Lawmakers, policy officials, attorneys and representatives from almost every sector of the financial services industry are continuing to review and assess the Dodd-Frank Act. This new legislation requires regulatory bodies to engage in more than 240 rulemaking initiatives and conduct almost 70 studies on a broad range of issues.
Goodwin Procter partner Lynne Barr joined this discussion at the second annual Financial Reform Symposium on November 12 at George Washington University Law School’s Center for Law, Economics & Finance (C-LEAF). Barr participated on the “Consumer Protection: Stuck in Neutral or Full Speed Ahead?” panel with the chief counsel of the Office of the Comptroller of the Currency, the head of the Division of Consumer and Community Affairs at the Federal Reserve Board, and the New York State Banking Superintendent.
While the Dodd-Frank legislation carries multiple provisions, one that has been greatly debated is the creation of a new Consumer Financial Protection Bureau (CFPB). The CFPB will be an independent entity within the Federal Reserve, with the power to write and enforce rules over mortgages, credit cards and other types of consumer financial products. The CFPB will have full supervisory and enforcement powers over banks and credit unions with more than $10 billion in assets as well as enforcement authority over non-bank entities such as payday lenders and providers of mortgage-related services.
“There has been a lot of talk about the compliance burden on small banks,” said Barr at the event. “Life for most of these banks and credit unions will remain largely unchanged, and they will continue to operate under the same regulatory compliance and examination regime.”
She observed that institutions such as large mortgage lenders and credit card issuers could experience the greatest change because the consumer compliance examination staff will come from the CFPB. Additionally, their practices with respect to mortgage lending, credit card lending, overdraft practices and other services could be the subject of additional scrutiny and regulation.
“The big question is how the CFBP is going to regulate the roughly 71,000 non-depository institutions such as mortgage lenders and brokers, check cashing companies, payday lenders, and finance companies as compared to the fewer than 8,000 banks,” said Barr.
To learn more about this event, visit C-LEAF’s website. For comprehensive information on the Dodd-Frank Act and related legislation, visit Goodwin Procter’s Dodd-Frank website.