Consumer Bankers Association President and CEO Richard Hunt dished out some hard honesty on his latest blog posting, listing five things the Consumer Financial Protection Bureau should do to be more widely respected.
In his Sept. 9 edition of Richard’s Rapid Fire, Hunt stated that the first thing the CFPB should do is appoint a permanent deputy director.
“If Director [Richard] Cordray appointed a permanent deputy director, it would quell concerns he is playing politics with the position,” Hunt wrote. “I believe if Donald Trump emerges victorious on Election Day, and the Democrats take control of the Senate, Director Cordray would then name a deputy director. Should Senate Democrats be unwilling to confirm Mr. Trump’s nominee as CFPB director, Cordray’s appointee could then become the acting director without Senate confirmation. However, if Secretary [Hillary] Clinton wins, she would nominate a director of her own.”
Former Deputy Director Steven Antonakes, who held the position since January 2013, stepped down in July 2015. Meredith Fuchs took over temporarily before being replaced by current Acting Deputy Director David Silberman.
Hunt next suggested that the CFPB reform the use of its Consumer Complaint Database, which has come under fire because of what the industry termed a lack of verification. Hunt took issue with the CFPB encouraging consumers to send their complaints to the CFPB rather than to the companies themselves.
It has been reiterated several times that the CFPB uses the complaints to target its supervision efforts. In March 2015, Antonakes discussed the CFPB’s risk-based supervisory approach as concentrating on risks to consumers rather than to those to institutions. The CFPB also began publishing monthly complaint snapshots to highlight certain products and services (“mak[ing] public the gross volume of complaints – unverified and out of context – every month,” Hunt wrote).
“The complaints can and should be a way to target possible problem areas for supervision and enforcement, but the public campaign has not been shown to benefit consumers,” Hunt said.
Next, Hunt called for the CFPB to end “regulation by enforcement,” or the use of its consent orders as guidance to how to comply with the laws and regulations. At CBA Live in March, Cordray stated that its consent orders “provide detailed guidance for compliance officers across the marketplace.”
Hunt begged to differ.
“Consent orders seldom provide clear guidance for the entire industry on how to comply with the law. Clear guidelines need to be established through public notice and comment rulemaking to provide banks with the certainty they need to best serve their customers,” he wrote.
The last two suggestions Hunt had for the CFPB included encouraging the Department of Education to provide better information to federal student loan borrowers and ending the use of midnight embargos to announce rules and regulations.
“Unlike private student loans, which are required to provide customers with clear disclosures of loan costs and terms, the Department of Education does not highlight the key financial information needed by consumers at the application stage,” Hunt stated.
Hunt called the use of the embargoes as “overtly political” and leading to “confusion and unfair reporting, rather than advancing consumer interest.”