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CFPB Director Talks Credit Regulation, Lending With Congress

Just a little over give years ago, the Dodd-Frank Wall Street Form and Consumer Protection was passed by Congress. Around four years ago, the Consumer Finance Protection Bureau opened.

Today (Sept. 29), CFPB Director Richard Cordray addressed the House Committee on Financial Services to share a bit more about the CFPB’s semi-annual report to Congress.

“We understand our responsibility to stand on the side of consumers and ensure they are treated fairly. Through fair rules, consistent oversight, appropriate enforcement of the law, and broad-based consumer engagement, the Consumer Bureau is working to restore people’s trust and confidence in the markets they use for everyday financial products and services,” Cordray said. “As we continue our work, consumer financial markets are showing increasing signs of health.”

He cited data from federal agencies that showed that more consumers are taking out mortgages. And with the help of new mortgage rules that wen into effect last year, mortgage originations for owner-occupied home purchases increased between 4-5 percent, he remarked. He also spoke toward consumer credit markets and how it shows economic optimism.

“For example, in the first half of this year, over 14 million consumers obtained new auto loans, up eight percent over the prior year. For auto loans this marks a 45 percent increase since 2011 and a nine-year high. Similarly, 54 million new consumer credit card accounts were opened in the first half of 2015, which is 12 percent more than in the same period last year and 48 percent higher than in the same period of 2011,” Cordray said. “At the same time, the percentage of loan balances that are seriously delinquent dropped below four percent last quarter for the first time since 2007 and down from seven percent four years ago.”

Tossing out other key stats — like the fact that lending by community banks grew 8.8 percent, year over year — he gave more examples of the upward trend in consumer confidence. And most importantly, confidence among banks to lend more. Community bank lending in the past year grew twice as fast as non-community banks, Cordray said, and noted that credit union lending grew faster — with credit union membership growing at the fastest rate in 20 years.

“As consumers gain more confidence, lenders are responding and credit standards are becoming less tight across all these markets. Consumers appear to be carrying their debt burdens more effectively, which has contributed to the fact that the delinquency rate in each of these markets is at or near record lows. These are all positive trends for the consumer financial marketplace and very much aligned with the Bureau’s mission,” Cordray said.

Tossing out more stats he gave a few big number’s that have been part of the CFPB’s enforcement activity. This includes: more than $11 billion in relief for over 25 million consumers; FIs providing more than $248 million in redress to nearly 2 million consumers; handling over 700,000 financial service complaints from consumers. The CFPB has also taken action against a company for illegal debt collection practices resulting in $2.5 million in relief for service members; stopped illegal kickback schemes that gave consumers back $11.1 million; worked with the Department of Education to obtain $480 million in debt relief who were schemed by Corinthian Colleges, a for-profit chain of colleges.

And in Oct. 2014, the CFPB issued rules that aim to reduce burdens on the financial industry by making it more effective to disclose information from FIs to their customers. The CFPB also issued a Notice of Proposed Rulemaking to guide new federal consumer protections for prepaid accounts.

Cordray’s conclusion to the committee came with remarks about what’s next for the CFPB’s efforts.

“The Bureau is in the process of developing new rules governing payday, vehicle title, and certain installment loans. Earlier this month, the Bureau finalized further changes to some of our mortgage rules to facilitate mortgage lending by small creditors, particularly in rural or underserved areas. These changes will increase the number of financial institutions able to offer certain types of mortgages in rural or underserved areas, and help small creditors adjust their business practices to comply with the new rules,” Cordray said.

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