Cordray Fails to Spell Out CFPB’s Plans in Lending

AUSTIN, Texas — Uncertainty remains the biggest concern among financial service providers even after Richard Cordray, director of the Consumer Financial Protection Bureau, addressed a room full of attendees this morning at the Consumer Bankers Association conference held here.

“He talked a lot about the initiatives of the agency, but didn’t provide a lot of substance on exactly what the agency was going to be doing,” said Andrew Miller, Senior Vice President Director of Regulatory Policy at the PNC Financial Services Group. “What’s prevailing and ruling the day is uncertainty.”

Miller, along with other officials who participated in a “Regulatory Rapid-Fire” following Cordray’s address emphasized the uncertainty that revolves around what will happen when the CFPB begins to enforce regulations.

“The issue that people have is what happens 12 months from now, 18 months from now when we see enforcement. Will that really measure up to the speech we heard today?” said Jaret Seiberg, managing director and senior policy analyst for Guggenheim Securities’ Washington Research Group.

Cordray spoke about the reasons why the CFPB was created. 

“While there is no doubt that the financial crisis occurred because the financial system failed the American people, we also recognize that the regulatory system failed, that the vision of a government watching out for the consumer failed,” Cordray said. “That is the key reason why the Consumer Financial Protection Bureau was created.”

Cordray emphasized the importance of promoting transparency and ensuring a level playing field between banks and their non-bank competitors. He also mentioned that the CFPB aims to renew trust in the financial marketplace and help Americans to feel more confident about the financial products they use.

“Consumers need better information about the costs and risks of borrowing, to be able to make comparisons for a good deal,” he said, adding that it’s important for consumers to know that the deal they were promised is the deal they are actually getting.

“Financial institutions can and should speak to their customers in terms that are simple and clear,” he said. “This kind of straightforward transparency promotes more informed and more responsible decision making by consumers across a number of financial markets.”

A well-functioning marketplace would be a place where buyers and sellers understand the terms of the deal and where consumers can compare possible alternatives, Cordray noted.

To be clear, Cordray did not address auto finance. His speech was to the entire CBA Live conference, which encompasses all the channels of consumer credit, not just auto finance, and even so, Cordray offered few details on CFPB activities related to specific lending products and practices.