Leaders at the Federal Reserve, the OCC and the CFPB spoke at the Consumer Bankers Association annual conference about the need to be more flexible when applying oversight to bank & fintech partnerships; “We need to do a better job of educating our supervision staff, in some cases, in terms of interpretation of the guidance,” said Dan Quan, who leads the CFPB’s Project Catalyst, as reported by American Banker; they also talked about better coordination to ensure consistency in oversight. Source.
This week’s PeerIQ Industry Update covers 4th quarter GDP news, another round of bank earnings, the new SoFi CEO, fintech fundraising’s and the latest securitization trends; the new SoFi CEO was accepted positively across the market as the company looks to expand products in coming quarters; SoFi and Lending Club are looking at a busy quarter on securitization issuance and PeerIQ reviews their most recent deals; Streetshares secured a $23mn series B round led by Rotunda Capital; PeerIQ also took a deep dive into the key points of the recent letter CFPB Director Mulvaney circulated to staff about his vision for the bureau. Source.
With open banking starting last week in the UK, we might soon see a global push as Hong Kong is looking to explore the idea; the CFPB in the US recently came out with data sharing guidelines that look to begin creating a framework for future legislation; there is not yet the expectation that Hong Kong will adopt such regulations but they did ask for banks and fintechs to weigh in on the open API framework; the FT also sits down with former Barclays CEO Antony Jenkins to further discuss open banking and what it could mean for all participants. Source.
The Trump administration is looking to potentially name the chair of the National Credit Union Administration to lead the CFPB; J. Mark McWatters has been seen as being a bigger credit union advocate over banks; bankers are concerned because his public record has indicated he lobbies more for breaks that favor credit unions over banks; while a decision is yet to be made bankers are hopeful that the administration will consider those from the banking community as well. Source.
Acting CFPB Head Mick Mulvaney said he thought the payday lending rule was too far along for the agency to change but that he supports a congressional rollback; the Congressional Review Act gives Congress 60 days to nullify a regulation; Mr. Mulvaney is currently involved in a dispute over whether or not he can run the agency on an interim basis and he said he anticipates staying for 5 to 7 months. Source.
The Community Home Lenders Association and the Community Mortgage Lenders of America sent a joint letter to the CFPB asking for more clarity around surprise audits; the companies cite exemptions for small banks but they don’t have the same type of exemption for small nonbanks; they believe if the state regulator in which they operate requests a formal action then an audit can go ahead but surprise audits should not be permitted. Source.
The new CFPB director Mick Mulvaney is planning to rollback a key regulation that will allow payday lenders to charge very high interest rates; the current rule was set to be enacted soon and allow for lenders to become compliant by the middle of 2019; the rule limited the amount of money or the amount of times a person could borrow from these short term lenders; with the removal of the rule payday lenders can go back to operating like they did prior to the CFPB; many fear that lower income Americans will become mired in debt. Source.
In 2017 the CFPB saw a ton of regulation and a battle for the successor to former director Richard Cordray; this coming year could be even more tumultuous as acting director Mick Mulvaney looks to undo many of the regulations Cordray put in place and the ensuing court battle over who is the rightful director; recent rule like the arbitration rule have been reversed and they payday lending regulation could be next to go; with a number of regulations in need or more clarity or a court decision the next 12 months could prove crucial for the future of the agency. Source.
Open Banking is set to launch in Europe next month. As banks and fintech firms rush to ensure compliance we...
This weeks PeerIQ Weekly Industry Update covers the power struggle at the CFPB and Lending Club’s new pass through security transaction; a federal judge sided with the Trump administration in the CFPB spat and allowed for Mr. Mulvaney to run the agency for now; Lending Club completed a first of it’s kind deal and in turn will help them to expand the market, lower financing costs, address secondary market liquidity and allows valuation agents to calibrate pricing; PeerIQ also took a deep dive on mortgage delinquencies during the 2008 financial crisis. Source.