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On May 25, the U.S. Senate voted along party lines to confirm Sandra L. Thompson as Director of the FHFA. Thompson has served as acting Director since June following the U.S. Supreme Court’s split decision in Collins v. Yellen, which held that it was unconstitutional for FHFA’s leadership structure to allow the President to fire the FHFA director only for cause. (Covered by InfoBytes here.) According to President Biden’s nomination announcement, Thompson brings “over four decades of government experience in financial regulation, risk management, and consumer protection,” including previously serving as Deputy Director of FHFA’s Division of Housing Mission and Goals where she oversaw the agency’s housing and regulatory policy, capital policy, financial analysis, and fair lending space, as well as all mission activities for the GSEs and the Federal Home Loan Banks. Thompson also worked for more than 23 years at the FDIC where she served in a variety of leadership positions. Her most recent position at the FDIC was Director of the Division of Risk Management Supervision. Thompson also led the FDIC’s “examination and enforcement program for risk management and consumer protection at the height of the financial crisis” and “the FDIC’s outreach initiatives in response to a crisis of consumer confidence in the banking system.”
On April 14, Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Richard J. Durbin (D-IL) sent a letter to CFPB Director Rohit Chopra urging the Bureau to investigate recent reports of student loan servicers mismanaging income-driven repayment (IDR) programs. The letter alleged that servicers have failed to properly count qualifying payments or accurately track borrowers’ progress towards cancellation. Specifically, the senators noted that servicers’ mismanagement is affecting the lowest-income borrowers the most, citing report findings that 48 percent of IDR borrowers are eligible for $0 monthly payments that can be counted towards loan forgiveness, but are not being tracked. In addition, IDR cancellation requires servicers to “proactively notify borrowers when they are within six months of qualifying for loan cancellation”—a process that requires servicers to accurately count payments and properly track borrowers’ progress. According to the senators, “out of 4.4 million eligible borrowers, recent reports indicate that only 32 borrowers have ever had their student loans canceled through IDR.”
On February 10, several U.S. senators sent a letter to CFPB Director Rohit Chopra claiming private student loan companies and servicers have “intentionally misrepresented to borrowers” their ability to discharge certain private student loans in bankruptcy. Citing a report from the Student Borrower Protection Center, the senators claimed that these private lenders “have intentionally perpetuated the false narrative that all student loans, including all private student loans, are nondischargeable in bankruptcy except in cases where borrowers meet a standard of ‘undue hardship.’” The letter stated, however, that rules related to the dischargeability of private student loans apply only to qualified education loans whereas private lenders and servicers “have long peddled a variety of private student loans that do not meet the definition of qualified education loans.” Citing a figure that estimated approximately $50 billion in private student loan debt held by some 2.6 million borrowers fell into this category, the senators stated that lenders included misleading language in their promissory notes while misrepresenting that students could not discharge their loans in bankruptcy, and collected debts that could have been legally discharged, including through the use of abusive measures such as pursuing legal action and making negative reports to credit bureaus. The senators urged the Bureau to investigate the report’s findings and take action to ensure private lenders and servicers comply with bankruptcy law.
On December 7, the U.S. Senate confirmed Jessica Rosenworcel to a five-year term as FCC Chair. As previously covered by InfoBytes, President Biden’s nomination highlighted Rosenworcel’s work at the FCC, where she has focused on addressing illegal robocalls and has worked to enhance consumer protections in the agency’s telecommunications policies. Rosenworcel issued a statement following the confirmation thanking President Biden for the opportunity and saying it is an honor to be confirmed and designated as the first woman to be named permanent Chair of the FCC.
On November 10, seven democratic senators sent a letter to CFPB Director Rohit Chopra requesting that the Bureau reform the credit reporting industry by improving credit reporting accuracy and updating the process on dispute resolutions, among other things. The senators recommended that the Bureau examine persistent errors in credit reporting “and how CRAs [(credit reporting agencies)] consistently fail to resolve these errors, especially by failing to devote sufficient personnel and resources for dispute resolution—a shortcoming the CFPB could use its supervisory authority to remedy.” Among other things, the senators requested that the Bureau (i) establish an ombudsperson position to facilitate the dispute resolution process; (ii) require nationwide CRAs to match an individual’s full Social Security number; (iii) consider requiring nationwide CRAs to perform accuracy audits on information furnishers periodically; and (iv) “codify provisions of the nationwide CRAs’ settlement with state attorneys general that delayed reporting of medical debt for six months and removed debts paid by insurance.” The senators noted that their requests were not exhaustive, and asked for immediate action to be taken to protect consumers and establish “much-needed accountability into the credit reporting system.”
On October 8, Senator Ed Markey (D-MA) and Representatives Kathy Castor (D-FL) and Lori Trahan (D-MA) sent a letter to FTC Chair Lina Khan urging the Commission to ensure that technology companies comply with their own policies regarding the protection of children’s and teen’s privacy. Among other things, the three Democratic lawmakers advocate that Khan “use [her] authority under Section 5 of the FTC Act to ensure that technology companies comply with these commitments to users and hold them accountable if they fail to do so." Under Section 5 , companies are prohibited from engaging in unfair or deceptive acts or practices in or affecting interstate commerce. The lawmakers assert that the FTC has a statutory obligation to ensure that technology platforms fulfill their public statements and policies regarding children’s and teen’s privacy. The letter emphasizes that the need to protect children and teens from online privacy threats is very urgent, stating that “[s]ince 2015, American children have spent almost five hours each day watching their screens, and children’s and teens’ daily screen time has increased by 50 percent or more during the coronavirus pandemic.”
On September 20, nine Democratic Senators sent a letter to FTC Chair Lina M. Khan requesting that the FTC draft new rules that better protect consumers’ personal data and privacy. The Senators argued that ongoing data breaches and privacy violations have “shown the limits of the FTC's general prohibition on unfair and deceptive practices.” Among other things, the Senators urged the agency to consider a rulemaking process that has “strong protections for the data of members of marginalized communities, prohibitions on certain practices (such as the exploitative targeting of children and teens), opt-in consent rules on use of personal data, and global opt-out standards.” The Senators also pointed out that the FTC has substantial expertise in the legal process regarding enforcement and privacy authorities, such as those under the Children’s Online Privacy Protection Act and the Fair Credit Reporting Act. Therefore, a rulemaking initiative led by the FTC would advance congressional efforts in developing federal privacy legislation through “research, public comment record, and dialogue.”
On July 29, Ranking Member of the Senate Banking Committee Senator Pat Toomey (R-PA) sent a follow-up letter to the Chief of Staff at the National Economic Council, Leandra English, claiming the CFPB is “taking unusual and possibly unlawful actions” to replace civil servants at the CFPB. As previously covered by InfoBytes, Republican members of the Senate Banking Committee sent a follow-up letter to CFPB director nominee and FTC Commissioner Rohit Chopra in July, which referred to Ranking Member Toomey’s June 17 letter, asking Chopra whether he was aware of any alleged improper treatment of, or efforts to, “sideline” Bureau employees. The recent letter seeks, among other things, information regarding whether English is aware of whether the CFPB: (i) “has taken any steps between January 20, 2021, and the present to replace or encourage any career CFPB employees to leave their positions[?]”; (ii) “between January 20, 2021, and the present offered any career CFPB employees separation incentives to leave their positions[?]”; and (iii) “between January 20, 2021, and the present opened an investigation into any career CFPB employee at the Assistant Director level or above[?]”.
On August 2, Senators Elizabeth Warren (D-MA), Kirsten Gillibrand (D-NY), and Chris Van Hollen (D-MD) wrote to John Morton, Climate Counselor of the Department of Treasury’s Climate Hub, urging the Department to address the threat to the country’s health, security, and financial system regarding the “climate crisis.” As previously covered by InfoBytes, Treasury announced a new coordinated climate policy strategy focusing on domestic and international policymaking to “leverag[e] finance and financial risk mitigation to confront the threat of climate change,” in addition to the formation of a new Climate Hub to coordinate existing climate-related efforts. The Senators’ letter seeks to gather information regarding the Climate Hub’s plan to fulfill its role, including coordinating a strategy in response to President Biden’s recent Executive Order (covered by InfoBytes here), which mandates financial regulators take steps to mitigate climate-related risk related to the financial system, including directing the Secretary of the Treasury to work with Financial Stability Oversight Council (FSOC) members to consider “assessing, in a detailed and comprehensive manner, the climate-related financial risk . . . to the financial stability of the federal government and the stability of the U.S. financial system,” and to facilitate climate-related risk information sharing between FSOC member agencies and other federal departments and agencies. The letter states that “it is imperative that you wield your leadership position in the Climate Hub to support FSOC’s efforts to align these financial regulators and implement strong guidelines to ensure that banks and financial institutions, which continue to finance risky fossil fuel investments, are adequately prepared for climate-related disruptions.”
On August 3, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled “Oversight of Regulators: Does our Financial System Work for Everyone?” which, among other things, highlighted the future of the CRA. OCC acting Comptroller of the Currency Michael Hsu discussed that the OCC has an aggressive timeline for collaborating with the Federal Reserve and FDIC to release joint rulemaking that modernizes the CRA. In his written testimony, Hsu noted that the OCC is “working to strengthen regulations implementing the [CRA],” such as the May announcement regarding reconsideration of the 2020 final rule overhauling the CRA (covered by InfoBytes here) and calling to prohibit discriminatory practices while promoting financial inclusion and increased access to credit for the unbanked and underbanked. During the hearing, Hsu also pointed out that the CRA is a “complicated law,” so groups “are working pretty much around the clock on coming up with options to strengthen the CRA to make sure that low and moderate-income communities have their needs met.” FDIC Chairman Jelena McWilliams also discussed that the FDIC has engaged in a multi-year, interagency effort to examine alterations to CRA regulations “that would benefit low- and moderate-income communities and modernize the rules for the first time in a quarter of a century.”
- Buckley Webcast: Fifth Circuit muddles CFPB’s plans to use in-house judges in enforcement proceedings
- Steven vonBerg to discuss “Regulatory plenary” at the Information Management Network’s Non-QM Forum
- Jeffrey P. Naimon to discuss “Understanding the ESG impact on compliance” at the ABA’s Regulatory Compliance Conference