Bank Insurance Agency Management
Community Banks and Insurance
Compliance and Risk Management
Wealth Management
Insurance Product Marketing

Thursday, February 20, 2014

U.S. Chamber Criticizes CFPB for Setting Policy by Enforcement & Guidance, Failing to Use Administrative Rulemaking Procedures

By: ABIA Outside Counsel Adam D. Maarec, McIntyre & Lemon, PLLC

In a letter to CFPB Director Richard Cordray, the U.S Chamber of Commerce stated that it "remain[s] seriously concerned that the Bureau is not working toward clear, evenly applied, economically sound standards in at least three significant and cross-cutting areas — compliance standards for disparate impact, liability in the context of indirect auto lending, and perhaps other areas as well; the definition of “abusive” acts or practices; and the standard for companies’ liability for the actions of service providers. We strongly believe that if the Bureau identifies areas in which it wants to fundamentally alter the rules, it should take the time to write new standards rather than rely on one-off enforcement and press release 'warnings' to other regulated companies."

Effect on Add-On Products
In October 2013, I [Adam Maarec] authored an article in the American Banker criticizing the CFPB's actions in the add-on product space: "With respect to add-on products, the CFPB has taken five enforcement actions and issued two bulletins, all of which contain significant policy statements, as well as specific requirements that particular companies must comply with. But the CFPB has failed to put these specific policies out for public notice and comment, leaving the industry to speculate over what it wants, and fearing that the CFPB's lack of thorough industry insight (which is typically obtained through comment letters) will hinder its judgment."
Read the article: Regulators must stop policymaking by enforcement.

State Regulators Use Similar Tactics
My [Adam Maarec] article also highlights how state regulators, including the New York Department of Financial Services, have used similar tactics to effect new policy without meaningful notice and comment.

Read the letter to the CFPB from the Chamber.