Reflecting on the 2021 predictions I made in January, I can’t help but note that, yet again, we’ve had a year of surprises. Rather than putting COVID-19 in our rear view, in many ways, the pandemic worsened this year. Below is an accounting of what happened – or didn’t – based on my winter 2021 predictions:
1. COVID impact: The anticipated economic fallout resulting from COVID-era unemployment has been staved off a bit by continued borrower relief efforts and sustained workforce difficulties. Whether the delay will mean a positive or negative impact as we head into 2022 remains to be seen.
2. CFPB leadership transition: As Director Rohit Chopra was not confirmed until September 30, the upheaval at the Consumer Financial Protection Bureau (CFPB) has been minimal. However, the agency has signaled an increased focus on big data and consumer privacy. It is yet unclear how the auto finance industry fits into the new regime, but that’s something we’ll keep our eyes on in 2022.
At a high level, the CFPB has rolled back some of the COVID-era permissiveness and policy statements that were less restrictive to creditors. Based on the past year’s supervisory highlights, lenders will need to be sure their practices relative to repossessions and collections are aligned with relief extended to borrowers during the height of the pandemic.
3. State regulation and enforcement: Early this year, there was a sense that other states may follow California’s lead in creating state-level “mini-CFPB” agencies. While some enacted new data privacy provisions, states have so far stopped short of creating new regulatory bodies.
To that end, Colorado and Virginia joined the fray on increased data privacy; however, those new laws won’t be effective until early 2023. Lenders have time to get their houses in order related to cybersecurity, although the time to do so is certainly upon us. There was concern in the industry that the “all-in” rate cap Illinois passed with its January “Predatory Loan Prevention Act” would be the precursor for an avalanche of all-in caps, but that has not come to fruition.
4. Congressional activity: We’ve not yet seen Congress take real action on advancing an all-in cap at the federal level, but they have increased their attention to privacy measures employed by large data providers. What that means for future legislation impacting lenders? Time will tell.
In a year of transition, much has (for better or worse) remained unchanged. Next month, I’ll let you know what we expect for 2022. Happy holidays and happy new year to you all!
Mark Edelman chairs McGlinchey’s national Financial Services Compliance Practice. He represents banks, finance companies, and marketplace lenders with a particular focus on multistate and federal law compliance, business planning, and risk management for personal property financing. He is known for his work in the areas of motor vehicle financing and leasing for captive and independent finance companies; buy-here, pay-here dealers; and related finance companies.
