With less than one week remaining until general election ballots in the U.S. are counted, financial firms and traditional mortgage lenders across the country are preparing for the possibility that former Vice President Joe Biden could become the next President of the United States. If Biden wins, then the possibility accompanying that win would be a stronger regulatory posture from the Consumer Financial Protection Bureau (CFPB), according to an article at the Wall Street Journal (WSJ).
“A Biden administration is expected to embrace a more aggressive role for the CFPB, which in many ways has grown less forceful during President Trump’s time in office,” the article says. “For the financial sector, a reinvigorated CFPB could be one of the most immediate impacts of a Biden presidency.”
The likelihood of “180-degree turns” in matters of policy are only likely in a few key areas if there is a new administration in January, but CFPB enforcement and rule-making is one such area according to Dennis Kelleher, co-founder, president and CEO of financial regulatory advocacy group Better Markets.
“The Biden team expects the agency would issue more fines, try to recover more money for consumers and give priority to protecting people hurt by the coronavirus recession, according to people familiar with the matter,” the WSJ article reads. “For example, Biden’s team wants to make sure lenders who have let borrowers temporarily skip mortgage payments don’t rush to foreclose on them next year.”
One of the things that would allow the CFPB to change its posture so quickly if a new president is elected is one of the very things sought by Republicans and incumbent director Kathleen Kraninger over the past year. Previously, the CFPB director could not be removed by the president unless there was very good reason to do so, as described in the Dodd–Frank Wall Street Reform and Consumer Protection Act that brought the CFPB into existence.
The Donald Trump Administration sought, and Kraninger endorsed the invalidation of the Bureau’s single-director structure as unconstitutional, contending that the inability of the executive branch to dismiss the CFPB director violated the separation of powers. The Supreme Court agreed with those assertions in a 5-4 decision this past summer, allowing the sitting president to dismiss the CFPB director.
If Biden is elected in November, then in January he would have the newfound authority to dismiss Director Kraninger at-will and replace her with a director of his own choosing. An acting director could be appointed immediately; a full director would take additional time since the position requires confirmation by the Senate. Kraninger was nominated to succeed Acting Director Mick Mulvaney in June of 2018, but she wasn’t ultimately confirmed until that December.
The CFPB maintains regulatory authority over the reverse mortgage industry at the national level. Since the onset of the COVID-19 coronavirus pandemic, reverse mortgage-related complaints to the Bureau have slowed. Enforcement actions have also recently risen to their highest levels in five years, though Democrats in Congress have repeatedly lamented what they perceive to be a softer approach to the agency’s regulatory posture since President Trump took office in 2017.
Shortly after he was officially nominated as the Democratic Party’s candidate for president in the upcoming election, RMD profiled the reverse mortgage-relevant political positions of Vice President Biden and his running mate, Senator Kamala Harris (D-Calif.). Previously, RMD had conducted a similar profile of the reverse mortgage record of President Trump and his administration.
Read the article at the Wall Street Journal, subscription required.