In conjunction with yesterday’s meeting of the CFPB’s Consumer Advisory Board, which included a session on the CFPB’s strategic outlook, the CFPB issued its “near-term priority goals where we hope to make substantial progress over the next two years.”
The CFPB’s policy priorities over the next two years involve the following nine areas, which are listed alphabetically: arbitration, consumer reporting, debt collection, demand-side consumer behavior, household balance sheets, mortgages, open-use credit, small business lending, and student lending. (The CFPB defines “open-use credit” as “any credit product that is offered without an expectation that the loan will be used for a specific purpose” and includes overdraft products, payday, auto title and installment loans.) For each goal, the CFPB provides its rationale for making it a near-term priority and indicates how it intends to use its tools over the next two years to reach its goal.
Much of the CFPB’s discussion of its goals tracks previous comments made or positions taken by the CFPB. For example, like Director Cordray’s recent remarks to the American Constitution Society, the CFPB’s arbitration discussion signals that the CFPB is on track to implement the proposals it outlined last fall which would prohibit class action waivers in consumer arbitration agreements. However, the priority goals do provide the following noteworthy information:
- In previous statements, the CFPB indicated that it had not decided whether it would engage in overdraft rulemaking. However, it now appears that the CFPB has decided to move forward with overdraft rulemaking. In discussing how it intends to reach its goal for open-use credit, the CFPB stated that it “will initiate a rulemaking process with the goal of developing rules to make the overdraft market fairer and more transparent.”
- The CFPB confirmed that it plans to propose a “larger participant rule” for the installment lending market as another way of reaching its goal for open-use credit. The CFPB had previously indicated only that it was considering such a rule.
- The CFPB indicated that to reach its goal for debt collection, it will “initiate the rulemaking process with the goal of finalizing a rule that will establish clear rules of the road to ensure that debt collectors (both first-party and third-party) treat consumers with dignity and respect, obtain and retain the information necessary to substantiate the debts they collect on, and provide consumers with appropriate information about their rights and the debt collection process.”
- We have previously reported about developments indicating a growing CFPB interest in small business lending. The inclusion of small business lending in the CFPB’s near-term priority goals confirms the CFPB’s interest. In describing how it intends to reach its goal for small business lending, the CFPB lists its plans to build a small business lending team and begin market research and outreach for rulemaking on business lending data collection; subject to an assessment of feasibility, build an infrastructure to intake and analyze small business lending complaints; and continue to examine small business lenders for fair lending compliance. (Dodd-Frank Section 1071 amended the ECOA to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses. Such data includes the race, sex, and ethnicity of the principal owners of the business.)
The CFPB also notes that while its strategy focuses on its forward-looking priorities, there are “additional priority work streams that are well-established and ongoing, and we will see that work through to completion. This includes, in particular, our fair lending oversight of indirect auto lenders and our rulemaking on prepaid cards.” The CFPB is expected to issue a final prepaid card rule this Spring.
The CFPB also cautions companies to “continue their focus on complying with the law beyond the particular issues described in the goals, whether or not they see their particular industry or product mentioned explicitly among the shared cross-Bureau priorities.”