Last week, Director Cordray spoke at a National Credit Union Administration town hall webinar. While his prepared remarks were not particularly revealing, the American Banker reported that Director Cordray was unusually candid during the Q&A part of the program.
In discussing the CFPB’s work on a proposed rule for overdraft products, Director Cordray indicated that the CFPB is not planning on banning overdraft products, but is “reviewing the size of fees, frequency of fees, occasion for fees, [and] the ordering of transactions.” He indicated that rules relating to prepaid cards, payday loans and the Home Mortgage Disclosure Act are a higher priority for the CFPB than rules for overdraft and debt collection. Finally, during the Q&A session, Director Cordray emphasized that the CFPB is not going to ease up on using the disparate impact theory to hold indirect auto finance companies liable for unintentional discrimination. Under this highly controversial theory—currently before the Supreme Court—a lender can be found to have violated the law without any evidence of intentional discrimination but based on statistical differences between groups that cannot be ascribed to legitimate business considerations.
The majority of Director Cordray’s prepared remarks did not include new information. The remarks focused on the CFPB’s actions in the mortgage space including the proposed changes to the definitions of “rural” and “small creditor” in Regulation Z. Additionally, Director Cordray promoted that the “Rate Checker” tool on the CFPB’s website, which allows consumers to check various mortgage rates in a specific area, as a critical feature that helps consumer make informed mortgage decisions. This comment suggests the CFPB is unlikely to be receptive to recent industry comments, including those from the American Bankers Association (“ABA”), urging the CFPB to remove the mortgage rate calculator from its website. (The ABA believes that the Rate Checker is an inadequate tool for consumer to use to compare financing because it lacks the ability to review all relevant information.)
Finally, we find it interesting that in his remarks, Director Cordray profusely praises the work of small lenders. We hope that Director Cordray continues to recognize the importance of small lenders as the CFPB prepares future proposed rules.