On gambling and the CFPB. . .

August 20, 2012 at 7:51 am Leave a comment

Not that you would have found the regulation if you went to the Federal Register on Friday, or even if you went to the regulation section of CFPB’s website, but the Bureau out to save America from itself by January 1, 2013 posted yet another regulatory proposal.  You can find a link to the material in the Bureau’s newsroom section as one of its latest press releases.  Comments are due in October.  This is the latest example of the CFPB’s regulation by press release.  The Federal Register is so 20th Century.

I have to admit that I did not get to read the entire proposal over the weekend, but from what I’ve read so far, this one is rather clever.  The Dodd-Frank Act sought to ban the use of up-front points and fees in mortgage loans, where such points and fees were being used to compensate brokers and originators based on the size of the loan.  That means, for instance, that an originator isn’t supposed to receive a higher commission for getting a $500,000 home loan through the mortgage lending process than he is for an $80,000 loan.  The problem is, the legislation is written so restrictively that it isn’t clear where any points and fees can legitimately be charged. 

Under the CFPB’s proposal, consumers would be given a comparison that allowed the option of a mortgage with points and fees paid up-front or the same mortgage where the points and fees would instead be included in the financing of the mortgage.  In announcing the proposal, Richard Cordray explained that many consumers face a bewildering array of points and fees and are confused by the mortgage process. This proposal would give them an easy way to compare the cost of a mortgage loan.  Remember that the credit union would still be allowed to recover its legitimate costs.  It is simply a question of making sure the member understands which approach is most cost effective.  

Incidentally, I went to the Saratoga Racetrack yesterday and I think the CFPB’s approach to ensuring that the daft American public knows what is it actually doing with its money should be applied to the betting industry.  For instance, I observed that 10s of 1000s of people were staring down at race forms with loads of numbers they couldn’t possibly understand and then using those same number to throw away their money.  The CFPB should mandate that horses with long odds be given names in the program such as “get ready to tear up your ticket,” “what about the college fund?” or “who needs to pay the mortgage, anyway.”  Those horses with shorter odds should be named things such as “keep you fingers crossed” and “don’t forget, the house always wins”.  Such improvements to the gambling industry would not prohibit anyone from gambling, but simply point out how foolish they are for doing so. 

Not for nothing, but the Meier family came back in the black, thanks to the expert prognostication of my nearly 10 year old daughter.  Take that, Richard!

Entry filed under: Compliance, Regulatory. Tags: , , , .

It’s Time For The CFPB To Take A Breather Dividing up the Standard Chartered “Windfall”. . .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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