What has the change of leadership in Washington meant for regulation of consumer financial products – and what will it mean in the future?
The federal government is stepping back, and the states are stepping up, according to a new report.
“Fewer federal enforcement actions and deregulation could be the new norm for the foreseeable future,” the Goodwin law firm wrote in its annual Consumer Finance Year in Review. “This, combined with federal agencies continuing to adjust their enforcement and regulatory priorities as they transition away from their financial crisis-era focus and confront new technology, products, and services, means that it is more important than ever that consumer finance companies monitor this shifting landscape.”
The consumer financial services landscape remains very uncertain, given that the federal agency that sits at the heart of the space, the Consumer Financial Protection Bureau, may not survive, Goodwin noted.
Here are some specific takeaways from the past year, as well as a look ahead.
In 2017, federal and state entities filed 49 enforcement actions, the same as in 2016, but down sharply from 2015. Goodwin thinks that signals two things: Crisis-era issues are receding, and that regulators and industry participants are coming to an understanding after years of tussling.
Many of the mortgage-related regulator actions last year were related to Federal Housing Administration lending, a practice that’s pushed many banks out of participating in FHA programs and riled many lenders.
Goodwin also noted that mortgages – particularly servicing – were the second-most-complained-about topic to the CFPB. The firm expects regulators to continue to focus on servicing complaints. But it thinks the CFPB may abandon a Dodd-Frank requirement that lenders document borrowers’ ability to repay loans, as it has already signaled that industry participants find the rule too…