Getting Tougher
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THURSDAY DECEMBER 31, 2020 VOL. 185 No. 251 AMERICANBANKER.COM Follow us on Twitter @AmerBanker OceanFirst chief eyes possible Getting tougher 5 merger of equals next year Chris Maher recently unloaded loans hurt Enforcement activity at the consumer bureau has risen in the two by the coronavirus shock, convinced he years since Kathy Kraninger took the helm of the agency in late was freeing the New Jersey company of 2018, but has yet to return to its Obama-era peak baggage that could impede a large M&A deal. CFPB enforcement actions This assertive move makes him one of our community bankers to watch in 2021. Page 6 See story on page 2 Eleven fintech M&A 60 6 deals that defined 2020 The year 2020 was disruptive and chaotic. 56 50 And while it derailed or delayed some companies’ plans for growth, it also created 40 44 42 opportunities for new combinations — or, at 38 the very least, didn’t slow them down. Page 7 30 32 27 House Dems demand fee 20 22 7 waivers for new stimulus cards Eleven Democrats on the Financial Services 10 11 Committee have asked the heads of the 8 Treasury Department and IRS to eliminate 0 service charges tied to debit cards used to 2012 2013 2014 2015 2016 2017 2018 2019 2020 distribute COVID-19 relief. Page 8 Source: CFPB Chase’s latest deal bets on 8 loyalty over cash rewards The motivation behind JPMorgan Chase’s dailybriefing Stimulus law may put purchase of the rewards company cxLoyalty 3 disputes over PPP agent is clear — travel spending and rewards have fees to rest for banks suffered greatly during the pandemic — but How far left will The new legislation includes a provision another problem Chase is tackling with this 1 CFPB swing in 2021? sparing lenders from having to pay such fees acquisition is the need to wean people off The Consumer Financial Protection Bureau is on Paycheck Protection Program loans, except cash rewards. Page 9 headed for more disruption in the new year in cases where they agree in advance with with a Democratic administration likely to borrower representatives to do so. Page 4 FHFA looks to reverse several GOP-backed policies. More 9 modernize GSE appraisals aggressive relief for mortgage borrowers, a How will SEC complaint The agency’s request for input will shape rollback of Trump-era rulemakings and yet 4 affect banks’ relationships how mortgages underwritten by Fannie Mae another realignment of CFPB offices will all with Ripple? and Freddie Mac handle appraisals and curb be on the table. (See chart above.) Page 2 The Securities and Exchange Commission’s risk. Page 9 accusation that Ripple broke securities laws Fed extends Main Street raises questions about the future of banks’ Remote work gives 2 program to process more loans ties with the company. Page 5 10 ransomware hackers Treasury Secretary Steven Mnuchin a new line of attack approved the extension of the Main Street By upgrading permissions and defining Lending Program, which offers loans access, firms can get ahead of the new to midsize companies affected by the threat, a chief information security officer pandemic, to Jan. 8. Page 3 writes. Page 10 THURSDAY DECEMBER 31, 2020 AMERICANBANKER.COM PAGE 2 some immediate and others more long-term. Freddie’s exemption. ENFORCEMENT ACTIONS Kraninger’s response to the pandemic has The second QM rule allows “seasoned” been to offer regulatory relief to financial loans held on bank balance sheets for an firms. For example, she promised not to issue extended period to receive QM status if they How far left enforcement actions to credit card issuers or meet other criteria. cite them in supervisory exams as long as they But consumer advocates have some will CFPB make good-faith efforts to resolve consumer misgivings about the QM rules and are likely billing disputes during the pandemic. A new to have the new acting director’s ear. It is not acting director would likely reverse such yet clear the extent to which the QM rules will swing in policies. be reassessed, tweaked or further delayed by “Consumer debt is going to be a gigantic a Biden CFPB, experts said. 2021? issue and a lot of work needs to be done around credit reporting,” said Ira Rheingold, More penalties ahead By Kate Berry executive director of the National Association Of all the expected changes, financial firms December 29, 2020 of Consumer Advocates. “A new acting are bracing for increased enforcement and a With a new Democratic president set to director will use the bully pulpit to get out return to stiffer penalties and fines. When take office in January, the biggest question there and tell consumers that the CFPB will Kraninger took over the CFPB two years facing the Consumer Financial Protection protect them in a lot of these areas.” ago, she listed enforcement last among her Bureau entering 2021 is: How far will the A new director would also quickly have to priorities. A new acting or permanent director pendulum shift back? make a decision about whether to preserve could make enforcement a top priority. After three years of Trump-appointed two recent final rules revising the definition Since then, enforcement actions have officials at the bureau undoing much of the of a “qualified mortgage.” The so-called QM been on an upswing, a sign that Kraninger agency’s Obama-era policies, the CFPB’s rule is one of the CFPB’s most consequential is committed to penalizing institutions for focus could boomerang back to tough rulemakings, affecting what types of “safe” violations. In a press release in December, enforcement and aggressive rule writing mortgages can be made by banks and lenders. Kraninger touted the $1.45 billion in total rather quickly, some officials said. The twin QM rulemakings could consumer relief and $270 million in civil Now that a Supreme Court ruling has radically affect the booming housing money penalties resulting from the 66 CFPB made it easier for presidents to install CFPB market by redefining certain underwriting enforcement actions issued in 2019 and 2020 chiefs of their choosing, President-elect Joe qualifications for getting a home loan. combined. Biden is expected to appoint a new acting Of immediate concern is that come July, Even so, Democratic lawmakers accused CFPB director either on or shortly after Jan. Fannie Mae and Freddie Mac will lose an Kraninger year of failing to extract sufficient 20. Current Director Kathy Kraninger is exemption that has allowed them to purchase monetary penalties from bad actors. expected to be fired or resign, although some loans with debt-to-income ratios above 43%, CFPB enforcement had ground to a halt Republicans are pushing for a legal battle a carve-out that the mortgage industry has for a year under former acting Director Mick over who would succeed her. lobbied heavily to keep. The first QM rule Mulvaney, whom the Trump administration With a change in leadership, many predict replaced DTI with a new set of factors based installed in late 2017 to succeed Cordray. the agency’s agenda for the new year could on a loan’s price, which was seen as a way Many of the actions brought by Kraninger — quickly resemble that pursued by former to ease the transition away from Fannie and including lawsuits against Citizens Financial CFPB Director Richard Cordray during the Obama administration. “Everybody is expecting a more aggressive Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 and active CFPB on a number of fronts,” said Phone 212-803-8200 AmericanBanker.com Eamonn Moran, of counsel at the law firm Morgan Lewis and a former attorney in the Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 CFPB’s Office of Regulations. Managing Editor Dean Anason 770.621.9935 The immediate focus will be on aiding Reporters/Producers consumers who have been harmed Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 financially during the COVID-19 pandemic, Washington Bureau Chief Joe Adler 571.403.3832 observers said. Mortgage servicers, credit Executive Editor, Technology Miriam Cross 571.403.3834 bureaus, debt collectors and auto lenders are Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 expected to land in the CFPB’s crosshairs. BankThink Editor Rachel Witkowski 571.403.3857 “There will likely be more mortgage- John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 related investigations and a laser beam focus Hannah Lang 571.403.3855 on what servicers are doing not to harm Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 consumers,” Moran said. Digital Managing Editor The year ahead is going to present many Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 challenges for whoever leads the agency, For up to date and complete coverage go to AmericanBanker.com THURSDAY DECEMBER 31, 2020 AMERICANBANKER.COM PAGE 3 Group and Fifth Third Bancorp — were filed director. Chopra was the CFPB’s former initially under Cordray. student loan ombudsman and, if he gets the MAIN STREET LENDING Tony Alexis, a partner at the law firm job, is likely to reverse Kraninger’s policy of PROGRAM Goodwin who heads the firm’s consumer having that office focus solely on the private financial services enforcement practice, said student loan market. enforcement actions could spike simply as a U.S. consumers owed $1.55 trillion in Fed extends result of the CFPB’s likely focus on mortgage student loan debt in the third quarter, with servicing issues.