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CBA's Public Policy Issues

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CFPB Resource Center

On July 21, 2011, the Consumer Financial Protection Bureau (CFPB), an agency with unprecedented power and authority to regulate the market for consumer financial products, opened its doors for business.

Because of our focus and expertise on retail banking products and services, CBA is well positioned to be your industry resource on the CFPB and will regularly update this page as the rulemaking process unfolds. In addition, our insights and analysis on CFPB-related issues, along with the latest news and information, will provide you with the necessary tools to navigate this new regulatory environment, so please visit often.

CBA’s 2014 Legislative & Regulatory Priorities

CFPB Report
July 18, 2014

CBA Submits Comments to Privacy Notice Proposal
On Monday, July 14, 2014, CBA and other industry trades submitted a comment letter to the CFPB on its proposal to streamline annual privacy notices under Regulation P. While the proposal would create an alternative method for delivering annual privacy notices, the alternative is so circumscribed it has little practical value to consumers or financial service providers. To be eligible to take advantage of the alternative delivery method, a financial institution must not have changed its information sharing practices, must only share information in accordance with one of the statutory exceptions, and must post its privacy notice online. Furthermore, the online notice option would be limited to institutions not sharing data with either affiliates or unaffiliated third parties in any manner which triggers a customer’s rights to opt-out of such sharing, while strictly adhering to the model form. Institutions eligible for the online notice option would still be required to provide the Gramm-Leach-Bliley Act (GLBA) privacy notice to any customer on request. Financial institutions electing the alternative delivery method would be required to provide the customer with a clear and conspicuous annual disclosure indicating: (i) the privacy notice has not changed, (ii) the notice is available on the institution’s website with a specific web address directly to the privacy notice, and (iii) the customer may request a mailed copy of the notice by calling a toll-free number.
CBA urged the Bureau to further streamline the proposal and eliminate the annual notice in instances where there is no sharing under either GLBA or the Fair Credit Reporting Act which would require the institution to offer customers an opt-out.
CFPB Sues Law Firm for Operating as a Debt Collection “Lawsuit Mill”
On Tuesday, July 14, 2014, the CFPB filed a lawsuit in Federal District Court against a Georgia-based law firm, Frederick J. Hanna & Associates, and its three principal partners. The Bureau claimed the firm operated a debt collection “lawsuit mill” in which it used illegal tactics to intimidate consumers into paying debts they did not owe. The CFPB says the firm often relied on deceptive court filings and unsubstantiated evidence to file hundreds of thousands of lawsuits – specifically, more than 350,000 suits between 2009 and 2013 in Georgia alone. The lawsuit seeks to compensate victims, issue a civil fine, and impose an injunction against the company and its partners.
CFPB Abandons Consumer Complaint Portal Agreement with Financial Institutions
On Tuesday, July 14, 2014, the CFPB abandoned its Consumer Complaint Portal Agreement initiative which, according to American Banker, would have required banks to “sign a contract that would have given the agency ownership of the content of consumers' complaints that it receives online.” Previously, the CFPB circulated a draft contact to limited financial institutions outlining the terms of the mandatory agreement regarding information obtained on the Consumer Complaint Portal. The CFPB’s spokeswoman Moira Vahey said the Bureau "is not moving forward with the contemplated contract approach," but "will continue to engage with industry stakeholders to ensure compliance with their legal obligations for securely and appropriately handling consumer complaint information."
CFPB Proposes Publishing Narratives to Consumer Complaints
On Wednesday, July 16, 2014, the CFPP announced a proposal to include consumer narratives in its Complaint Portal. The Bureau already collects and publishes customer complaint information on banks and nonbanks concerning products such as credit cards, mortgages and student loans. But the proposal would give consumers the option to share their "narratives," providing more detailed accounts of specific complaints. Releasing these details, the CFPB said, would allow the public to "detect specific trends in the market, aid consumer decision-making, and drive improved customer service."
"The consumer experience shared in the narrative is the heart and soul of the complaint," CFPB Director Richard Cordray said in a press release. "By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole."
The announcement was followed by a field hearing in El Paso, TX on Thursday, July 17, 2014, which included remarks Director Cordray, consumer groups, and industry, and provided an opportunity for public input. None of the panelists strongly opposed the publication of narratives, but some sought reassurance regarding the protection of personally identifiable information. Industry groups noted the asymmetry of a complaint database which does not underscore the public good provided by financial service providers. There was also discussion about how the addition of the narrative will increase competition in the financial services marketplace.
The CFPB also released a 35-page report entitled: “Consumer Response: A snapshot of complaints received.” The document presents an overview of the way in which the Office of Consumer Response handles complaints and offers analysis of complaints received from June 21, 2011 through June 30, 2014. According to the report, the CFPB plans to expand its complaint handling to include other products and services under its authority, such as pre-paid cards. The report does not mention the concurrent issuance of a proposal to include the narrative. Nor does the report normalize the complaint data by volume. Instead, it says the Bureau “continues to evaluate, among other things, the release of the consumer narratives, the potential for normalization of the data to make comparisons easier, and the expansion of the functionality to improve user experience.”
The proposal will have a 30-day comment period following publication in the Federal Register. CBA will collaborate with other trade groups to submit a comment letter.

House Financial Services Subcommittee Holds Hearing on “Operation Choke Point”
On Tuesday, July 15, 2014, the House Financial Services Subcommittee on Oversight and Investigations held a hearing entitled, “The Department of Justice’s ‘Operation Choke Point,’” which included testimony from the Department of Justice (DOJ), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC) and the Comptroller of the Currency (OCC).  The hearing was widely attended by Republicans and Democrats, and examined a series of investigations by DOJ, related to Operation Choke Point.” DOJ took the position that the investigations of businesses, including from financial regulators, are part of its regular efforts to protect consumers from unlawful business practices. Subcommittee Chairman Patrick McHenry (R-NC) and his Republican colleagues are concerned the Administration is applying political pressure on financial services providers to not conduct business with certain industries such as pawn shops, payday lenders, and gun manufacturers.
“The initial findings are quite disturbing. Rather than directly investigate merchants for fraudulent activities, the Department of Justice subpoenaed banks and payment processors of targeted merchants to effectively compel them to choke off businesses from accessing the banking system. Consequently, it seems that Operation Choke Point may have led to banks terminating their relationships with unjustifiably named, quote, high-risk, end quote merchants out of fear of civil and criminal liability from the Department -- the Department and other financial regulators as well,” Chairman McHenry said in his opening statement.
Rep. Blaine Luetkemeyer (R-MO) advocated for the “End Operation Choke Point Act of 2014” (H.R. 4986), legislation he introduced aimed at providing a legal safe harbor to institutions serving legally operating customers.

Prudential Regulators Hold Interagency CRA Q&A
 On Thursday, July 17, 2014, prudential regulators, which included the FDIC, Federal Reserve, and the OCC, held a presentation entitled: “Interagency Questions and Answers Regarding Community Reinvestment,” outlining revised and new Q&As regarding community reinvestment, and revised examination procedures for financial institutions. The five revised Q&As included: 1) activities in the broader statewide or regional area; 2) meaning of regional area; 3) investment in nationwide funds; 4) community services; and 5) community development services. The two new Q&As establish standards for: 1) qualified investments and 2) community development lending.

Fed Chair Reports to Congress on the State of the Economy
Federal Reserve (Fed) Chair Janet Yellen testified before the Senate Banking Committee on Tuesday, July 15, 2014, and offered similar testimony before the House Financial Services Committee on Wednesday, July 16, 2014. Yellen described the state of the economy, as well as the current and future monetary actions of the Federal Reserve. She fielded questions from both Democrats and Republicans, and reiterated her belief the economy is rebounding, but has a long way to go.
In the Senate Banking Committee, Yellen affirmed the eventual dissolution of the Fed’s “quantitative easing” stimulus program, and its refocus on a more “normalized” monetary policy, though very delicately and over time. She noted a reasonable distance between Congress and the Fed would help the agency maintain the independence it requires. In the House Financial Services Committee, Republicans questioned Yellen, calling for the Fed to “lift the veil of secrecy,” and highlighted the need for strong Congressional oversight. Republicans also expressed concern on the increasing costs of servicing U.S. sovereign debt when the Fed ultimately increases rates.
Democrats focused on Yellen’s diagnosis of the economy, raising the issue of unemployment, among minorities several times. Yellen reiterated, as the state of the economy continues to trend upward, employment would increase across all facets of the working population.
Yellen said the tool for mending fractures created by the 2008 recession is monetary policy, which she says will tighten as the economy recovers.

FDIC Releases Proposed Rule for Capital Standards, Requests Comment
On Tuesday, July 15, 2014, the FDIC released a Notice of Proposed Rulemaking (NPR) and Request for Comment, due in 60-days on the issue of capital standards. The proposal would: 1) revise the capital evaluation ratios used in the agency’s risk-based deposit insurance assessment system to conform to those adopted by the prudential regulators; 2) revise the assessment base calculation for custodial banks to conform to the asset risk weights adopted by the prudential regulators; and 3) require all highly complex institutions to use the Basel III standardized approach to measure counterparty exposure for deposit insurance assessments and exposure amount for other securities financings transactions. According to the FDIC:
  • The proposed changes to the risk-based deposit insurance assessment system reflect changes to the regulatory capital rules recently adopted by the federal banking agencies. See 79 FR 20754 (Apr. 14, 2014), 78 FR 62018 (Oct. 11, 2013), and 79 FR 24528 (May 1, 2014).
  • The NPR would conform the capital ratios and ratio thresholds in the assessment system to the new prompt corrective action capital ratios and ratio thresholds, which include a new common equity Tier 1 capital ratio (effective 2015), revised ratio thresholds for the Tier 1 risk-based capital ratio (effective 2015), and a new supplementary leverage ratio (effective 2018) for advanced approaches banks.
  • The NPR would conform the assessment base calculation for custodial banks to the new asset risk weights using the standardized approach in the regulatory capital rules (effective 2015).
  • The NPR would require all highly complex institutions measure counterparty exposure for assessment purposes using the standardized approach in the regulatory capital rules (effective 2015).
FDIC Chairman Martin Gruenberg stated it is important the capital categories used in deposit insurance premium assessments reflect the new rules in order “to maintain consistency in risk measurement and not increase reporting burden for smaller banks."

Hill Letter to Education Secretary Duncan
On Thursday, July 17, 2014, a bicameral and bipartisan letter was sent to Department of Education (DOE) Secretary Arne Duncan urging the Department to limit the scope of its proposed rulemaking to Title IV funds and consider the impacts to students. The letter, with 41 signatories, was led by Congressman Blaine Luetkemeyer (R-MO) in the House and Senator John Hoeven (R-ND) in the Senate. CBA will closely monitor the activity of the DOE as it moves forward in the rulemaking process.

Past Reports

July 18, 2014
July 11, 2014
June 27, 2014
June 20, 2014
June 13, 2014
June 6, 2014
May 30, 2014
May 23, 2014
May 16, 2014
May 9, 2014
May 2, 2014
April 25, 2014
April 18, 2014
April 11, 2014
March 28, 2014
March 21, 2014
March 14, 2014
March 7, 2014
February 28, 2014
February 21, 2014
February 14, 2014
February 7, 2014
January 31, 2014
January 24, 2014
January 17, 2014
January 10, 2014

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