President Obama Considers Candidates for CFPB Director Position

Posted on April 29, 2011 by Lee Istrail

Earlier this week, Bloomberg reported that President Obama has created a short list of candidates to lead the Consumer Financial Protection Bureau (CFPB). The list includes Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB. According to Reuters, the list also includes Federal Reserve Governor Sarah Raskin and close associates of Ms. Warren.

The CFPB is scheduled to become fully operational on July 21. The White House could make a nomination in the next few weeks, which would likely draw a fierce confirmation battle led by Senate Republicans. Alternatively, the administration may wait until the Senate recess in August to make a recess appointment. A recess appointee could serve through the session of Congress which ends in 2012.

At least two prospective candidates have publicly declined to be considered for the position. Former Michigan Governor Jennifer Granholm and former Ohio Governor Ted Strickland both announced that they do not want the position and that they believe Ms. Warren is the best candidate for the job.

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CFPB and States Agree to Joint Statement of Principles

Posted on April 13, 2011 by Kelley Drye

Earlier this week, Elizabeth Warren, on behalf of the Consumer Financial Protection Bureau (CFPB), announced a cooperative working agreement with a group of state attorneys general. Specifically, Ms. Warren introduced a Joint Statement of Principles adopted by the CFPB and the Presidential Initiative Working Group of the National Association of Attorneys General (NAAG). The Joint Statement is intended to increase the efficiency of state and federal regulators working together to protect consumers of financial products and services. The Joint Statement provides the following:

  • Combined training and information sharing programs regarding developments in state and federal consumer protection laws applicable to consumer financial products and services.
  • Sharing of market-based information and data related to practices in consumer financial products and services with an eye towards effective and efficient enforcement practices.
  • Regular consultations to discuss enforcement practices and priorities and the development of frameworks to share investigatory and enforcement information.
  • Enforcement support between states and federal agencies, as permitted by law, including joint investigations and enforcement actions.
  • Pursuit of legal remedies to foster transparency, competition, and fairness in the consumer financial products and services markets across states and without regard to corporate forms or charters.
  • Sharing of consumer complaints and complaint-tracking technology and information between CFPB and state attorneys general.

The Joint Statement Principles illustrates CFPB’s agenda to work closely with state regulators in enforcing financial laws.

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Court Refuses to Enjoin Impact of Financial Reform Legislation

Posted on April 8, 2011 by Lee Istrail

On April 4, the U.S. District Court for the District of South Dakota denied TCF National Bank’s motion to preliminarily enjoin enforcement of the Durbin amendment to the Dodd-Frank financial reform legislation, which would limit large banks’ ability to charge debit fees to merchants. The court held that since no regulations have been promulgated pursuant to the Durbin amendment, a preliminary injunction would be premature.

TCF National Bank has $18 billion in total assets and issues debit cards but not credit cards. In October 2010, the bank filed a complaint alleging that the legislation violates its constitutional right to equal protection for two main reasons:

  1. it only applies to banks with over $10 billion in assets (which is true of roughly 1% of all banks); and
  2. it imposes the most harm on debit card issuers who do not also issue credit cards, since those issuers cannot compensate for the impact of the amendment by assessing credit card fees.

The suit has drawn amicus briefs supporting both sides. For instance, a group of economists and scholars have filed a brief supporting TCF’s position, arguing that the legislation is not only a violation of the constitution, but that it is likely to harm consumers and competition, and hurt the banking system’s stability. On the other side, the Merchants Payments Coalition (“MPC”), a trade association of merchants, argued that the legislation will curb large banks’ ability to impose these fees, which RLC claims are often hidden and have escalated dramatically over time.

In the same hearing, the court said that it will take the defendants’ pending motion to dismiss the case under advisement.

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