This is the latest issue of our weekly update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.
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ON THE HILL Senator Elizabeth Warren (D-MA) continues to press Wells Fargo for answers to questions surrounding the fraudulent sales practices that led to a $185 million settlement with regulators. In a letter sent to Wells Fargo CEO Tim Sloan, Senators Warren, Robert Menendez (D-NJ) and Ron Wyden (D-OR) reference Financial Industry Regulatory Authority (FINRA) filings by Wells Fargo that call into question when the bank could have known about the fraudulent activity, as well as whether Wells Fargo violated FINRA rules. The senators have requested a response from the bank by December 5, 2016.
Although currently in recess, the House Financial Services Committee has scheduled Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to testify later this month at a Financial Services Committee oversight hearing. The November 30 hearing will be Director Cordray’s first appearance before the committee since an appellate court found the agency was “unconstitutionally structured.” Cordray will likely be asked about the bureau’s investigation into unauthorized customer account activity at Wells Fargo.
IN THE AGENCIES In further fallout from the CFPB settlement with Wells Fargo over the fraudulent account scandal, Wells Fargo has confirmed that in addition to the U.S. Congress, federal and state prosecutors and the Labor Department, the Securities and Exchange Commission (SEC) now is looking into the scandal. Wells Fargo has boosted its reserve to deal with these legal issues from $1 billion to $1.7 billion.
The CFPB, in partnership with the New York Attorney General, filed a lawsuit in a federal district court against the leaders of a massive debt collection scheme based out of Buffalo, N.Y. The lawsuit alleges Douglas MacKinnon and Mark Gray operate a network of companies that harass, threaten, and deceive millions of consumers across the nation into paying inflated debts or amounts they may not owe. The CFPB is seeking to shut down this illegal operation and to obtain compensation for victims and a civil penalty against the companies and partners. You can read about this latest action from the CFPB here.
Government-sponsored enterprise Fannie Mae has partnered with finance company SoFi to announce a new loan option allowing homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan. Under the new loan option, which is titled the Student Loan Payoff ReFi, SoFi stated that it will pay down the student loan by disbursing payment directly to the servicer of the student debt.
FROM THE INTEREST GROUPS A number of interest groups issued statements in response to the announcement last week by the U.S. Department of Education of final regulations to protect student borrowers against misleading and predatory practices by post-secondary institutions and clarify a process for loan forgiveness in cases of institutional misconduct. (See the “In the Agencies” of the October 27, 2016 update)
You can read each statement by clicking on the group name.
- The Institute for College Access and Success (TICAS)
- National Consumer Law Center (NCLC)
- Americans for Financial Reform (AFR)
- Center for Responsible Lending (CRL)
The Center for Responsible Lending (CRL) has issued an analysis of the CFPB outline on its debt collection proposals. You can read the analysis here.
The Washington Center for Equitable Growth released an extensive report detailing policy initiatives for a new administration. Although lengthy, there is a section, beginning on page 82, about the “bankruptcy flag” negatively affecting the allocation of workers and resources. You can read the report here.