CFPB Internal Processes Criticized
A new published critique from a former Consumer Financial Protection Bureau (CFPB) official lends new weight to mortgage industry worries about politics inside that organization, writes HousingWire Editor-in-Chief Jacob Gaffney. In a lengthy article published recently in the National Review, Ronald Rubin, a former enforcement attorney for the CFPB and former chief advisor on regulatory policy for the House Financial Services Committee, discussed the regulatory body’s internal processes. Gaffney notes that Rubin’s piece, which aimed to highlight politicization inside the bureau, has “confirmed the worst fears of the mortgage industry.”
Industry fears bureau’s internal politics
For Gaffney, these fears had centered on two criticisms of CFPB actions, according to unnamed mortgage industry leaders. First, it appeared the bureau’s enforcement action was based on “opaque internal decisioning.” Second, mortgage industry figures noted that monetary penalties seemed less an “equalitarian application” of enforcement actions and more related to revenue. However, prior to Rubin’s piece, this reading of the situation was far from certain.
“Break-but-don’t-bust” policy accusations
Gaffney points to Rubin’s discussion of the PHH Corp. v. Consumer Financial Protection Bureau case, where CFPB Director Richard Cordray overruled an administrative judgment for $6.4 million and ordered PHH to pay $109 million for alleged kickbacks, as an example of a “break-but-don’t-bust violators” policy.
“Targets were almost certain to write a check,” wrote Rubin, “especially if they were accused of subjective ‘unfair, deceptive, or abusive acts or practices.’ Even the size of the checks didn’t depend on actual wrongdoing — during investigations, enforcement demanded targets’ financial statements to calculate the maximum fines they could afford to pay.”
CFPB must “behave with necessity”
“It’s not the starting point that’s the problem, it is the CFPB as a means to an end,” concludes Gaffney. “The CFPB needs reminding that in order to be needed one should behave with necessity,” he continues. “Until that day the complaints of the mortgage industry should not be disregarded; we are in this too.” Gaffney then argues that the “best door to great financial responsibility should swing both ways.”