Full Transcript is Below:
– I don’t think that there’s going to be a radical change in the way the bureau is gonna regulate the marketplace. So, the idea, we’ve heard stories that, that the Wild West is back, that people are doing things, and they’re ignoring the risk of a CFPB audit. I would say that’s a huge mistake for a whole variety of reasons. One, the bureau is still maintaining a thorough examination program of non-banks. The states are there as well. They’re enforcing the same rules that the bureau’s enforcing. So, I think the changes we’ll see will be around the edges. They’ll hopefully follow a lot of the recommendations we made in a whitepaper that we released recently, called, “CFPB 2.0.” It’s a roadmap for how the bureau can do a better job of providing industry guidance on existing rules that’re out there. Little bit more fairness and process, or due process, around supervisory and enforcement actions. But I don’t see any radical change where they’re gonna pull back from the marketplace and not examine non-bank lenders or ignore blatant violations of the law. That’s not gonna happen.
– Right, so there is this mentality among IMBs that, “Hey, they called the dogs off, “we can do whatever we want.” Or, “No one’s gonna be knocking on our door “to look at our book from the CFPB.” You would strongly advise them not to have that mentality.
– I would suggest that would be a mistake.
– Okay, well one of the biggest things Pete, I think you just touched on, maybe you can elaborate a little bit, has been on just clarity and definition of some of these rules and laws. Oftentimes we don’t find out about certain laws until they come down, the agency comes down on a lender and we read it on The Wire.
– Right, you read about it in an enforcement action.
– [Reporter] Yeah.
– As opposed to in the rule or in the guidance and I do think that’s an area where we will see some change. We’ve been, really for the better part of five years now, talking to bureau about changing what we call regulation by enforcement. And I think when acting director Mulvaney came in he said, “We’re gonna change that.” Director Kraninger has taken that message as well. And, like I said, we have some very specific policy recommendations around that. Guidance is intended to be, to clarify how to comply with the rules. It’s not the only way to comply but if you follow the guidance issued by the bureau and that guidance should clarify the rule, not change the rule. Then, you should be okay. If you wanna go outside the guidance you can, you better be ready to justify it to the bureau and supervise reaction. But it is more of a shield than a sword. The prior regime tended to use guidance in enforcement actions to change the rules as opposed to clarify the rules and we think we’re gonna see a change in that.