Cheryl Parker Rose, Assistant Director of the Office of Intergovernmental Affairs of the Consumer Financial Protection Bureau, answered questions regarding the CFPB’s priorities and coordination with state officials.
Question: What are the key issues and priorities currently facing the CFPB?
The Consumer Bureau’s priorities can be summed up as the “Four Ds” that plague consumers: deceptive marketing, debt traps, dead ends, and discrimination.
The first problem we have seen is deceptive and misleading marketing of consumer financial products and services.
When important information is deliberately withheld, or when the information provided is misleading or inaccurate, consumers can’t make sound choices.
We are addressing this not only through supervision, enforcement, and regulation, but also through consumer education. Our signature “Know Before You Owe” efforts in mortgages, credit cards, and student loans are designed to streamline and inform the choices people make about borrowing money.
The second “D” that causes problems for consumers is debt traps.
Financial products that can trigger a cycle of debt may generate substantial unexpected costs through repeated use, which can disrupt the precarious balance of consumers’ financial lives.
Debt traps can turn short-term credit into long-term debt that deepens people’s problems and leaves them worse off.
There is a clear demand for short-term credit products, which can be helpful at times for consumers who use them responsibly. We want to make sure that consumers can get the credit they need without jeopardizing or undermining their finances.
The third “D” is dead ends.
In certain important markets – such as debt collection, loan servicing, and credit reporting – consumers cannot choose their provider of financial products or services. When people cannot “vote with their feet,” their clout is limited, even though these products and services can have a profound influence on their lives.
At the Bureau, we are taking on this problem by highlighting troublesome practices and working to fix them. At the same time, we recognize that careful rules and effective oversight (through supervision and enforcement) are needed if we are going to correct the kinds of market failures that treat the interests of individual consumers as an afterthought.
The fourth “D” is discrimination.
Unequal, invidious treatment based on characteristics such as race or gender or other bases prohibited by law is a serious roadblock to consumers seeking to make economic progress.
We have made it clear that – like the other banking regulators and the Justice Department – we will pursue discrimination in consumer financial markets based on disparate impact as well as on intentional violations. From the perspective of a consumer disadvantaged by policies that have a discriminatory effect, it makes no practical difference whether or not a lender consciously intended to discriminate. Every consumer, regardless of race, gender, or other characteristics protected by law, should have equal access to credit and the opportunity that comes with it.
Question: Coordination between state and federal regulators is absolutely critical to providing seamless and efficient supervision. Your role at the CFPB is dedicated to ensuring this coordination takes place. Can you speak to me a little about the coordination between the CFPB and state regulators?
Our job, together, is to turn into reality the American vision of a marketplace in which no consumer has to suffer being swindled into a financial product. We want a consumer financial marketplace that works for consumers and honest businesses. To this end, we are focused on the 4 “Ds.”
Our collaboration with states takes a number of forms from information sharing, to enforcement, to consumer response.
In the area of enforcement:
- The Bureau has worked with state attorneys general across the nation (New Mexico, North Carolina, North Dakota, Wisconsin and Hawaii) to refund money to consumers who were unlawfully charged advance fees for debt settlement services by the company Payday Loan Debt Solution.
- And we worked with 49 states and the District of Columbia to file a court order requiring Ocwen, the nation’s largest nonbank mortgage servicer, to provide $2 billion in principal reduction to underwater borrowers. In that deal, we also secured $125 million in refunds.
With regard to information sharing and coordination, we and the Conference of State Bank Supervisors (CSBS) have a framework which establishes a process for coordination on supervision and enforcement matters.
Finally, we have piloted a partnership with a growing number of cities from Boston to Jackson, Mississippi, so that consumers in those cities, calling 311 with a problem about a consumer financial product or service gets routed directly to experts with the Bureau’s Consumer Response team.