Alexandria, Va. — Starting with an article in the December edition, a new series in the ABI Journal is examining the Consumer Financial Protection Bureau (CFPB), its current activities and its potential impact on bankruptcy practice. “For the individual consumer heretofore victimized by unscrupulous financial service providers, the CFPB’s activism is a welcome respite from feelings of oppression and helplessness,” Alane A. Becket and William A. McNeal of (Malvern, Pa.) write in their article, “What Is the CFPB, and Why Should You Care?” “However, for a service provider or smaller entity, the CFPB’s overzealous and heavy-handed regulatory tactics arising out of the near-limitless and sweeping powers conferred by broad enabling statutory language, could result in financial ruin.”
The CFPB was established by the “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010” in response to financial practices that helped precipitate the financial crisis of 2008. “For consumers, the CFPB ensures that they ‘are provided with timely and understandable information to make responsible decisions about financial transactions’ and ‘are protected from unfair, deceptive, or abusive acts and practices and from discrimination,’” according to Becket and McNeal.
The authors point out that the CFPB has been very active and aggressive in carrying out its duties, citing the agency’s Mortgage Servicing Rules that went into effect in 2014. Becket and McNeal write that the new rules require “that a lender perform a good-faith ability-to-pay analysis; provide certain information requested by such borrowers; and afford protections to such borrowers in connection with force-placed insurance and impose obligations on servicers to correct errors asserted by mortgage loan borrowers.” The authors also note that “the CFPB’s rule-making power generally supersedes that of other agencies and courts, and for the most part, they must defer to the CFPB exclusively.”
While the CFPB was established to protect low-income consumers, Becket and McNeal warn that “the CFPB’s policies may hamper their ability to obtain products and services that are needed but might not be available through traditional financing sources.” The authors will address these issues in forthcoming editions of the ABI Journal.
To obtain a copy of “What Is the CFPB, and Why Should You Care?,” published in the December issue of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at jhartgen@abiworld.org. Additionally, make sure to watch ABI Executive Director Sam Gerdano interview Alane Becket and Joanne Needleman of Clark Hill PLLC (Philadelphia) about the powers of the CFPB.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abi.org/education-events.