Financial Regulatory Forum

U.S. consumer bureau’s first criminal referral is a warning for regulated banks

By Emmauel Olaoye, Compliance Complete

WASHINGTON, May 15 (Thomson Reuters Accelus) - Lenders who work closely with unregulated financial companies should conduct a thorough background check on the track record of such companies if they want to avoid being sanctioned by regulators.

The advice comes a few days after federal prosecutors charged debt settlement company Mission Settlement Agency and four individuals with mail and wire fraud. The charges were the result of allegations that the defendants ran a scheme that victimized more than 1,200 people across the United States. (more…)

U.S. consumer bureau’s mortgage servicing rules are in the right direction despite shortcomings

By Bora Yagiz

NEW YORK, Aug. 31 (Thomson Reuters Accelus) - The Consumer Finance Protection Bureau’s proposed rules earlier this month on mortgage servicing are a step in the right direction in its efforts to uproot the malpractices that were once prevalent in the subprime mortgage market. The proposals suffer from a few shortcomings, however, not the least because the Bureau, with its “one-size-fits-all” approach, seems to have ignored the nuances between the different players within the servicing industry. (more…)

ABA urges U.S. consumer bureau to exercise caution in regulating prepaid debit cards

By Emmanuel Olaoye

WASHINGTON/NEW YORK, July 26 (Thomson Reuters Accelus) - The Consumer Financial Protection Bureau should expand the disclosure protections on debit and credit cards to general purpose reloadable prepaid cards, but it should provide flexibility on the disclosures that prepaid card issuers have to make to consumers, a major U.S. banking trade group said on Tuesday.

In a comment letter submitted yesterday, the American Bankers Association said that the general purpose reloadable, or GPR, prepaid cards should be given the same protections as prepaid cards such as gift cards, but the CFPB should recognize that there are a variety of GPR cards and that the market will continue to evolve.  (more…)

Suit against U.S. Consumer Financial Protection Bureau could force it to define limits to its authority, says banking industry lawyer

By Emmanuel Olaoye

NEW YORK, June 29 (Thomson Reuters Accelus) - Even if a small bank’s lawsuit challenging the authority and leadership of U.S. Consumer Financial Protection Bureau fails in court, it could force the bureau to publicly define its limits, a top banking industry lawyer said.

Joseph Barloon, a partner at Skadden Arps in Washington, said the bureau could be forced to say what it can and cannot do, and provide the banking industry some guidance on the agency’s positions on issues such as mortgage lending. (more…)

Peer to peer lending: the murky future with America’s new consumer protector

By Alex Lee

NEW YORK, Jan. 25 (Business Law Currents) - With the promise of high yields, peer to peer lending is attracting record amounts from institutional investors and individual lenders alike, even in the face of a cloudy regulatory future. Potential uncertainty aside, the attraction of an estimated $2.5 trillion industry is proving too hard to pass up for investors. The two largest P2P lending companies, LendingClub and Prosper have funded loans so far to the tune of over $480 million and $290 million respectively.

By way of background, peer to peer (P2P) lending microcredit institutions sprang up in 2005 in order to provide needy borrowers with viable alternatives to normal commercial bank loans. This industry had as its backbone, the seemingly novel concept of stripping out intermediaries, such as banks, and allowing lenders and borrowers to connect to reach their own financial terms for loans via the internet. The nascent industry made significant strides when even credit-worthy borrowers were locked out of the commercial credit markets due to the credit crisis. (more…)

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