I just want to observe the irony that while the anti-consumer echo chamber was jumping up and down in joy over the ruling in PHH v. CFPB (see, e.g., here, and here), Wells Fargo's CEO resigned over a consumer financial abuse scandal. Hmmm.
The headlines look pretty bad: the DC Circuit Court of Appeals held the CFPB's structure to be unconstitutional in a case call PHH v. CFPB, which deals with kickbacks in captive private mortgage reinsurance arrangements allegedly in violation of the Real Estate Settlement Procedures Act. In fact, however, the ruling is a blessing in disguise for the CFPB.
It doesn't take a genius to figure out that incentive-based compensation like the type featured in Wells Fargo's current and previous consent orders has the potential to encourage fraud and steering of consumers into inappropriate products in order to make sales numbers. Here's the thing: there's little regulation of retail banking employee compensation.
The Consumer Financial Protection Bureau's consumer complaint database has contained narratives for over a year now. Each month, the CFPB publishes a report that summarizes the complaints received over the previous three months, and that focuses on a specific product and geographic area.
As has been expected for some time, the Consumer Financial Protection Bureau has issued a proposed rule that would prohibit companies providing consumer financial services from
Steve Davidoff Solomon has a Dealbook column on the CFPB's attempts to regulate auto lending that unfortunately gives the wrong impression about what the agency is up to, but which does tee up a really interesting question about the agency's politics.