Consumer Financial Protection Bureau Seeks Comments on Streamlining Regulation

On December 5, 2011, the Bureau of Consumer Financial Protection (the “Bureau”) announced a project to streamline the regulations it has inherited from other federal agencies by “updating, modifying, or eliminating outdated, unduly burdensome, or unnecessary provisions.” The Bureau seeks public comment regarding the “highest priority areas for streamlining.” The project is authorized pursuant to Sec. 1021(b)(3) of the Dodd-Frank Act. The Dodd-Frank Act established the Bureau on July 21, 2011 and transferred rulemaking authority under certain consumer financial laws to the Bureau from the Board of Governors of the Federal Reserve and six other federal agencies. The inherited regulations (which will be republished shortly in Chapter X of Title 12 of the CFR) relate to the following fourteen consumer laws, illustrating the broad sweep of the Bureau’s rulemaking authority:

• The Consumer Leasing Act
• The Electronic Fund Transfer Act (except with respect to Section 920 of that Act)
• The Equal Credit Opportunity Act
• The Fair Credit Reporting Act (except with respect to Sections 615(e) and 628 of that act)
• The Fair Debt Collection Practices Act
• Subsections (b) through (f) of Section 43 of the Federal Deposit Insurance Act
• Sections 502 through 509 of the Gramm-Leach-Bliley Act (except for Section 505 as it applies to Section 501(b))
• The Home Mortgage Disclosure Act
• The Real Estate Settlement Procedures Act
• The S.A.F.E. Mortgage Licensing Act
• The Truth in Lending Act
• The Truth in Savings Act
• Section 626 of the Omnibus Appropriations Act, 2009
• The Interstate Land Sales Full Disclosure Act

The Bureau requests that commenters suggest “provisions of regulations that should be:

• Simplified, rationalized, or consolidated;
• Relaxed, modified, or eliminated, perhaps for smaller firms or certain classes of transactions, without undermining essential protections;
• Updated to reflect current practices and technology;
• Adjusted to avoid unintended consequences; or
• Changed to remove an obstacle to responsible innovation” in consumer financial services markets.

Among a number of wide-ranging examples, the Bureau asks if the provisions of Regulation Z that require creditors to assess the  borrower’s ability to repay are unfairly precluding non-working spouses from obtaining credit and should be revised. (We note that the Bureau states, erroneously, that the “requirement is based on a provision of” the CARD Act.  In fact, the requirement is based on two such provisions.) The Bureau also asks whether it should permit legally mandated disclosures to be provided by text messaging for mobile banking applications, even though such messages are not readily retainable by the consumer.

The Bureau invites commenters to offer their highest priorities for changes, to single out their top priority, to describe and, where possible, quantify the potential benefits and costs to consumers and providers, and to submit or identify empirical evidence the Bureau could use to analyze and quantify or describe the potential costs and benefits of the proposed changes. The Bureau will consider five factors in prioritizing its streamlining initiative:  (i) the potential benefits and costs of a regulatory change (for both consumers and covered entities); (ii) the likelihood of achieving benefits consistent with the underlying statute; (iii) the speed with which the public would realize the benefits; (iv) the governmental and private resources needed to realize the benefits; and (v) the state of the evidence with which to judge these factors. The Bureau also seeks suggestions on how it should approach the review overall (including the order of review) and other practical measures it can take, apart from revising regulations, to ease compliance.

Until March 5, 2012, interested parties can submit written comments by visiting http://www.regulations.gov and following the instructions for comment submission, or by sending written comments to:

(Via mail) Research, Markets & Regulations Division, Bureau of Consumer Financial Protection, 1500 Pennsylvania Avenue NW, (Attn: 1801 L Street NW), Washington, DC 20220 (Via hand delivery/courier) Research, Markets & Regulations Division, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20006 Comments should refer to “Docket No. CFPB-2011-0039.”