CFPB 2.0: Advancing Consumer Protection

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CFPB 2.0

This white paper, prepared by MBA and its counsel at the law firm of Covington & Burling LLP.

Over the past six years, the Consumer Financial Protection Bureau has grownfrom a small startup to a powerful agency with over 1,600 employees. Over the same period, the economy and our financial and political institutions have also been transformed. Accordingly, it makes sense to take a fresh look at the Bureau and see how it should evolve to reflect these changes as well as its own successes and challenges. This white paper and its recommendations explain how an updated Bureau - call it CFPB 2.0 - could advance consumer protection while promoting a vibrant, competitive mortgage lending market.

Recommendations for the Bureau

A new CFPB - CFPB 2.0 - can fulfill its consumer protection mission by producing rules and guidance that prevent consumer harm rather than merely punishing harm after it occurs. Such a shift in emphasis recognizes the strides the Bureau and industry have made over the past six years in creating an environment where supervision and guidance are actively sought by industry to ensure compliance.

The bureau should:

  • Place priority on issuing appropriate guidance to facilitate compliance with federal law.
  • Establish guidelines for when and how it will issue and revise rules and guidance.
  • Acknowledge that it is bound by its guidance.
  • Ensure industry input on mortgage and other issues.
  • Provide timely answers to questions on regulations with authoritative guidance.
  • Publish notice of changes in guidance and apply those changes prospectively.
  • Provide time for regulated entities to comply.
  • Ensure due process in its enforcement actions.

Looking Forward

MBA and its members are committed to compliance, consumer protection and to a level playing field for all who offer mortgages and related services to consumers. The Bureau is now at a crossroads and has an opportunity to rethink the way it pursues consumer protection. This White Paper and the recommendations contained in it are meant to help the Bureau in this process. MBA looks forward to working with the Bureau on this important effort.