In a March 8 speech to the National Association of Attorneys General (NAAG), Richard Cordray, the top enforcement official for the new Consumer Financial Protection Bureau (CFPB), outlined his agenda for enforcement once the CFPB’s powers become effective on July 21, 2011. Prior to being appointed to his current position, Mr. Cordray served as attorney general of Ohio. In that capacity he brought lawsuits against many types of financial companies, including global banks, mortgage servicers, credit rating agencies, and subprime lenders.
The plan laid out in Cordray’s speech is consistent with his priorities as attorney general, and Cordray’s remarks signal an intent to work closely with state enforcers. He emphasized the need to police “unfair, deceptive or abusive” lending tactics by both banks and the “tens of thousands” of non-depository institutions not previously subject to federal agency supervision. While payday lenders are the only type of non-depository institution specifically mentioned in the speech, the CFPB will also have supervisory authority over several other types of non-depository entities who have never been supervised by federal agencies, including money transmitters, private educational lenders, and debt collectors.
Cordray also emphasized the “sloppy” underwriting practices once prevalent in the mortgage origination market, and stated that the CFPB will endeavor to learn from the experience of state attorneys general in policing such practices. His remarks suggest that before getting significantly involved with this issue, the CFPB may let state enforcers continue to resolve problems in their own backyards.
He also noted that in response to the CARD Act, which became effective in February 2010, credit card issuers have abandoned certain business practices which surprised consumers with fees they had no reasonable basis to expect. This sentiment echoed recent remarks by Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB.