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    What the Heck is Happening at the CFPB?

    Mulvaney Named as Interim CFPB Director Following Cordray's Resignation

    On Friday, the 24th of November, Richard Cordray – the first and only nominated and confirmed Director of the Consumer Financial Protection Bureau - announced his resignation, effective immediately.  Pursuant to the Dodd-Frank Act, which says "the deputy director shall serve as acting director in the absence or unavailability of the acting director," Cordray determined that Leandra English, the Deputy Director of the CFPB, would serve as acting director.

    Only hours later, President Trump announced a different person would serve as Interim Director. Trump's appointment is Mick Mulvaney, a former Congressman who is currently the Director of the Office of Management and Budget (OMB).

    In contrast to the Dodd-Frank Act, Trump derives his appointment power from the Federal Vacancies Act, which says the President can appoint any person who has been approved by the Senate to temporarily run an agency.  

    Can you imagine how awkward it must have been last Monday, the 27th of November, when both English and Mulvaney showed up to the CFPB, each asserting they were the Acting Director? (Side note: Mulvaney did bring Dunkin' Donuts, so he'd get my support exclusively based on tasty breakfast treats alone)! 

    All English brought to work was a copy of the lawsuit she filed that Sunday (11/26), which sought to block Mulvaney's appointment as interim director. Shortly thereafter, the CFPB's Office of General Counsel issued a memo that "advise[d] all Bureau personnel to act consistent with the understanding that Director Mulvaney is the acting director of the CFPB." 

    English's suit has two distinct legal arguments. First, there is a statutory conflict of laws claim. Remember, the Dodd-Frank Act authorizes English to serve as Interim Director, whereas the Federal Vacancies Act authorizes Trump to name Mick Mulvaney as Cordray's successor. Second, the suit asserts that the White House is attempting to indirectly control the CFPB through Mulvaney, who you'll remember is the Director of the OMB, which is part of the White House (Mulvaney is a member of Trump's cabinet). 

    This argument matters because Congress built CFPB to be independent of politics and the branches of government that go along with it. Under Dodd-Frank, the President has one power in relation to the CFPB – to nominate director. Congress likewise has one power – to confirm that director. After that, the agency is supposed to operate independent of political power. 

    So, English's argument is that Trump is trying to unlawfully influence and control the Agency by appointing someone who is directly beholden to him. 

    Regardless, the first round of litigation shows the President victorious.  Last Tuesday, November 28th, Judge Timothy J. Kelly ruled that although the case required further review, Mulvaney could serve acting CFPB Director.  

    Follow the iTod blog for developments in this case and updates on other banking news. 


    Independent Bank Class Action Alleges Specific Equifax Harms, Squire Patton Boggs

    In another lawsuit against Equifax, the Independent Community Bankers of America (ICBA), on behalf of thousands of community banks, seeks to hold Equifax accountable for the July 2017 data breach that potentially affected more than 145.5 million consumers. ICBA, along with Bank of Zachary and First State Bank, filed the class action last week in the U.S. District Court for the Northern District of Georgia.

    In analogous litigation, two open issues exist:

    (1) First, whether alleging the threat of future harm – as opposed to alleging actual harm suffered – is sufficient to establish Article III standing, and

    (2) Whether plaintiffs allege defendants’ acts or omissions with sufficient specificity.

    Article III Standing for Threat of Future Harm vs. Actual Harm Suffered

    In the ICBA complaint, since Plaintiffs do allege actual harm suffered, in addition to the threat of future harm, Article III standing is likely established. Specifically, Plaintiffs allege actual harm suffered from having had the immediate need to mitigate and rectify fraudulent transactions (i.e., monetary harm from reissuing cards, stopping transactions, current monitoring efforts, fielding questions from consumers). Plaintiffs allege a threat of future injury from: (i) having to continue monitoring the “certainly impending risk” of fraudulent use of their customers’ stolen identities; (ii) further monetary injury resulting from consumer emotional distress – those emotionally distressed consumers may choose to forego banking services, instead opting to use cash, which ICBA argues will hurt revenue from transaction fees, ATM fees, interest and other monetary charges; and (iii) significant costs that will be incurred to implement additional methods to determine customer authentication and credit worthiness.

    In analogous litigation, many plaintiffs only allege the threat of future harm. The Supreme Court may settle a circuit split on whether such theoretical harm is sufficient to establish Article III standing. On December 12, the Federal Trade Commission (FTC) holds an open workshop for public commentary on the topic.

    Read More.



    New House bill would kill consumer watchdog payday loan rule, CNBC

    Congress has it in for consumer protections enacted by the Consumer Financial Protection Bureau.

    A congressional resolution introduced Friday in the House would kill the CFPB's new rule aimed at making sure borrowers of so-called payday loans can afford to repay their debt. The House measure's cosponsors (three Democrats and three Republicans) and the rule's critics say it will block consumers' access to payday loans, which are short-term, small-cash loans consumers often use when they are coming up short until their next paycheck.

    "The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense," said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.

    Read More



    President Trump Will Choose Jelena McWilliams to Lead the FDIC, Fortune

    Image result for jelena mcwilliams

    U.S. President Donald Trump plans to nominate Jelena McWilliams, Fifth Third Bancorp’s top attorney, to serve as the next head of the Federal Deposit Insurance Corporation, the White House said on Thursday.

    McWilliams has worked as the bank’s chief legal officer since January, and if confirmed by the Senate, would take the helm of a key financial regulator that is still being run by an appointee of former President Barack Obama.

    The White House said in a statement Trump will nominate her to serve as an FDIC board member for the remainder of a six-year term expiring July 15, 2019, and as chairperson for five years. Read More


    Mortgage Lenders Get Tax Fix by Finding a Glitch in Senate Bill, Bloomberg Politics 

    The last-minute Republican additions to the Senate tax bill include one apparently designed to appease mortgage lenders who worried that the legislation could cost them billions of dollars and drive some small firms out of the business.

    A measure offered by South Dakota Republican Mike Rounds was described as “exempting mortgage service rights from new income inclusion rule” in a list of items to be included in the “manager’s amendment” obtained by Bloomberg News. The list was confirmed by two people familiar with the plans, but plans remained fluid Friday afternoon.

    Lenders say the rule -- if it didn’t exclude the servicing rights -- would have required them to pay taxes upfront on income that they might not receive for several years.

    Bigger lenders said the change would have cost them billions of dollars, as the value of those income streams dropped. Smaller lenders, lacking the cash to withstand the change, said they might have to significantly change their operations. Read More




    iSKIM - The Quickies

    Ransomware attacks in the cyberspace are likely to increase and become more sophisticated in 2018 targeting high net worth individuals and corporates, McAfee Inc. warned in its latest prediction report.

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    A new ransomware strain called Halloware is available on the dark web for the lowly price of $40.

    What to do about it? ATTEND:​​​

    Ransomware: Protect Your Bank From The Fastest Growing Cybercrime Business. Tuesday, January 9 @ 2PM ET

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    Agricultural Lending. AgLetter Reports in the third quarter of 2017, agricultural land values for the Seventh Federal Reserve District (Midwest) were down 1 percent from a year ago

    During periods of low net farm incomes, such as we are currently experiencing in agriculture, it is essential to use an accurate measure of farm profitability.Discover how to stress test your agricultural loan portfolio to measure and mitigate risk at next week's webinar!

    Agricultural Loan Analysis During Challenging Times: Indicators of Problems Ahead.Wednesday, December 13 @ 2PM ET

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    Community Reinvestment Act (CRA). Last week, the Federal Deposit Insurance Corporation (FDIC) issued the lists of institutions scheduled for a CRA examination during the first and second quarters of 2018.

    Being Evaluated​​​​​​​? Discover how to pass your exam in our upcoming CRA Prep session.

    Community Reinvestment Act. Thursday, January 18 @ 2PM ET