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Consumer Financial Protection Bureau Begins Action This Week

President Obama is expected to reject interim director and Harvard Law professor Elizabeth Warren and appoint Richard Cordray, former Ohio attorney general, to be the director of the Consumer Financial Protection Bureau, according to reports learned by Boston bankruptcy lawyer Neil Burns. The CFPB officially opens July 21.

Nevertheless, coming up with the idea for the agency, lobbying for it during the Gramm-Dodd leglislation, and laying the groundwork by “directing” it since its inception, Massachusetts’ Elizabeth Warren and her team have undertaken numerous alliances and endeavors in advance of the opening. Boston bankruptcy lawyers who represent consumers are looking carefully at the regulators to determine what new rules and programs we can pass on to our Massachusetts consumer clients. So far, we have gleaned the following: 4
 
On July 12, 2011, Professor Warren announced the CFPB approach to examining large banks, with over $10 billion, with respect to the financial protection and disclosure to consumers. Using examiners formally from the FDIC, other federal and state regulatory agencies, the CFPB will examine local practices, and educate to enforce compliance. The monies in these banks comprise more than 80% of banking industry assets.
 
In an alliance with the military Offices of the Judge Advocate Generals, the CFPB entered into an agreement to protect members of the armed services regarding consumer financial products and services. Noting that military personnel are too often “targeted by predatory lenders” and become “victims of unfair financial practices,” the parties agreed to work together to educate the military personnel, enforce consumer laws and study financial products and practices to determine how to protect consumers.
 
The CFPB has drafted new CFPB mortgage disclosure forms to protect consumers. The goal is to remove critical items from the preverbal fine print. With a mandate from the Dodge-Frank Act, which brought about the birth of CFPB, the agency was instructed to integrate the “truth-in-lending” form and the “good faith estimate” form in a way that will be simpler, less complicated, and not duplicative. CFPB floated two proposed forms and sought comments on each. The responses were focused on “cautions,” “key terms,” and “summary.” The projected payments sections presented the next most comments. According to CFPB, comments were critical in revising the mortgage disclosure forms.
 
Massachusetts student loans are another consumer area the CFPB seems intent on working on (well, their focus is national!). In their initial CFPB student loan postings, the CFPB is merely providing information. They note that the average college graduate has over $23,000 in student loans. They differentiate between the publicly backed student loans and private student loans. However, as the CFPB points out, discharging student loans in bankruptcy is very difficult.
 
The CFPB website allows for inquiries of myriad consumer financial questions, including loan modification, foreclosures, equity loans, credit card issues, payday loans, cash advance rules, motor vehicle loans, tax refund loans, credit counseling, credit reports, travelers checks and money orders, wire transfer, etc.
 
With respect to the drama in Washington over Elizabeth Warren’s nomination, Massachusetts consumers will have to stay tuned. One side of the aisle wants her out, the other side in, and advocates are hoping that the debt ceiling crisis will be resolved so Congress can go into recess and the president can name Ms. Warren in a stealth interim nomination, avoiding Senate confirmation. As Professor Warren recently said “Every day, somebody’s got a plan to undercut this agency, to knock it down,” so her job description, before her job even starts, has been to defend the agency she advocated for and that Congress put into place.