UPDATED: Bureau targets six key regulatory activities for new year – overdraft fees not among them

Six regulatory activities in 2022 by the federal consumer financial protection agency have been identified by the agency as “key” actions, according to a rulemaking the agency released Monday.

The Consumer Financial Protection Bureau (CFPB) said the list of matters the agency plans to pursue from now through Oct. 31 of next year “reflects the continuation of significant rulemakings that further our consumer financial protection mission and help to advance the country’s economic recovery from the financial crisis related to the COVID-19 pandemic.”

The key actions, the agency said, are:

  • Small Business Lending Data Collection
  • Availability of electronic consumer financial account data
  • Property Assessed Clean Energy (PACE) Financing
  • Standards for Automated Valuation Models (AVMs)
  • Facilitating transition away from LIBOR Index
  • Reviewing existing regulations and market monitoring

Conspicuously missing from the list of “key actions” is anything new on regulating overdraft fees at banks and credit unions. Two weeks ago, the agency signaled it would be acting on the fees with the aim, it said, of restoring “meaningful competition.” The bureau also said it would be enhancing its supervisory and enforcement scrutiny of banks that are heavily dependent on overdraft fees. “In recent years, the CFPB ordered TD Bank to pay $122 million in penalties and customer restitution, and ordered TCF Bank to pay $30 million in penalties and restitution,” the agency noted.

More details about the six key items include:

Small Business Lending Data Collection: Comments close Jan. 6 on a proposal issued in October on requiring financial institutions to report information about small business credit applications, including information related to the credit applied for, demographic and other information about the small business credit applicant, and key elements of the price of the credit offered. The bureau expects to move to a final rule after reviewing comments received.

Availability of electronic consumer financial account data: In November 2020, the bureau issued an advance notice of proposed rulemaking (ANPR) to address the availability of consumer financial account data in electronic form, in order to help consumers understand their finances and “make better-informed decisions.” The comment period closed in February 2021. The bureau said it is considering the comments and monitoring the market as it assesses potential next steps, including whether a small business review panel is required pursuant to the Regulatory Flexibility Act.

Property Assessed Clean Energy (PACE) Financing: In March 2019, the agency issued an ANPR to solicit information aimed at developing a proposed rule on PACE financing. The CFPB defined that as “a tool for consumers to finance certain improvements to residential real property. The financing has characteristics of both home equity lending and real property taxes, and like home equity loans, PACE obligations arise through a voluntary contract and are secured by real property. But, under state law, the CFPB noted, they are billed and repaid as special property tax assessments and typically secured by a lien with equal priority to real property taxes. The agency said it is continuing to engage with stakeholders and collect information for the rulemaking, including by collecting quantitative data on the effect of PACE on consumers’ financial outcomes.

Standards for Automated Valuation Models (AVMs): The bureau said it is participating with other federal financial institution regulators – including the Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) – to develop regulations concerning automated valuation models (AVMs). The amendments require rules for quality control standards for AVMs. “These quality control standards are designed to ensure a high level of confidence in the estimates produced by the valuation models, protect against the manipulation of data, seek to avoid conflicts of interest, require random sample testing and reviews, and account for any other such factor that the Agencies determine to be appropriate,” the bureau stated.

Facilitating transition away from LIBOR Index: Just last week, the bureau issued a final rule to address the anticipated expiration of the LIBOR (London Interbank Offered Rate) index, which expires completely in June 2023 (no new loans using the rate may be written after Dec. 31). “This rulemaking is important for the millions of consumers who have adjustable-rate mortgages, credit cards, student loans, reverse mortgages, home equity lines of credit, or other loans that are tied to the LIBOR index,” the agency stated, adding that the rule is designed to lessen the financial impact to consumers and facilitate creditor compliance by providing examples of replacement indices that meet Regulation Z requirements.

Reviewing existing regulations and market monitoring: The agency noted that it is required by law to assess significant rules or orders it issues within five years after taking the action. “We decided to conduct an assessment of a rule implementing the Home Mortgage Disclosure Act (HMDA), most of which became effective in January 2018, and recently (Nov. 22) issued a Request for Information seeking comment from the public to ensure the Bureau can use the data collected under this rule to most effectively meet its goals,” it said. The bureau also recounted that it conducted a review of Regulation Z rules implementing the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. “Specifically, we reviewed an interim final rule and three final rules published by the Board from July 2009 to April 2011,” the agency stated. “After considering the statutory review factors and public comments, we determined that the CARD Act rules should continue without change.”

The CFPB said it is also “continuing to monitor markets for consumer financial products and services to identify risks to consumers and the proper functioning of such markets.”

Fall 2021 Rulemaking Agenda