President Obama today re-nominated Richard Cordray as director of the Consumer Financial Protection Bureau. This will be Cordray's first permanent term. He was selected for the post as a recess appointment in January 2012, which did not require Senate confirmation.
Mr. Cordray's nomination may face opposition from Senate Republicans.
The CFPB was created in 2011 to be an independent watchdog for consumers. It has wasted no time in forcing changes in the lending industry, assessing penalties and analyzing consumer complaints.
Here are some of the major accomplishments of the CFPB under Cordray's leadership:
Credit Card Complaints
The CFPB created a database to take credit card complaints and made this information public. Prior to this action, there was no way for consumers to see the complaints or response rate when comparing credit card issuers.
The CFPB's database shows which issuers have had the most complaints on their cards and how specific complaints were ultimately handled. The data can be viewed online by company, consumer zip code and type of complaint. The CFPB reviews each complaint and forwards the ones that meet its criteria to the appropriate company for review and resolution. Companies have 15 days to provide a response to each consumer complaint. Most complaints are expected to be resolved and closed within 60 days. The filer can track the progress of the complaint and dispute the resolution provided by the financial institution. If the CFPB finds possible legal violations, it will work with other parts of the Bureau to deal with the potential violation. The database does not include private information.
The CFPB is sharing this data with state regulatory agencies which makes filing complaints easier for consumers. With one compliant, multiple government agencies can work on solving the problem for the consumer.
This applies to complaints on credit cards, mortgages, student loans, checking accounts, savings accounts, credit reporting, bank services and other consumer loans. One of the objectives of this program is to help state government agencies develop a more complete understanding of the markets for financial products in their respective states.
Monitoring of Credit Reporting Agencies
The CFPB now monitors 30 of the country's biggest credit reporting agencies and is working to bring transparency and public accountability to these companies. These 30 firms make up an estimated 94 percent of the industry.
This is a big step for the federal government which has never had widespread access to information about the credit reporting industry. The CFPB is monitoring the credit agencies in three areas: accuracy of the information received by the credit reporting companies, accuracy in assembling and maintaining that information, and the processes that govern error resolution. The Bureau makes sure the reporting and information provided by lenders as well as other companies that furnish information is accurate and reliable.
Crackdowns on Deceptive Marketing Tactics
The Consumer Financial Protection Bureau levied significant fines against American Express, Discover and Capital One for either misleading consumers into applying for credit cards or buying add-on services. The actions by the CFPB put $425 million back into the hands of nearly six million credit card consumers. In addition to these refunds to consumers, the three issuers had to pay a total of $66.5 million in penalties.
New Rules to Help Reduce Risky Mortgages
In January, the CFPB announced new mortgage rules that aim to reduce risky lending and make it harder for some consumers to qualify. The rules also look to ensure that borrowers can repay their mortgage loan.
Gone are the deceptive teaser rates or loans that required no documentation for borrowers. Lenders are prohibited from making loans if the borrower will have total debt that exceeds 43 percent of income.
The rules also restrict interest-only loans, balloon payments or negative-amortization loans. Banks can make these loans, but they won't be protected from potential borrower lawsuits. Mortgage originators will be restricted from charging high upfront points and fees.