Authors

On January 28, 2021, the Consumer Financial Protection Bureau (CFPB or the Bureau) provided the first official details regarding its new direction under the Biden administration. In a statement originally issued internally to Bureau employees, Acting Director Dave Uejio outlined his two main priorities: (1) relief for consumers facing hardship due to COVID-19 and the related economic crisis and (2) racial equity. While these two areas of focus were largely expected, the details of Acting Director Uejio’s statement provide helpful clarity to companies subject to the Bureau’s supervisory and/or enforcement jurisdiction.

COVID-19 Relief

Noting the need to take swift action to help consumers, the Acting Director signaled his intention to focus the Bureau’s supervision and enforcement tools on overseeing companies responsible for COVID-19 relief. Expressing concern regarding the Bureau’s findings from “Prioritized Assessments” of consumer risks resulting from the pandemic (summarized in the most recent Supervisory Highlights), the Acting Director specifically highlighted findings related to the activities of banks, mortgage servicers, student loan servicers, and companies that report information to credit reporting agencies. These include findings relating to improper administration of consumer relief during the pandemic, including the following:

  • Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests, and collected and assessed late fees despite having approved forbearances.
  • Servicers withdrew money even though consumers were in deferment.
  • One student loan servicer denied thousands of forbearance extensions because the loan holder never responded.
  • Companies across markets misreported accounts to credit bureaus and violated CARES Act provisions that amended the Fair Credit Reporting Act to provide additional consumer protections.
  • Some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.
  • Examiners found that the widely used policy of banks only taking PPP applications from pre-existing customers may have a disproportionately negative impact on minority-owned businesses.

Uejio directed the Division of Supervision, Enforcement and Fair Lending (SEFL) to “always determine the full scope of issues found in its exams, systemically remediate all of those who are harmed, and change policies, procedures, and practices to address the root causes of harms.” The Acting Director also indicated that Prioritized Assessments that did not adhere to those standards should be followed-up on without a new examination. In cases in which penalties may be necessary, Uejio directed SEFL to expedite enforcement investigations related to COVID-19.

Racial Equity

The statement also noted the ongoing national conversation regarding racial equity. The Acting Director indicated that fair lending enforcement will be a top priority of the Bureau going forward. Uejio further stated that he will “elevate and expand existing investigations and exams and add new ones to ensure we have a healthy docket intended to address racial equity.” Beyond fair lending, the Bureau will look to identify and address other unlawful conduct that disproportionately affects communities of color and other vulnerable populations.

Conclusion

While the long-term direction of the CFPB will likely be determined by Rohit Chopra—President Biden’s nominee to run the Bureau who is awaiting Senate confirmation—we expect COVID-19 relief and racial equity to remain at the forefront of the CFPB’s efforts for the foreseeable future. As a result, companies under the Bureau’s supervisory and/or enforcement jurisdiction should examine their compliance efforts in these areas and address any potential weaknesses.

For more a more detailed review of our expectations for the Bureau under Director Chopra, please read our previous analysis.