CFPB, CFPB Where For Art Thou CFPB?

March 20, 2018

Th election of President Donald Trump signaled for many in the mortgage industry that finally something would be done to reign in federal regulation and allow lenders to make more loans.  There was also a secret desire that the potential elimination of the super federal regulator would mean that the millions spent on building out compliance programs and purchasing compliance software would mercifully come to an end.

Like many other things we have learned about President Trump, one cannot easily predict his actions.  Today nearly 500 days into a Trump presidency the CFPB is still alive and well, albeit with a new director, and although some of the most cumbersome regulations, those attaching “too big to fail” labels on lenders who clearly were not that big, have in fact been watered down or eliminated altogether, the King is not yet dead.

The bulk of the CFPB’s regulations and their regulatory oversight functions remain firmly in place. So what does this all mean?  What does a Trump presidency actually mean when it comes to the CFPB and the environment of heightened regulations lender’s have experienced over the past decade?

What it means is that no one in government is about to allow lenders to retreat back to the heady days of unfettered and unprincipled lending activities.  Quality loan origination and consumer protection rules are not easily removed once in place because the public has a long memory of the financial meltdown that occurred between 2007 and 2008.  Dodd-Frank was a reaction to a serious problem, perhaps an overreaction in hindsight, but it was an honest attempt to address real operational flaws.

CFPB where for art thou?  Still sitting comfortably in Washington DC with millions of dollars in its operating budget and thousands of staff members including investigators who remain committed to preventing the next mortgage meltdown.

So for now, lenders, it would be advisable not to lay off your compliance staff or terminate your compliance vendors.


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