What is Trump’s true plan for the CFPB?

An existential crisis and a negotiating ship

The truth is that none of the dozens of sources that Housing Wire spoke for this story Real Know the intention of the Trump Witte Huis with the CFPB. One veteran in Washington Housing Finance speculated that Trump uses a shock-and-peen approach with the dizzying series of aggressive movements that are designed to bump the desk.

“This is a theory, it is just like the shots over the arch, partly to find out where the opposition is, partly to lay the foundation,” he said. “Then you withdraw and get what you want. He did that for example with the rates with Mexico and Canada. If they closed this place, they would have left Vough as acting director. He is like the Terminator. It just doesn’t make sense to nominate McKernan if they just close the place. “

An employee of the CFPB told Housingwire that a theory that is still circulating around the still frozen agency is a strategy “Bad cop, good cop”. Vought This week, 70 largely fired probation staff of the agency.

“A part of thinking is now that they let Vought do the dirty work to trim now and then let McKernan come in as a good agent,” the employee said. “And use us as an aid to get a compromise agreement.”

The CFPB employee said that he expects that the financing structure of the agency will be part of the upcoming negotiations for debt ceiling and tax plan.

Another theory is that employees of the White House realized that it is too constitutionally difficult to try to close the desk. There are simply better, more practical options for Republicans.

McKernan “seems absolutely someone you would nominate if you want to reform and exploit the CFPB, in contrast to removing it,” said Peter Idziak, senior associate at MortGage Law Firm Firm Polunsky Chisel Green. “My thought is that the administration may realize that if you just take out the agency, you actually leave all the rules made under Chopra and the Consumer Financial Protection Act, [which] Authorize the generals of the lawyers and in some cases private parties, the possibility to enforce these financial laws of federal consumers and these regulations. So you would essentially hand over the field to Democratic AGs. ‘

Even if McKernan is appointed and has a broad mandate of Trump’s White House to reform the CFPB, he will probably be challenged by vocal elements within his own party, in particular home republicans who want to see the desk on the ground burning, one Source, one source said.

“Every time he comes for them during a hearing, they want to hear him say:” My desk is fraudulent, it’s ridiculous. I get money from the Fed, I should not spend anything, “and he won’t do that.”

What money lenders can see from a new-look CFPB

The record of McKernan at the FDIC and other agencies suggests that he would be a more conservative regulator that takes a narrower reading of the articles of association than his predecessor, Rohit Chopra, which was often criticized by the industry for aggressive jurisdictive interpretations, wads in medical guilt And ‘junk reimbursements. ‘

“My thought is that McKernan signals that despite the rhetoric ‘the CFPB’, that you will see a CFPB that continues to work in a much smaller footprint, but still works,” said Idziak.

He expects that an agency laid by McKernan will withdraw when binding discrimination to Udap, fewer enforcement actions and a switch away from the inexpensive impact theory that is linked to fair credit actions.

“Mckernan has reflected that the rules must be clear and cannot be overly difficult. So I think you’ll see a more cooperation approach with the industry, “he said.

One source said that he did not think that large-scale revision of dated rules such as respect, what the industry would be beneficial to tackle McKernan, although the reforms of the rule X could be in the cards.

Anyway, the agency is still responsible for a considerable amount of routine activity within Mortgage. Annual HMDA reports will be due soon and there are weekly SOFR reports on which the industry depends on, Faith Schwartz said Strategies for home financing.

She expressed the hope that McKernan would bring common sense.

“Because I have had an agent on the beat, I don’t care how great our industry has been after a major financial crisis, there are many rules and laws, some old, which have been under new proposed rules that must be completed That the industry will help to continue to streamline and be more efficient. And the CFPB is very involved. ‘

Even when the rhetoric was “removing” the strongest in the Republican circles, lenders did not change their compliance practices, Colgate Selden noted, a partner at Seldenlindeke LLP.

“I think everyone was a bit awaiting from a little more to see who comes in as a director. Nobody changed anything, given the amount of time for some research backs, state rulers. “

Potential changes to the CFPB

Sources Housingwire said that there are too many factions within the Republican Party and too many variables that still play to really know how things will shake with the CFPB.

Most said they expect that the personnel level of the agency will be smaller and that the budget will be lowered, but greater structural questions DREN still.

Scott Olson, the executive director of the Community Home Lenders of Americasaid that the intervention of the congress could change the financing structure of the agency and even the scope of the power of McKernan.

“If the congress weighs, they probably go from a director to a board … and I think there would be support for that. There would be opposition, but I think they would come through. Number two, the big thing about this, is whether they terminate the legal authority to send the FED money to lead the agency and is subject to loans instead. “

Selden noted that the Trump administration has indicated an interest in consolidating the OCC and FDIC. Although there have been a high level in Washington to combine the agency with other federal agencies, there is actually not as much overlap as some have suggested, he said.

“The Dodd Frank Act tried to weave through those edges a bit, so to speak. From a supervision and a regulatory administrative perspective, who has the authority to interpret the rules and write the rules? “