CFPB Semi-Annual Update to Congress: Director Cordray Indicates That the Bureau Will Move Forward with an Arbitration Rule, Defends Regulation of Auto Lenders, and Reiterates No Grace Period on TRID

3 min

On July 15, 2015, Consumer Financial Protection Bureau (CFPB or the Bureau) Director David Cordray testified before the Senate Banking Committee on a variety of issues in response to questions from the representatives after his prepared remarks. These issues included:

Arbitration Study and Rulemaking: In response to queries from Senators about the Bureau's recently released study of forced arbitration clauses, Director Cordray noted that the Bureau would proceed with its plans for rulemaking in this area. He characterized the CFPB's study as thorough and explained that the Bureau considered information from a wide variety of sources in concluding that forced arbitration clauses rarely benefit consumers. He stated that the CFPB would convene a small business review panel as the first step in this rulemaking.

Regulation of Auto Lenders: Chairman Richard Shelby and Senator Tim Scott (R-SC) both questioned whether the CFPB's recent attempts to regulate automobile lenders contravened the specific exemption under Dodd-Frank. Director Cordray responded that the CFPB has jurisdiction over auto lenders and will act to address violations of the law by lenders. Director Cordray noted the distinction between lenders, which are subject to CFPB jurisdiction, and dealers, which are not.

CFPB Data Collection: Several Senators expressed their concerns that the CFPB is collecting vast amounts of personally identifiable information. Director Cordray explained that the CFPB collects personally identifiable information only if (1) consumers give personally identifiable data so that the CFPB can work on their complaint; or (2) the CFPB needs the information to provide relief to consumers. He further stated that the CFPB does not maintain in its databases any consumer names, addresses, social security numbers, or account numbers.

TILA-RESPA Forms: In response to an inquiry from Senator Scott, Director Cordray confirmed that the CFPB does not support a grace period for the implementation of the new rule. He explained that the CFPB would not be punitive with new forms in the first few months after implementation. He also noted that the CFPB has tested the new forms, which consumers found to be more accessible and easier to understand than the old forms.

CFPB Definition of "Rural": In response to queries from Senators from rural states about the CFPB's definition of "rural" (contained in the Bureau's proposed rule regarding the facilitation of credit in rural and underserved areas), Director Cordray explained that the Bureau's revised rule now covers 22% of the population. He further noted that the Bureau is working to finalize the definition by the end of the summer.

Native American Tribe Consultation Process: Director Cordray confirmed that the CFPB has a policy on consultation with Native American tribes and that the CFPB has received input on the policy from Native American tribes.