From overdraft to HMDA, rulemaking has new look at Mick Mulvaney’s CFPB

CFPB seeks comment on guidance process as part of Mulvaney review

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Acting Consumer Financial Protection Bureau Director Mick Mulvaney has overhauled the agency’s spring agenda, dropping several long-time goals of his predecessor, including a rule on overdraft programs, checking accounts and student loan servicing.

Notably, Mulvaney also apparently scrapped plans to extend CFPB supervision to a wider group of nonbank, such as large marketplace lenders.

The changes are yet another boon for corporations as Mulvaney seeks to reshape the agency.

“The bureau is considerably narrowing its footprint in the market,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading.

Following is a summary of where the CFPB is changing gears:

Long-term shift

The CFPB’s agenda no longer includes any reference to a rulemaking for overdraft programs on checking accounts, student loan servicing or so-called “larger participants.”

Banks had preemptively opposed further efforts to crack down on overdraft programs, arguing that rules that took effect in 2010 which required customers to opt-in to such programs had proven effective. But former CFPB Director Richard Cordray had continued to sound the alarm on overdraft, suggesting that customers weren’t necessarily aware of the risks involved.

The agenda’s lack of mention is a concrete sign that Mulvaney is not interested in pursuing that course, which many had expected given his desire to ease regulations.

The CFPB also dropped mention of any reference to oversight of the $1.3 trillion student loan servicing industry. Mulvaney last week also stripped the student lending office of all its functions except consumer education.

Taken together, the moves show the CFPB is not likely to engage in rulewriting or significant supervision of that area.

Finally, the CFPB dropped plans to release a larger participant rule to give it oversight of large installment lending firms, including marketplace lenders which are not directly subject to any federal supervision for consumer protection.

The move leaves the firms grappling with state-by-state regulation, but saves a potential headache from a federal regulator which might have sought to restrict such firms.

“CFPB supervision would have exposed [marketplace lenders] to potential greater liability for their compliance with federal disclosure and substantive laws, like the [Truth in Lending Act] and fair lending, and compliance costs in connection with gearing up for CFPB supervision,” said Richard Horn, a former CFPB official and now principal at the law firm Garris Horn.

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