On April 6, 2020, a white paper on the effects of the coronavirus pandemic was published publicly and addressed to the current director of the Consumer Financial Protection Bureau (CFPB, the Bureau), Kathleen Kraninger. This white paper – authored by Richard Cordray (former CFPB director), Diane Thompson (former CFPB deputy assistant director of regulations) and Christopher Peterson (former CFPB special advisor) – argues that the CFPB should take action under its existing legal authority to protect consumers against scams, fraud and predatory conduct during the coronavirus pandemic.
The authors outline several actions the Bureau should take to help consumers, including:
- Using consumer complaints to find out what is happening to them;
- Helping people avoid foreclosures, evictions and repossessions;
- Ensuring that mortgage servicers are treating consumers appropriately;
- Finding ways mitigate loan delinquencies and defaults;
- Supporting clear communication between lenders and consumers;
- Providing sufficient oversight of creditors, debt collectors and credit reporting agencies;
- Identifying illegal schemes to defraud consumers;
- Stopping non-essential rulemaking work to preserve limited resources; and
- Ensuring the use of virtual exams are sufficiently effective.
While the white paper can be interpreted as having overt political overtones, it does illustrate how the coronavirus pandemic may influence the compliance environment for financial institutions in the future. Many of the elements identified in the white paper – loan modifications, fraudulent schemes and predatory practices – received enhanced scrutiny following the financial crisis over a decade ago.
After the current crisis dissipates, regulators may pursue these issues with renewed vigor. With the backdrop of a presidential election year, the relative importance of these issues may only be magnified. Accordingly, it is prudent for financial institutions to ensure their compliance management systems in the areas of Fair Servicing, Fair Lending and Anti-Money Laundering are sufficiently monitoring these compliance risks.