourteen months since Congress passed the Dodd-Frank Act, and the new government agency still has no formal leader. Read More

And the Plot Thickens: the CFPB Issues a Quartet of Interim Final Rules Laying Out Its Investigatory and Enforcement Procedures

By: Melanie Hibbs Brody, Paul F. Hancock, David G. McDonough, Jr., Stephanie C. Robinson

The powerful new Consumer Financial Protection Bureau (the “Bureau” or “CFPB”) is up and running, and is expected to soon begin investigating and prosecuting claims against covered persons under the Consumer Financial Protection Act (the “CFPA” or “Act”).

To this end, on July 28, 2011, the Bureau issued four interim final rules setting out procedures governing: (i) Bureau investigations of possible violations of federal consumer financial law; (ii) the Bureau’s use of administrative adjudications to enforce compliance with the Act, rules issued under the Act, and any other federal law or regulation the Bureau is authorized to enforce; (iii) how the Bureau will handle confidential information obtained from persons over which it exercises its authority; and (iv) the process by which state officials must notify the CFPB of actions or proceedings they take under the Act.

To read the complete alert online, click here.

 

Bureau Asks for Help Deciding Whom to Supervise

By: David L. Beam, Stephanie C. Robinson

Debt collectors, consumer lenders, money transmitters, and prepaid card issuers, be forewarned: The Consumer Financial Protection Bureau (the “Bureau”) thinks it might need to send some examiners to your offices to see if you are complying with consumer protection laws.

The Dodd-Frank Act requires the Bureau to examine large banks, thrifts, credit unions, and their affiliates. The Act also allows the Bureau to conduct routine examinations of nonbank covered personsin the residential mortgage lending, private education lending, and payday lending markets, among others. Nondepository covered persons such as these will be subject to a risk-based supervision program that is designed to assess the covered person for compliance with Federal consumer financial law, obtain information about its activities, and assess risks to consumers and to the consumer financial markets. They may also have to register with the Bureau to help support the implementation of its supervision program.

To read the complete alert online, click here.

 

Consumer Financial Services Industry, Meet Your New Regulator

By: Melanie H. Brody, Stephanie C. Robinson

The centerpiece of the Dodd-Frank Act from a consumer protection standpoint is Title X, the Consumer Financial Protection Act of 2010. The Act will create a powerful consumer financial protection watchdog, the Bureau of Consumer Financial Protection. The majority of existing federal consumer financial protection laws will come under the Bureau’s purview, and the Bureau will have broad authority to enforce those laws and to issue its own rules under the Act. This alert describes the Bureau, including its structure, objectives, functions, jurisdiction, rulemaking authority and enforcement powers.

To view the complete alert online, click here.

This client alert is part of a series of alerts focused on monitoring financial regulatory reform. Below is a list of other alerts in the series:

New Executive Compensation and Governance Requirements in Financial Reform Legislation – July 7, 2010

Financial Regulatory Reform – The Next Chapter: Unprecedented Rulemaking and Congressional Activity – July 7, 2010

Investor Protection Provisions of Dodd-Frank – July 1, 2010

Senate Financial Reform Bill Would Dramatically Step Up Regulation of U.S. and Non-U.S. Private Fund Advisers – June 8, 2010

Approaching the Home Stretch: Senate Passes “Restoring American Financial Stability Act of 2010” – June 8, 2010

Analysis of the Consumer Financial Protection Agency Legislation: Top Ten Issues

By:  Stephanie C. Robinson

The Obama Administration’s Financial Regulatory Reform plan is progressing through Congress. Last week, the House Financial Services Committee voted to approve H.R. 3126, the bill that would create a Consumer Financial Protection Agency. As we reported in a prior publication, the agency would have extremely broad regulatory and enforcement authority over providers of consumer financial products and services, with the power to impose high penalties. See our Mortgage Banking & Consumer Financial Products alert, Million Dollar Baby: The Consumer Financial Protection Agency Act of 2009, for a complete discussion of the bill as introduced.

The committee spent the past couple of days considering and voting on dozens of proposed amendments to Chairman Barney Frank’s (D-MA) original version of the bill. This alert highlights some of the issues we are being asked about most and what has changed since the bill’s July 8, 2009 introduction.

To view the complete alert online, click here.

Million Dollar Baby: The Consumer Financial Protection Agency Act of 2009

By: Melanie Hibbs Brody, Steven M. Kaplan, David L. Beam, Stephanie C. Robinson

With the power to impose penalties of up to $1 million per day, the recently proposed Consumer Financial Protection Agency (“CFPA” or “Agency”)—an independent agency with the sole mission of protecting consumers—is the subject of much attention. After Congress returned from the Independence Day holiday, House Financial Services Committee Chairman Barney Frank introduced House Bill 3126—entitled Consumer Financial Protection Agency Act of 2009 (“bill” or “Act”). The bill mirrors draft legislation that the Obama Administration delivered to the Hill the previous week, with only a few substantive changes, and is based on the recommendations the Administration set forth in its financial regulatory reform package issued earlier this year to establish the Agency.

To read the complete alert online, click here.

 

Singularity of Purpose: Is Looking Out for Consumers Too Narrow a Mission?

By: Melanie Hibbs Brody, Stephanie C. Robinson

No one doubts that consumers have been hurt by the global financial crisis and a better federal and state regulatory regime could lessen the likelihood of future harm in the consumer credit arena. The question is how best to accomplish that objective? Is it simply a matter of better funding of the enforcement of existing laws? Is it prudent to impose new substantive obligations on providers of consumer financial products and services? Do we need to shuffle the boxes out of which regulators operate to ensure a better-coordinated approach to government regulation and enforcement?

At a press conference on June 17, 2009, President Obama laid much of the blame for the financial crisis on gaps in financial regulation. To fill in those gaps, the President unveiled his proposed financial regulatory reform package—a white paper entitled A New Foundation: Rebuilding Financial Supervision and Regulation. Among many recommendations for significant change, the reform package recommends the creation of a new federal agency with the singular job of, in the words of Mr. Obama, “looking out for consumers.” The new Consumer Financial Protection Agency (CFPA) would be designed to protect consumers in the financial products and services markets, and would be the primary federal consumer protection supervisor.

To read the complete alert online, click here.

 

Fifty Ways to Need a Lawyer: Congress Proposes to Establish Financial Services Watchdog Agency

By: Melanie Hibbs Brody, Stephanie C. Robinson

Advocates for the creation of a new federal financial regulatory body claim that consumer loans and toasters have something in common—both are useful and convenient, but either one could explode in your face. In an effort to protect consumers against the risks associated with risky financial products—particularly the types that contributed to the country’s current foreclosure crisis—Senators Richard Durbin (D-IL), Chuck Schumer (D-NY), and Ted Kennedy (D-MA), and Congressmen Bill Delahunt (D-MA) and Brad Miller (D-NC) recently introduced legislation (S.566 and a companion bill, H.R. 1705) that would create the Financial Products Safety Commission (the “FPSC” or the “Commission”), a federal financial regulatory body designed to protect users of consumer financial products and services from unreasonable risk. 

To read the complete alert online, click here.

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