Financial Services Industry Regulation in The Biden Era | Rumberger | KirkJanuary 4, 2021
As the Biden administration takes shape, many are foreseeing changes to the regulation and conduct of the financial services industry in keeping with themes of the Biden/Harris campaign. Expectations include a renewed emphasis on consumer protection; changes to monetary policy; and, the pursuit of political goals, such as racial equality and amelioration of climate concerns. If Republicans retain control of the Senate, the president is likely to act through regulation rather than legislation, and to advance his agenda with appointments to key positions in the numerous federal agencies that affect financial services.
The Biden administration can appoint its own director of the Consumer Financial Protection Bureau (CFPB) thanks to a recent U.S. Supreme Court ruling that allows the president to fire the director before the end of a specific term. This matters because the Trump administration’s effort to restructure divisions within the CFPB to ensure a more industry-friendly approach to the bureau’s regulatory efforts were largely slow-walked once the presidential election results were learned and will almost certainly not go forward under Biden. The Biden administration’s transition team for CFPB includes people who worked for prior CFPB Director Richard Cordray. The CFPB under Cordray collected billions of dollars in fines from financial services companies. Such fines slowed almost to non-existence after the Trump administration installed its own director but would presumably ramp back up upon reinstallation of the Cordray team.
In addition, numerous provisions of the just-passed, second CARES Act (COVID-19 “stimulus” legislation) will fall to the CFPB to administer. Examples include monitoring of mortgage lenders’ compliance with rules allowing certain borrowers to skip payments, and enforcing foreclosure bans on certain properties financed by federally insured loans, such as apartment buildings. Beyond provisions in stimulus legislation, the CFPB can reinstate restrictions on payday lending and the Biden/Harris campaign has talked of creating via CFPB regulation a federal credit reporting agency that all lenders who participate in federally insured lending would be required to use.
Beyond the CFPB, the Biden administration’s transition team for the Federal Communications Commission (FCC) includes its former Commissioner Mignon Clyburn, who while in office supported a broad interpretation of the FCC’s “auto-dialer” rules that made it more difficult to use automation for credit collection calls. Recent federal court rulings that exempted many such calls from the auto-dialer rules could be effectively overturned by new interpretations of the rules.
Also being discussed is regulatory change through the Federal Reserve known as “real time payment systems” to give consumers quicker access to deposited funds that currently require time to “clear.” Consumer advocates claim that delays in the…