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The acting head of the Consumer Financial Protection Bureau vowed to continue policing lending discrimination yesterday, a day before his first semiannual report to Congress on the CFPB, the Wall Street Journal reported. Mick Mulvaney, who has been interim director since November, will use today’s and Thursday’s sessions before lawmakers to outline his strategies for overhauling the bureau and his regulatory agenda for the coming months. Mulvaney said in remarks prepared for his testimony that enforcement and supervision of lending-discrimination rules will remain part of the CFPB’s powerful enforcement division, which will soon be renamed to reflect its updated role. “This will make enforcement and supervision more efficient, effective and accountable,” Mulvaney said of his fair-lending policy in the remarks. The announcement comes two months after Mulvaney removed the CFPB’s Office of Fair Lending and Equal Opportunity from the bureau’s enforcement division and placed it under his direct control. The bureau said at the time that the fair-lending group would focus on advocacy, coordination and education, without explaining what would happen to the sizable team of enforcement and supervision experts in the group. Mulvaney’s testimony clarifies that the fair-lending division has essentially been split, with advocacy under the director’s control but enforcement and supervision remaining under the enforcement division.

The top U.S. watchdog for consumer finance is seeking a record fine against Wells Fargo & Co that could exceed several hundred million dollars for auto insurance and mortgage lending abuses, Reuters reported. The penalty would be the first issued by Mick Mulvaney, whom President Donald Trump tapped in November to head the Consumer Financial Protection Bureau (CFPB). The CFPB is readying sanctions alongside the Office of the Comptroller of the Currency (OCC), Wells Fargo’s day-to-day regulator. The agencies are ready to sanction Wells Fargo for layering extra insurance on drivers and collecting commissions on those policies, Reuters reported last month. Both agencies have also been investigating the bank for wrongly levying fees on mortgage borrowers.

Wells Fargo & Co. and Citigroup Inc. are unlikely to make a $14,000 auto loan to a borrower with a subprime credit score as that is now the domain of direct lenders such as Exeter Finance LLC, based in Irving, Texas. But Wells Fargo and Citigroup have helped lend Exeter $1.4 billion for that very purpose, according to a Wall Street Journal analysis. Bank loans to Exeter and other nonbank financial firms have increased sixfold between 2010 and 2017 to a record high of nearly $345 billion, according to the WSJ's analysis of regulatory filings. They are now one of the largest categories of bank loans to companies. Banks say that their new approach of lending to the nonbank lenders is safer than dealing directly with consumers with bad credit and companies with shaky balance sheets.

Growing numbers of small subprime auto lenders are closing or shutting down after loan losses and slim margins spur banks and private equity owners to cut off funding, Bloomberg News reported. Summit Financial Corp., a Plantation, Fla.-based subprime car finance company, filed for bankruptcy late last month after lenders including Bank of America Corp. said it had misreported losses from soured loans. And a creditor to Spring Tree Lending, an Atlanta-based subprime auto lender, filed to force the company into bankruptcy last week, after a separate group of investors accused the company of fraud. Private equity-backed Pelican Auto Finance, which specialized in “deep subprime” borrowers, finished winding down last month after seeing its profit margins shrink. The pain among smaller lenders has parallels with the subprime mortgage crisis last decade, when the demise of finance companies like Ownit Mortgage and Sebring Capital Partners were a harbinger that bigger losses for the financial system were coming. In both cases, rising interest rates helped trigger more loan losses. “There’s been a lot of generosity and not a lot of discretion on the part of lenders and investors,” said Chris Gillock, a banker at Colonnade Advisors, which advises companies on subprime auto investments. “There’s going to be more capitulation.”

The Trump administration kicked off plans to revamp lending rules in lower-income communities with a proposal that would make it easier for banks to comply with a decades-old law that has long confounded the industry, the Wall Street Journal reported. The Treasury Department, in a memo released Tuesday, said the 1977 Community Reinvestment Act (CRA) hasn’t kept pace with the evolving banking sector. The law, which was passed to stop “redlining,” a form of lending discrimination, is enforced by a complicated series of regulations. Treasury Secretary Steven Mnuchin and Comptroller of the Currency Joseph Otting, who both dealt with the law as executives at OneWest Bank, now a part of CIT Group Inc., have said altering the rules is a priority. Under the proposed changes, banks would be held to more objective, numbers-based standards for complying with the law, compared with the current approach in which large parts of the exam hinge on regulators’ subjective judgments. The changes also would make it easier for banks to meet certain lending requirements and lower penalties for compliance problems.

Consumers could find it easier to get small loans for emergency car repairs and other unplanned expenses under Trump administration plans to prod more banks to make short-term loans, the Wall Street Journal reported. “We have a big market, we have a market that is unfulfilled,” said Comptroller of the Currency Joseph Otting. “When you don’t have an alternative in that space, what happens is people have a tendency to fall to the lowest common denominator,” such as check-cashers, pawnshops and liquor stores, he said. The move signals a shift from the Obama administration, which earlier this decade pressured banks to scrap their short-term lending programs. Those regulators viewed small loans by banks with suspicion because of concern about high interest rates and perceived repayment risks. The Office of the Comptroller of the Currency, which oversees national banks, will “clarify” its position on installment loans that can help consumers with immediate cash needs such as buying “a piece of equipment [or] a family emergency,” Otting said.

Former St. Louis Cardinals slugger Jack Clark claimed in a bankruptcy filing that he is more than half a million dollars in debt, the St. Louis Post-Dispatch reported. Clark and his wife Angela L. Clark, claimed in U.S. District Court of Eastern Missouri on March 6 that they owe more than $568,000 to creditors. They list assets of $25,000 and a combined annual income of $19,000. In all, Clark played 18 seasons with the Giants, Cards, Yankees, Padres and Red Sox. Baseball Reference estimated that Clark earned at least $15 million in his career. This is Clark's second bankruptcy. He filed in 1992 after being unable to pay for 18 luxury automobiles and fund his own drag-racing enterprise.