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Community institutions quiz CFPB on mortgage issues and beyond (pt. 2)
Posted Date: Wednesday, February 19, 2014
The Consumer Financial Protection Bureau may not have the authority to scrutinize community banks and credit unions, but the agency’s rules and policies have a direct impact on these small lenders. On Feb. 12, credit union professionals had the opportunity to question CFPB leaders about specific provisions of the agency’s new mortgage rules and about its other policy initiatives. Read on to learn what bureau leaders had to say about the future of balloon mortgages and the possibility of revising other rules related to loan originator compensation, appraisals for higher-priced mortgages and remittance transfers.
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CFPB overhaul package debated in U.S. House
Posted Date: Wednesday, February 12, 2014
Republican-backed legislation that would make significant changes to the Consumer Financial Protection Bureau was debated on the floor of the U.S. House on Tuesday. GOP leaders are advancing a package of bills that would replace the bureau’s current leadership structure with a five-member commission. The package would also bring the agency under the Congressional appropriations process. Read on for the details.
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State bank supervisors back Senate legislation to alter Dodd-Frank’s ‘rural’ provisions
Posted Date: Wednesday, February 19, 2014
The Conference of State Bank Supervisors expressed strong support for a Senate bill that would amend the Dodd-Frank Act to establish a petition process for community banks and others to apply for an area to be considered “rural” for the purposes of the Consumer Financial Protection Bureau’s mortgage rules. The “rural” definition is of particular importance to small lenders that originate balloon payment mortgages. Read on to learn about the proposed legislation.
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Lawmakers voice support for adopting ‘chip and PIN’ payment card technology
Posted Date: Wednesday, February 5, 2014
Lawmakers on both sides of the aisle expressed support for adopting so-called “chip and PIN” payment card technology in the United States following recent high-profile data breaches at Target and other merchants. However, during a recent Senate subcommittee hearing, they noted that technological solutions alone will not be enough to protect consumers’ sensitive data. Read on for the details.
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Retail, financial services groups form cybersecurity partnership
Posted Date: Monday, February 17, 2014
Major trade associations representing merchants and the financial services industry that have been at odds over payment card policy following a recent string of high-profile data breaches announced they will form a new cybersecurity partnership. The associations said their new partnership will focus on “increased information sharing, better card security technology and maintaining the trust of customers.” Read on for the details.
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CFPB releases early HMDA rulemaking outline
Posted Date: Monday, February 10, 2014
The Consumer Financial Protection Bureau plans to convene a small business review panel to provide feedback on an initial set of proposals the agency is considering as it works to implement Dodd-Frank provisions that expand the current Home Mortgage Disclosure Act data set. The proposals under consideration include some data fields that are not mentioned in Dodd-Frank. Additionally, hundreds of smaller depository lenders would no longer report HMDA data, the CFPB said. Read on for an in-depth look at the CFPB’s early plans.
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OCC updates Mortgage Banking booklet
Posted Date: Wednesday, February 12, 2014
The Office of the Comptroller of the Currency released a major update to its Mortgage Banking booklet, which provides guidance on assessing the quantity of risk associated with mortgage banking and the quality of mortgage banking risk management. Updates to the booklet include sweeping changes to the functional areas of production, secondary marketing, servicing and mortgage servicing rights. Read on to learn about the updates.
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FDIC to help community banks address their cyber risks
Posted Date: Wednesday, February 12, 2014
Institutions supervised by the Federal Deposit Insurance Corp. will soon receive tools from the agency intended to help banks address their cyber risks. FDIC Chairman Martin Gruenberg recently discussed the agency’s so-called Cyber Challenge exercise during a hearing before the Senate Banking Committee. Read on to learn about Cyber Challenge.
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CFTC to host discussion on executing package transactions
Posted Date: Wednesday, February 5, 2014
The Commodity Futures Trading Commission will hold a public roundtable to discuss the applicability of Dodd-Frank’s trade execution requirements to package transactions involving more than one swap or financial instrument. The commission recently said that the inclusion of a swap subject to the trade execution requirement in a multi-legged transaction would not per se relieve market participants of the obligation to trade such a swap on a multilateral platform as envisioned by Dodd-Frank. However, the CFTC promised to consider whether to grant limited relief in the future. Read on for the details.
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Lender trade associations urge bureau to delay effort to streamline closing process
Posted Date: Wednesday, February 12, 2014
Industry groups representing mortgage lenders urged the Consumer Financial Protection Bureau to delay its effort to gather information on the closing process until stakeholders can gauge the impact of new mortgage disclosure forms and rules scheduled to take effect in the summer of 2015. The bureau recently asked industry participants and consumers to identify areas where the closing process could be improved. Some industry groups said that while they support efforts to improve the process, now is not the time for the CFPB to gather information.
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Proposed diversity standards review should involve voluntary self-assessments, banking groups say
Posted Date: Wednesday, February 12, 2014
Banking groups urged regulators working to implement Dodd-Frank’s diversity assessment provisions not to heed other commenters who said the agencies should create specific diversity benchmarks and ensure those benchmarks are met through a supervisory process. The trade associations said in a joint comment letter that diversity assessments envisioned under Dodd-Frank should be voluntary self-assessments. They also said regulators should not require firms to adopt policies for assessing supplier diversity. Read on for the details.
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States, Texas community bank press on with Dodd-Frank constitutional challenge
Posted Date: Wednesday, February 19, 2014
Attorneys general from 11 states, as well as a Texas-based community bank, a senior advocacy group and a non-profit public policy think tank are moving forward with a constitutional challenge targeting key tenets of the Dodd-Frank Act. A federal district court dismissed the case in August 2013. However, the plaintiffs have appealed to the U.S. Court of Appeals for the District of Columbia Circuit. Read on for the details.
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Servicing issues highlighted in latest CFPB supervision report
Posted Date: Friday, January 31, 2014
Mortgage servicing issues have been top-of-mind for Consumer Financial Protection Bureau (CFPB) examiners, as evidenced by the latest report outlining the bureau’s supervisory activities. According to the CFPB’s third Supervisory Highlights report, the agency has found issues related to servicing transfers, waivers of rights in loss mitigation agreements, payment processing and other areas. The bureau also announced it is taking steps to simplify its examination reports and supervisory letters.
The report, released on Jan. 30, chronicles bureau supervision work between July and October 2013. It recaps recent high-profile enforcement actions related to mortgage servicing, credit cards and other products and services. The CFPB also revealed that consumers received $2.6 million as result of overall non-public supervisory activities at the banks and nonbanks the bureau oversees.
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Mortgage firm’s hedge fund payments violated RESPA, CFPB says
Posted Date: Tuesday, February 25, 2014
Connecticut-based mortgage firm 1st Alliance Lending LLC agreed to pay an $83,000 civil money penalty to the Consumer Financial Protection Bureau after the regulator determined that the company violated the Real Estate Settlement Procedures Act by splitting certain settlement fees with a hedge fund. 1st Alliance reported the issue to the CFPB, and the bureau said it took the firm’s cooperation into account while determining how to resolve the matter. Read on for the details.
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OCC’s ‘heightened expectations’ for big banks will likely impact all institutions, attorneys say
Posted Date: Tuesday, February 25, 2014
Earlier this year, the Office of the Comptroller of the Currency released a proposal that would formalize an enhanced set of bank governance and risk management standards that evolved in the wake of the financial crisis. While the agency said these “heightened expectations” are intended to apply to large national banks and federal thrifts, attorneys from Ballard Spahr LLP argued during a recent webinar that at least some elements of the proposal will likely impact all banks, including community institutions. Read on for the details.
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Know your regulator: SEC announces new leader for Division of Trading and Markets
Posted Date: Tuesday, February 25, 2014
The Securities and Exchange Commission (SEC) announced several key staff changes in the month of February. Most recently, the agency named Washington, D.C., compliance attorney Stephen Luparello as director of the Division of Trading and Markets, which regulates major securities market participants including broker-dealers, credit rating agencies, transfer agents and self-regulatory organizations (SRO).
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Fed, OCC announce firms that will begin using advanced approaches capital framework
Posted Date: Tuesday, February 25, 2014
The Federal Reserve and Office of the Comptroller of the Currency will permit certain big banks to begin using an additional approach to determine their risk-based capital requirements. Under the agencies’ “advanced approaches” capital framework, which implements the Basel III standards developed by the Basel Committee on Banking Supervision, firms must meet specific risk measurement and management criteria when calculating their risk-based capital requirements. The Fed also gave bank holding companies using the advanced approaches framework an additional year to incorporate those changes into their capital planning and stress testing cycles. Read on for the details.
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Court weighs retroactive application of Dodd-Frank’s whistleblower protections
Posted Date: Tuesday, February 25, 2014
A federal district court has ruled in the case of a former auditor at Morgan Stanley & Co. who said the firm retaliated against him for raising questions about its lending practices. Saeed Ahmad, the former employee, argued that Morgan Stanley’s actions violated Dodd-Frank’s whistleblower protection provisions, even though most of the alleged retaliation occurred before those provisions took effect. Read on to learn what the court said about whether Dodd-Frank’s whistleblower protections may be applied retroactively.
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FDIC extends comment period for single point of entry proposal
Posted Date: Friday, February 21, 2014
The Federal Deposit Insurance Corp. extended the comment period for a proposed strategy that would be used to resolve the largest, internationally active U.S. banks under Dodd-Frank’s orderly liquidation provisions. Read on to learn about the new deadline and what commenters have said about the so-called “single point of entry” strategy so far.
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Fed to repeal regulations reissued by CFPB, amend ID theft Red Flags Rule
Posted Date: Friday, February 21, 2014
The Federal Reserve Board wants the public’s feedback on the agency’s plan to repeal its Regulation DD (Truth in Savings) and Regulation P (Privacy of Consumer Financial Information) now that the Consumer Financial Protection Bureau (CFPB) has issued its own versions of those regulations. The Fed also proposed amendments to the identity theft Red Flags Rule in Regulation V (Fair Credit Reporting).
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CFPB to host first Consumer Advisory Board meeting of 2014
Posted Date: Friday, February 21, 2014
Leaders from the Consumer Financial Protection Bureau are scheduled to meet with the agency’s Consumer Advisory Board this week. Participants are expected to discuss several topics during the two-day meeting, including the bureau’s Home Mortgage Disclosure Act rulemaking. Part of the meeting will be open to the public. Read on for the details.
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Fed finalizes heightened prudential standards for big banks
Posted Date: Friday, February 21, 2014
The Federal Reserve approved a final rule that strengthens supervision and regulation of large U.S. bank holding companies and foreign banking organizations. The Fed crafted the rule in response to Section 165 of the Dodd-Frank Act, which directed the regulator to adopt enhanced prudential standards for banks with total consolidated assets of $50 billion or more and for certain large nonbank financial companies designated for Fed oversight by the Financial Stability Oversight Council. In response to comments, the final rule does not impose enhanced prudential standards on nonbank financial companies supervised by the board.
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U.S. Chamber to CFPB: Stop setting policy through enforcement actions
Posted Date: Friday, February 21, 2014
The Consumer Financial Protection Bureau’s practice of setting compliance expectations via enforcement actions and brief guidance statements has made it “virtually impossible for companies to determine in advance what they should do to comply with the law” in certain circumstances, according to the U.S. Chamber of Commerce. David Hirschmann, president and chief executive officer of the Chamber’s Center for Capital Markets Competitiveness, recently urged the CFPB to instead seek broad stakeholder input and clarify its compliance expectations in some specific areas.
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ISGN program helps lenders balance risks, CFPB requirements
Posted Date: Friday, February 21, 2014
ISGN Corp. announced during the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo that it has partnered with TRUPOINT Partners to offer its CFPB Compliance RiskCheck. A software-as-a-service, cloud-based tool, CFPB Compliance RiskCheck was designed specifically for small to midsize lenders in need of a cost-effective and efficient risk evaluation tool. Read on for the details.
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Law firm offers program to help mortgage originators, servicers prepare for CFPB exams
Posted Date: Friday, February 21, 2014
Weiner Brodsky Kider PC, a Washington, D.C.-based law firm focused on compliance, regulatory, transactional and litigation legal services for financial services companies, announced it has selected Clayton Holdings LLC to assist in its program to help mortgage originators and servicers prepare for Consumer Financial Protection Bureau examinations. Clayton is a provider of loan due diligence and consulting services to the mortgage industry. Read on for the details.
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House Democrats call for regulatory guidance on Volcker Rule CLO issue
Posted Date: Wednesday, February 19, 2014
A group of U.S. House Democrats urged regulators to craft guidance clarifying the treatment of senior debt securities issued by collateralized loan obligations under final rules implementing Dodd-Frank’s Volcker Rule. The rule, finalized by several agencies in December 2013, prohibits banks from having an ownership interest in certain funds, and the lawmakers argued that certain creditor-protective voting rights typically associated with senior debt securities issued by CLOs should not, on their own, cause such debt securities to be treated as equity interests.
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CFTC grants relief to European-regulated trading platforms
Posted Date: Wednesday, February 19, 2014
European-regulated trading platforms facing new requirements under the Commodity Futures Trading Commission’s Dodd-Frank swaps trading mandate will receive temporary, conditional relief under CFTC no-action letters released on Feb. 12. CFTC and European Commission leaders said they have made significant progress toward harmonizing a regulatory framework for U.S.-regulated swap execution facilities and E.U.-regulated multilateral trading facilities. Read on for the details.
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Morgan Stanley latest firm to settle over MBS sales to Fannie, Freddie
Posted Date: Monday, February 17, 2014
Morgan Stanley agreed to pay $1.25 billion to resolve government claims arising from the sale of private-label mortgage-backed securities to Fannie Mae and Freddie Mac. The settlement is one of several announced by the Federal Housing Finance Agency in recent months. Read on for the details.
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Community institutions quiz CFPB on new mortgage rules (pt.1)
Posted Date: Monday, February 17, 2014
The Consumer Financial Protection Bureau’s new mortgage rules may have gone into effect more than a month ago, but many lenders are still unclear about key rule provisions, according to bureau Director Richard Cordray. Cordray and other agency staff members fielded questions from credit union leaders during a webinar hosted by the National Credit Union Administration. Read on to learn how the bureau responded to questions community lenders had about the bureau’s ability-to-repay/qualified mortgage rule.
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ABA drops Volcker Rule lawsuit
Posted Date: Monday, February 17, 2014
The American Bankers Association said it will withdraw its Volcker Rule lawsuit in light of regulators’ efforts to adjust recently released rules the association said would have harmed many community and mid-size banks. ABA President Frank Keating said the group is still concerned about the rules but hopes to work with regulators on those remaining issues “without the chilling impediment of pending litigation.” Read on for the details.
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Webinar instructs on data security implementation for real estate settlement services
Posted Date: Monday, February 17, 2014
Title insurance and real estate settlement services professionals are facing increased pressure to protect their company’s dollars, data and customer information. Dodd Frank Update’s sister publication, The Legal Description, and sponsor Real Estate Data Shield have teamed up to instruct title insurance agents and others on how to implement effective cyber security strategies. Read on for the details.
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Court considers impact of pre-dispute arbitration agreement on whistleblower claim
Posted Date: Monday, February 10, 2014
A federal judge in New York weighed whether to stay a Dodd-Frank whistleblower protection case involving a financial strategist who said he was fired for complaining about alleged efforts to influence his published research. The company involved asked the court to dismiss the case or, in the alternative, stay the matter pending arbitration as stipulated under the employment agreement. However, the former employee argued that his whistleblower claim arises from the Sarbanes-Oxley Act and is protected by a ban on pre-dispute arbitration agreements. Read on to learn what the judge had to say.
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JPMorgan Chase to pay $614 million for wrongfully submitting FHA, VA loans
Posted Date: Monday, February 10, 2014
JPMorgan Chase will pay $614 million for violating the False Claims Act by knowingly originating and underwriting non-compliant mortgage loans submitted for insurance coverage and guarantees by the Department of Housing and Urban Development’s Federal Housing Administration and the Department of Veterans Affairs. Read on for the details.
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Bureau beefs up HMDA app
Posted Date: Monday, February 10, 2014
The Consumer Financial Protection Bureau unveiled an online tool aimed at allowing the public to easily filter, download and share data collected under the Home Mortgage Disclosure Act. The bureau bolted the new tool onto a HMDA data application it released last year. Read on to learn about the new tool.
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Lawmakers question regulators’ ability to coordinate on Volcker Rule issues
Posted Date: Monday, February 10, 2014
Regulatory agencies responsible for implementing Dodd-Frank’s so-called Volcker Rule faced pressing interpretive issues immediately after releasing their final rules late last year. Lawmakers quizzed agency leaders about the rulemaking during a recent hearing before the House Financial Services Committee. Republicans asked why the rule wasn’t re-proposed, and they questioned the agencies’ ability to address other issues, including those arising from the rule’s treatment of certain collateralized loan obligations. Read on for the details.
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Arizona ability-to-repay proposal would require consideration of credit score
Posted Date: Wednesday, February 5, 2014
Arizona lawmakers introduced a bill that would require creditors to make a reasonable determination that mortgage borrowers can repay their loans. The bill is similar to the Consumer Financial Protection Bureau’s new ability-to-repay rule but differs in some important respects. For instance, the Arizona proposal would require creditors to consider whether a borrower has a 750 credit score when making an ability-to-repay determination. The proposal would also adopt different qualified mortgage points and fees caps for smaller-dollar loans. Read on for the details.
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Dodd Frank Update offers Part 2 of Loan Estimate, Closing Disclosure Form Training
Posted Date: Wednesday, February 5, 2014
The Consumer Financial Protection Bureau recently released its final rule on the integrated mortgage disclosures, and Dodd Frank Update and RESPA News have teamed up to provide industry professionals with two training webinars that deliver in-depth instruction on the impactful provisions of the new regulations. Part 2 of the Mortgage Disclosure Forms Training Series airs on Feb. 13. Read on for the details.
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New FHA policy seen as important step toward e-mortgages
Posted Date: Wednesday, February 5, 2014
The Department of Housing and Urban Development (HUD) said the Federal Housing Administration (FHA) will accept electronic signatures on more mortgage documents. A new policy, unveiled in a Jan. 30 HUD mortgagee letter, allows e-signatures on origination, servicing and loss mitigation documents, as well as FHA insurance claims, real estate owned (REO) sales contracts and related addenda. Current FHA policy allows for electronic signatures only on third-party documents such as sales contracts and other documents not controlled by the lender.
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CFPB focuses on student loan payment processing policies
Posted Date: Wednesday, February 5, 2014
Private student loan servicers told the Consumer Financial Protection Bureau that they are taking steps to improve the way they communicate to borrowers about payment processing policies. The agency previously cited numerous issues in the student loan servicing industry, comparing it to the mortgage servicing space. The CFPB recently reached out to industry participants to learn about specific elements of their payment processing policies. Read on to learn what the CFPB found.
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PHH Corp. faces CFPB action following investigation into reinsurance practices
Posted Date: Friday, January 31, 2014
The Consumer Financial Protection Bureau (CFPB) filed an administrative proceeding against PHH Corp. and its affiliates, following a lengthy investigation of the company’s reinsurance practices. The bureau said PHH harmed consumers through a mortgage insurance kickback scheme that started as early as 1995. The CFPB is seeking a civil fine, a permanent injunction to prevent future violations and victim restitution. The bureau did not say how much money it would seek in fines and restitution.
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Big bank underwriting standards easing, but not for home equity loans, OCC says
Posted Date: Friday, January 31, 2014
A yearly survey of examiner observations finds that underwriting standards for both commercial and retail loan products continued to ease at the nation’s largest national banks and federal thrifts. However, the Office of the Comptroller of the Currency’s (OCC) 19th annual Survey of Credit Underwriting Practices also found that standards tightened for high loan-to-value (LTV) home equity and conventional home equity loans.
Survey results, released by the OCC on Jan. 30, are a compilation of examiner observations and assessments of credit underwriting standards at 86 of the nation’s largest OCC-supervised institutions. The survey spans the 18-month period ending June 30, and covers loans totaling $4.5 trillion — approximately 87 percent of total loans in the national bank and federal savings association system.
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CFPB seeks Academic Research Council applications
Posted Date: Friday, January 31, 2014
The Consumer Financial Protection Bureau (CFPB) is looking to fill some seats on its Academic Research Council, a technical advisory body that informs the bureau on its research work.
Title X of Dodd-Frank established the CFPB’s Office of Research and tasked it with studying and reporting on topics relating to the bureau’s mission, including developments in markets for consumer financial products and services, consumer awareness and consumer behavior. The bureau established the Academic Research Council to inform the office’s activities.
Specifically, the council provides the office with methodological and technical advice and feedback, suggests new data collection strategies and methods of analysis, provides input into research strategic planning and the research agenda and collaborates with CFPB researchers on certain high-value projects to share specialized expertise.
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Republicans press Cordray on CFPB data efforts
Posted Date: Friday, January 31, 2014
Republicans on the House Financial Services Committee challenged Consumer Financial Protection Bureau (CFPB) Director Richard Cordray on his agency’s effort to gather consumer credit card and other data. During a Jan. 29 oversight hearing, the lawmakers questioned whether the bureau’s policy and supervisory goals are well served by the massive data collection effort, and they expressed concern that the security of the data could be compromised.
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