Slideshow

'Can Mulvaney define the word usury?': Comments of the week

July 26, 2018 10:00 PM

Readers respond to Mulvaney's changes to the CFPB's consumer board, weigh a proposal regarding fair lending, react to adoption of pot banking regtech and more.

Mick Mulvaney, director of the Office of Management and Budget (OMB), speaks during a press briefing at the White House in Washington, D.C., U.S., on Friday, Jan. 19, 2018. Federal government funding runs out at midnight Friday. Legislation to extend the deadline passed the House on Thursday and is set for a showdown in the Senate Friday, in which Democrats are poised to block the bill. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

On acting Consumer Financial Protection Bureau Director Mick Mulvaney's decision to reestablish his consumer advisory board with just six members:

"Anyone that has been around for a reasonable amount of time recognizes that large Boards only have from 6 to 12 of the members that are active, supportive, knowledgeable, etc., so Mulvaney is only recognizing this by establishing a "working" Board!"

Related: CFPB advisory board 2.0: Far fewer members

A recent court ruling in Illinois advances a conspiracy case against prominent Wall Street banks.

On an uptick in enforcement actions at the CFPB:

"It's 3 simple questions: Can Mulvaney define the word usury? Does he believe usury exists in consumer credit? Is he willing to protect consumers from being shackled or burdened with debt they can never dig themselves out of or continue to allow companies to circumvent existing usury laws?"

Related: In a twist, Mulvaney now defending CFPB enforcement powers

Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), testifies during a House Financial Services Committee hearing in Washington, D.C., U.S., on Tuesday, Dec. 8, 2015. The Financial Stability Oversight Council's effort to enhance its transparency is "important," Securities and Exchange (SEC) Commissioner Mary Jo White said at the hearing. Photographer: Drew Angerer/Bloomberg *** Local Caption *** Richard Cordray

Drew Angerer/Bloomberg

Another response to a story about the bureau's enforcement activity:

"Mulvaney was very clear that he intended to go after bad actors as long as they fell within the legal scope of the bureau. The difference is that Cordrey was breaking the law in his attempt to expand the powers and oversight of the bureau. Easy solution here as far as constitutionality is to make the bureau accountable and have a commitee. Too bad politicians are too big of cowards to do the right thing."

Related: In a twist, Mulvaney now defending CFPB enforcement powers

Brett Kavanaugh, U.S. Supreme Court associate justice nominee for U.S. President Donald Trump, smiles during a meeting with Senator John Kennedy, a Republican from Louisiana, not pictured, on Capitol Hill in Washington, D.C., U.S., on Tuesday, July 24, 2018. Senate Democratic leader Chuck Schumer says his party is having trouble reaching agreement with Republicans on the scope of documents related to Supreme Court nominee Kavanaugh that should be reviewed before the confirmation process begins. Photographer: Zach Gibson/Bloomberg

Zach Gibson/Bloomberg

On how fair-lending lawsuits could shift if Judge Brett Kavanaugh is confirmed to the Supreme Court:

"it seems difficult to be guilty of lending discrimination with out evidence of discrimination against even one borrower---Remember Will Rogers said there are liars, damn liars and statistics. the fair lending regression analysis used by regulators is only about 90% accurate and should not be used by the courts to prove discrimination. another problem is that the analysis uses only about three variables but lenders use many more on especially the marginal loans"

Related: Fair-lending doctrines could take beating from conservative court

Sheila Bair, chairman of the Federal Deposit Insurance Corp. (FDIC), speaks during a hearing of the Financial Crisis Inquiry Commission (FCIC) in Washington, D.C., U.S., on Thursday, Sept. 2, 2010. U.S. regulators can prevent a repeat of the financial crisis that toppled Lehman Brothers Holdings Inc. if they fully apply new authority granted by lawmakers, Bair said. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Sheila Bair

Andrew Harrer

On an observation by former Federal Deposit Insurance Corp. Chair Sheila Bair that prudential regulators did not give consumer protection enough attention before the crisis:

"I agree with Ms. Bair that consumer protection is given short shrift by the other federal banking regulators. There is still an undercurrent, if not an overt thought, that consumer protection isn't a legitimate part of a regulator's mission. Having said that, though, we have a new federal agency rife with poor management and guilty of systemic discrimination towards its own staff. It also collects fines that provide a slush fund for left leaning organizations. A success story?"

Related: Dodd-Frank is a success story: Progressives, former regulators

Senator Elizabeth Warren, a Democrat from Massachusetts, questions Janet Yellen, chair of the U.S. Federal Reserve, not pictured, during a Senate Banking Committee hearing with in Washington, D.C., U.S., on Thursday, Feb. 11, 2016. Yellen said the Fed was taking another look at negative interest rates as a potential policy tool if the U.S. economy faltered, a scenario some investors view as a mounting possibility amid a darkening outlook for world growth. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Elizabeth Warren

Andrew Harrer/Bloomberg

On Sen. Elizabeth Warren praising rules put into place after the financial crisis:

"'The moral of this story is simple: Without basic government regulation, financial markets just don’t work,' said Sen. Elizabeth Warren, D-Mass., at an event hosted by Americans for Financial Reform. Was DFA basic government regulation? No one is saying we should abolish....just scale it back and tailor it to a bank's risk profile. Not all $10 billion banks are alike."

Related: Dodd-Frank is a success story: Progressives, former regulators

Intelligent house, smart home and home automation concept. Symbol of the house and wireless communication.

Jakub Jirsak/Jakub Jirsák - stock.adobe.com

On a proposal to examine default rates when considering disparate impact:

"The author assumes that the same approval/decline rate means that the loan terms offered to Group A and Group B are the same as well. But are they? Or is one group approved, but with higher interest rates and fees, or shorter terms, contributing to the default rate? Questions of discrimination are seldom (ahem) black and white, and can defy simple statistics. With AI, surely we can do better analysis than simply approval vs default rate."

Related: A better way to assess disparate impact

A crumpled up home loan application (stamped with the word "denied") has been discarded on the ground in disappointment and frustration. All information written is fictional.

Kabby - stock.adobe.com

Another reader weighs in on a plan to assess default rates when examining possible disparate impact:

"Different default rates don't necessarily indicate different standards. When outside shocks acclerate defaults, they don't always do so equally across demographics. The real challenge with disparate impact is that it conpletely eliminates intent from the discussion. If marketing is inclusive, pricing models are based on presicted performance and underwriting standards uniformly applied, we should see good outcomes."

Related: A better way to assess disparate impact

jdoms - stock.adobe.com

On the growing adoption of regulatory technology for pot banking:

"Translation and summary: Banking marijuana related businesses is extremely risky and costly."

Related: Pot banking regtech is ready for its moment