The director of the Consumer Financial Protection Bureau Richard Cordray was expected to make an announcement regarding his highly speculated gubernatorial run in Ohio this weekend, but instead highlighted a possible plan to regulate how credit scores are calculated.
During his speech at the annual AFL-CIO Labor Day picnic in Cincinnati — an event that has served as a launch platform for many former Democratic candidates for governor — the state’s former Attorney General dodged questions about his potential campaign. Rather, Cordray emphasized the importance of access to credit and the 26 million people in the U.S. who are considered “credit invisible” well into adulthood.
“To attack this problem, we are looking at how other kinds of information, such as payments for rent or mobile phone bills, can be used to build credit records,” he said in his prepared remarks. “We are pushing for more accurate credit information and more transparency, so people are not unfairly denied credit. We work to clean up discriminatory practices that prevent even those with good credit histories from obtaining loans on fair terms.”
Several lenders, such as Ford Motor Credit, are exploring uses of alternative data and artificial intelligence in their risk models, but it’s unclear how the CFPB would turn that into an official, enforceable rule. The bureau is also expected to introduce rules regulating mortgages and payday lenders, possibly before yearend.
Separately, Cordray confirmed to the Washington Post what most in the industry assumed — that the CFPB is investigating Wells Fargo’s recent insurance scandal. The bank admitted to automatically charging more than 500,000 consumers for insurance even though the borrowers had already purchased policies from a different source. Many of the consumers became delinquent on their loans because of the practice and some had their vehicles wrongfully repossessed.
Cordray said he is concerned about the issue, adding that the bank could face additional enforcement actions, according to The Post.
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