A year-long project commissioned by the Consumer Financial Protection Bureau produced quite a rundown of suggestions for the regulator as well as state and federal lawmakers and agencies on how they could improve.

The CFPB Taskforce on Federal Consumer Financial Law, which includes Hudson Cook partner Jean Noonan, released a two-volume report on Tuesday with approximately 100 recommendations on how to improve consumer protection in the financial marketplace. The bureau highlighted the taskforce report used five interrelated principles that are meant to serve as the foundation for proposed systematic changes to the current legal and regulatory framework, including:

— Consumer protection
— Information and education
— Competition and innovation
— Regulatory modernization and flexibility
— Inclusion and access

In its report, the taskforce made about 100 recommendations to the bureau, Congress, and state and federal regulators to strengthen consumer protection. Among some the taskforce recommendations (listed in no particular order) are:

— Authorize the bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services

— Expand access to the payment system by unbanked and underbanked consumers and ensure consistent treatment by applying the same rules to similar financial products

— Identify competitive barriers and make appropriate recommendations to policymakers and regulators for expanding access to the payments systems by non-bank providers

— Research and develop policies tailored to the unique challenges of formerly incarcerated people, and work with state and federal authorities to improve protection of this population

— Research and develop policies to address problems of financial inclusion in rural communities

— Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions

— Research consumer reporting issues that arise in connection with a consumer’s bankruptcy

— Consider the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of fintech companies engaged in money transmission

— Identify opportunities to coordinate regulatory efforts. For example, the bureau and prudential regulators should eliminate overlapping examination subject areas and reconcile inconsistent examination standards that unnecessarily expend multiple resources and can cause confusion

— Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation

— Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks

— Establish independent review of the bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the bureau and or by submitting its analyses to Office of Information and Regulatory Affairs for review

— Evaluate any positive or negative effect on inclusion as part of the bureau’s cost-benefit analyses as appropriate;

— Exercise caution (a recommendation for the bureau, Congress and other federal and state regulators) in restricting the use of nonfinancial alternative data, which can be useful indicators of creditworthiness

— Clarify the obligations of credit reporting agencies and furnishers with respect to disputes under the Federal Credit Reporting Act

— Assess periodically the accuracy and completeness of consumer credit reports

Chartered by the bureau last January, the taskforce has examined the existing legal and regulatory environment facing consumers and financial services providers.

The CFPB highlighted the Taskforce was in part inspired by the National Commission on Consumer Finance, which was established by the Consumer Credit Protection Act in 1968 to conduct original research and provide recommendations relating to the regulation of consumer credit.

To help inform its work, the taskforce engaged with external stakeholders, including consumer advocates, the bureau’s combined advisory boards, state and federal regulators, and industry. The taskforce’s report discusses what it learned during its examination and outreach to stakeholders and offers recommendations for the future of consumer financial protection.

“I want to thank Taskforce chair Todd Zywicki and members Dr. Howard Beales, Dr. Thomas Durkin, Jean Noonan, and William MacLeod for applying their considerable expertise and experience in consumer protection to prepare an insightful report that will be incredibly valuable to policymakers,” CFPB director Kathleen Kraninger said in a news release.

“The bureau is already committed to many of the recommended ideas presented in the report. The taskforce recommendations help define and illuminate our current path,” Kraninger continued.

Zywicki added, “On behalf of the Taskforce, I want to thank director Kraninger, deputy director Tom Pahl, and the incredible staff of the CFPB for granting us the opportunity to serve the American consumer in this effort. We were animated by the goal of promoting a strong and vibrant system that will protect consumers from harm and enhance access and choice for all Americans.

“The COVID-19 pandemic highlights the need to provide greater financial regulatory flexibilities and accelerated the adoption of new financial technologies, which raise both new opportunities and new threats for consumers,” he said. “By leveraging our combined 150 years of professional experience of seeking to improve the health of America’s financial system and the unique experiences and expertise inside and outside of the bureau, we have created a document that will help provide guiding principles to advance the cause of consumer protection and inclusion for years to come.”

The first volume of the report can be downloaded here while the second one is available here.

Industry reaction to report

The American Financial Services Association (AFSA) and the Consumer Bankers Association (CBA) generally had positive things to say when the taskforce’s report arrived on Tuesday. AFSA shared this statement with SubPrime Auto Finance News:

The American Financial Services Association is pleased that the Consumer Financial Protection Bureau Taskforce on Federal Consumer Financial Law has issued its report. The members of the taskforce have spent the bulk of their careers studying consumer finance and we encourage policymakers to closely review their important work in this report.

The prime focus of this Taskforce report is the effect of regulation on consumers and their access to credit. The last time such a comprehensive review was undertaken by the federal government was the 1970s. Clearly, much has changed — both for consumers as well as the diverse and evolving consumer credit industry – and our hope is that this report serves as a crucial resource for policymakers and our industry moving forward in shaping pro-consumer policies that expand consumer access to credit.

AFSA thanks director Kraninger for initiating and supporting the work of the Taskforce, as well as the members of the taskforce for their dedicated service. AFSA looks forward to both reviewing the report in detail and highlighting key elements that affect our member companies, as well as the millions of consumers they serve.

Furthermore, Consumer Bankers Association president and chief executive officer Richard Hunt offered this perspective.

“The CFPB, taskforce members and director Kraninger should be commended for undertaking this important initiative. Consumers are best served within the well-regulated banking industry and ensuring the rules of the road are consistent, harmonized and adapted to meet the demands of modern consumers and modern banking practices will help ensure continued and expanded access to credit for all Americans,” Hunt said.

“We look forward to reviewing the report and working with the Bureau on these and future recommendations,” he added.

The National Association of Federally-Insured Credit Unions (NAFCU) president and chief executive officer Dan Berger also weighed in on this week’s report release.

“NAFCU strongly appreciates the CFPB and its Taskforce on Federal Consumer Financial Law listening to our calls for reform and announcing their support for several of our recommendations,” Berger said in a statement from NAFCU.

“In addition to their support for expanding credit union access in underserved areas, we were pleased to see support for our longstanding call to modernize ESIGN Act requirements, expanding the use of alternative data and minimizing examination overlap included in the taskforce’s report,” Berger continued. “We strongly encourage policymakers to move forward with these recommendations and several others that will provide regulatory relief to credit unions — allowing them to better serve their growing membership.”

Consumer-oriented organizations offer assessments, too

Meanwhile, consumer-advocate organizations that sent statements to SubPrime Auto Finance News offered a much different viewpoint about what the taskforce assembled.

One perspective came from U.S. PIRG, the federation of state Public Interest Research Groups. Ed Mierzwinski is the organization’s senior director for federal consumer programs, and Mike Landis serves as its litigation director.

“We’ve already asked the Biden transition team to throw this illegitimate task farce’s report in the dumpster,” Mierzwinski said. “Most of its recommendations follow a dangerous, deregulatory, industry-approved playbook.”

Landis added, “This one-sided, shadowy taskforce is exactly what the Federal Advisory Committee Act was enacted to protect against. We’re confident that the court will see this taskforce for what it is — a blatantly unlawful attempt by the CFPB to favor special interests at the expense of consumers.”

Kathleen Engel is a research professor of law at Suffolk University and has held a number of public service positions, including on the Federal Reserve Board’s consumer advisory council, the CFPB’s consumer advisory board, and vice-chair of the board of Consumer Reports. Engel offered her assessment on behalf of Democracy Forward, a nonprofit legal organization that scrutinizes executive branch activity across policy areas, represents clients in litigation to challenge potential unlawful actions and looks to educate the public when the White House or federal agencies might break the law.

“From day one, director Kraninger and her Taskforce on Federal Consumer Financial Law have flouted federal law. The taskforce fundamentally lacked the credentials to take on a complete review of federal consumer financial laws as it was supposedly tasked to do. Now, in the Trump administration’s waning days, this illegal advisory group is advocating to transform critical consumer protections,” Engel said.

“The taskforce’s report recommends changes to consumer protections that will prove harmful to Americans struggling to weather the economic fallout of the ongoing pandemic,” she continued.

“Developed without transparency or a fairly balanced membership, the report revealed is the fruit of a poisonous tree. The CFPB should make public all records used in preparing the report, should not be permitted to rely on the report’s recommendations in future agency actions, and should label the report the result of an unlawful committee. We’ll continue to fight for these results in court,” Engel went on to say.