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Rohit Chopra, the head of the U.S. Consumer Financial Protection Bureau (CFPB), will tell lawmakers on the House Financial Services Committee today that the agency is seeking to minimize foreclosures on struggling American homeowners and ensure "greater competitive intensity" in consumer lending, according to his prepared testimony, Reuters reported. The agency will also aim to scrutinize Big Tech as it gains greater control over money flows and will sharpen its enforcement focus on firms that repeatedly violate consumer finance laws. "The CFPB will use its tools to promote an equitable and inclusive recovery," Chopra will tell the panel. I hope to focus attention on ways to stimulate greater competitive intensity in consumer financial markets and sharpen my focus on repeat offenders, particularly those that violate agency or federal court orders." He added that the agency will keep a close eye on practices that might impede competition by taking note of "the obstacles small local financial institutions face when seeking to challenge dominant incumbents, including in Big Tech." Analysts expect he will use the CFPB's sweeping authority to probe the financial marketplace and flex significant enforcement muscles. Read more.

To view today's hearing at 10 a.m. ET, please click here. 

The Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ), in cooperation with the Office of the Comptroller of the Currency (OCC), took action today to put an end to alleged redlining by Trustmark National Bank, according to a CFPB press release. The CFPB and DOJ allege that Trustmark discriminated against Black and Hispanic neighborhoods by deliberately not marketing, offering, or originating home loans to consumers in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area. The CFPB and DOJ also allege that Trustmark discouraged consumers residing in or seeking credit for properties located in these neighborhoods from applying for credit. If entered by the court, the settlement would require Trustmark to put $3.85 million into a loan subsidy program for impacted neighborhoods, increase its lending presence there, and implement proper fair lending procedures. The order would also impose a $5 million civil money penalty against the bank, and will credit the $4 million penalty collected by the OCC toward the satisfaction of this amount.

The Consumer Financial Protection Bureau has ordered a leading prison banker to pay $6 million for siphoning off taxpayer-funded benefits and forcing recently incarcerated individuals to pay hidden fees, according to an agency announcement posted yesterday, the Washington Post reported. JPay, a Florida-based company owned by the private equity firm Platinum Equity Partners, is a dominant provider of financial services to prisons, jails and inmates. The company provides former inmates with debit cards as they leave prison. The cards typically contain money that was seized when the former inmates were locked up, earnings from prison labor, or state benefits designed to help them get back on their feet. The CFPB concluded that JPay “engaged in unfair and abusive acts” by attaching fees to cards that people were required to receive as they left prison. The company also deceived consumers about the fees themselves, CFPB concluded.

The Consumer Financial Protection Bureau (CFPB) on Friday filed a complaint and proposed consent order alleging that American Advisors Group (AAG) used inflated and deceptive home estimates to lure consumers into taking out reverse mortgages, according to a CFPB press release. The CFPB also alleges that AAG’s deceptive conduct violated a 2016 administrative consent order that addressed AAG’s deceptive advertising of reverse mortgages. If entered by the court, the proposed consent order would prohibit AAG from future unlawful conduct and require AAG to pay $173,400 in consumer redress and a $1.1 million civil money penalty. American Advisors Group, based in Irvine, Calif., is one of the nation’s leading providers of reverse mortgages. A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for paying taxes, insurance, and home maintenance, among other obligations.

A federal judge on Thursday rejected Wells Fargo & Co.'s bid to dismiss a lawsuit claiming it defrauded shareholders about its ability to rebound from five years of scandals over its treatment of customers, Reuters reported. The fourth-largest U.S. bank has operated since 2018 under consent orders from the Federal Reserve and two other U.S. financial regulators to improve governance and oversight, with the Fed also capping Wells Fargo's assets. Shareholders said bank officials falsely claimed in TV interviews, analyst calls and congressional testimony that the bank was mending its ways, when regulators actually viewed its progress as "deficient" and "unacceptable." U.S. District Judge Gregory Woods in Manhattan said the shareholders plausibly alleged that some statements by various bank officials, including former Chief Executive Tim Sloan, were "deliberately or recklessly false or misleading." According to shareholders, San Francisco-based Wells Fargo lost more than $54 billion of market value as the truth was gradually revealed over a two-year period ending in March 2020.

The civil trial of three former Wells Fargo & Co. employees over their alleged roles in a scandal involving phony accounts kicked off yesterday, a rare public confrontation between a top U.S. banking regulator and former high-level bank executives, Reuters reported. The Office of the Comptroller of the Currency (OCC) is squaring off against executives it says are partly culpable for the San Francisco lender's misconduct before an in-house OCC judge in Sioux Falls, South Dakota, in a hearing expected to last at least two weeks. The long-running scandal over Wells Fargo's pressurized sales culture that led staff to open millions of unauthorized or fraudulent customer accounts has cost the bank billions of dollars in civil and criminal penalties and has badly damaged its reputation. The OCC alleges that Wells Fargo's former risk officer, Claudia Russ Anderson, former chief auditor David Julian and former executive audit director Paul McLinko failed to adequately perform their duties and responsibilities, contributing to Wells Fargo's "systemic sales practices misconduct" from 2002 to 2016. The proceedings mark a significant step for a regulator that has been criticized in the past for being too soft on the banks and executives it oversees, said regulatory experts.

The Consumer Financial Protection Bureau (CFPB) took action yesterday against an income share agreement (ISA) provider for misrepresenting its product and failing to comply with federal consumer financial law that governs private student loans, according to a CFPB press release. Better Future Forward, Inc., through its affiliated companies, provides students with money to finance their higher education, in the form of ISAs, under which students agree to pay a percentage of their income for a set period of time or until they reach a payment cap. Better Future Forward falsely represented that the ISAs are not loans, failed to provide disclosures required by federal law, and violated a prepayment penalty prohibition for private education loans. Under the CFPB’s order, Better Future Forward is required to provide disclosures that comply with federal consumer financial law, eliminate the prepayment penalties, and stop misleading borrowers.

A national subprime auto lender has agreed to pay more than $27 million to settle allegations that it took advantage of thousands of Massachusetts borrowers, the state attorney general’s office said yesterday, the Associated Press reported. The settlement with Credit Acceptance Corp. in Suffolk Superior Court will provide debt relief and credit repair to consumers, according to a statement from Attorney General Maura Healey. “Thousands of Massachusetts consumers, many of them first-time car buyers, put their faith in CAC to help them with an auto loan, but were instead lured into high-cost loans, fell deeper in debt, and even lost their vehicles,” she said. “With this significant $27 million settlement, eligible Massachusetts drivers who have been suffering under the weight of a crushing car loan due to CAC’s deceptive practices will be able to receive relief and avoid new defaults.” More than 3,000 borrowers across the state are expected to be eligible for settlement funds, many of them in Boston, Springfield, Worcester and Brockton. The settlement also requires the company to make changes to its loan handling practices.

The parent company of Cadence Bank agreed Monday to pay roughly $8.5 million in fines and community investments to settle charges of lending discrimination brought by the Justice Department and a federal bank regulator, The Hill reported. Cadence Bancorporation will pay a $3 million fine to the Office of the Comptroller of the Currency (OCC) and $5.5 million to expand credit opportunities for Black and Hispanic borrowers to resolve accusations of “redlining” minority customers in the Houston metropolitan area. From 2013 to 2017, prosecutors alleged that Cadence Bank concentrated “nearly all its branches, loan officers, marketing and outreach in majority-white neighborhoods,” according to the Justice Department complaint, despite serving one of the most diverse metropolitan areas in the U.S. All but one of Cadence’s 13 bank branches were located in majority-white census tracts even though 56 percent of census tracts in the Houston metro area were majority-Black and majority-Hispanic, according to the complaint. Cadence had only one branch in 2012 but gained 12 with the acquisition of Encore Bank in 2013, all but one of which were located in majority-white neighborhoods.