When talking about “risk” with the old school banking regulators, such as the Office of the Comptroller of the Currency, the Federal Reserve Board or the FDIC, the conversation was usually about “safety and soundness,” or risk to the financial institution’s bottom line and ongoing stability, or about “reputation risk,” or fear of being sued or getting bad press that might affect market price and assets.
The Moran amendment would replace the CFPB’s independent director with a board dominated by current regulators. Three of the six members of the board would be filled by the prudential regulators at the Office of the Comptroller of the Currency (OCC), the FDIC, and the Federal Reserve; the other three would be appointed by the president in a 2 to 1 party split. A board with an even number of members is a recipe for deadlock and inaction, particularly when prudential regulators have the ability to slow much-needed reforms.
"In light of the inability of all members of the subcommittee to have an opportunity to ask you questions, and your unwillingness to provide direct and responsive answers to a number of important questions, the committee would like to first discuss your plans for the CFPB."
Today, the Financial Services Committee of the House of Representatives will vote on legislation that would decidedly weaken the CFPB—or, as Elizabeth Warren put it, “stick a knife in its ribs.” Rep. Spencer Bachus (R-AL) introduced a bill (H.R. 1121) which would replace the director of the CFPB with a five-person commission. The CFPB needs strong leadership that can take action on behalf of consumers, not a commission subject to partisan infighting and delay.
First off, what are debt protection and credit insurance products? Both types of product have a similar function in that they can cancel or suspend all or part of a consumer’s debt in the case of a life-changing event, such as death, involuntary unemployment, disability, or birth of a child. The products are regulated differently, however. Since credit insurance is an insurance product, it is regulated by the states. Debt protection products are bank products regulated by federal bank regulators.
The new CFPB will acquire much of its staff from the existing federal banking regulators. Under DFA, the existing agencies have 12 months to make the transition and this could be extended another 6 months. In addition, the Office of Thrift Supervision will be folded into the Office of the Comptroller of the Currency at Treasury.