Posts tagged ‘Kathy Kraninger’

Three Things to Ponder As You Start Your Credit Union Week

Good morning, folks. Here are some things to keep in mind as you start what promises to be an extremely eventful truncated week. 

Meet the New Boss

With the Supreme Court ruling that the director of the CFPB serves at the pleasure of the President of the United States, President-elect Biden has announced his pick to head the Bureau. Even with the Supreme Court ruling, no one in government has as much power to shape the regulations of the consumer financial sector than will Rohit Chopra.

Judging by the press reports I read over the weekend, there are few regulators who will have as much running room at the start of the Biden presidency as the CFPB. The conventional wisdom is that the CFPB was made “toothless” (New York Times) under the parting director Kathy Kraninger. While this is not true, perception is reality, and the list of top priorities is already emerging. Get ready to work on proposals dealing with overdrafts, student loan disclosures, mortgage forbearances and payday loans. All this will be in addition to a much more aggressive use of regulation through enforcement action. 

NCUA and CFPB Enter Into A MOU

David Baumann of the Credit Union Times reported Friday that the CFPB and the NCUA had agreed upon a Memorandum of Understanding. According to the NCUA, the purpose of this agreement is “to improve coordination between the agencies related to the consumer protection supervision of credit unions over $10 billion dollars in assets.” But we won’t know for sure, at least for a while, as the NCUA is making the CUTimes file a FOIA request to learn the contents of the memo.

Under the Dodd-Frank Act, the Bureau has direct supervision over institutions with $10 billion or more in assets. An institution is subject to this supervision once it reports four consecutive quarters of $10 billion or more in assets. If I was at or near this threshold, I sure as heck would want to know what was in the MOU. After all, institutions have a right to know what’s expected of them; what regulators are overseeing them, and precisely with whom their supervisory information is being shared.

It’s Budget Day at the Capitol!

For New York Legislative geeks, today is like Christmas morning. You finally get to know what surprises are under the Budget tree, and there’s sure to be a few lumps of coal. Many of the big picture items are already being debated, such as online gambling and marijuana banking. And of course, the great wild card in all of this is the extent to which Congress will be able to ease New York’s fiscal woes. Goody gumdrops. 

Merry Christmas, Happy New Year, and enjoy your day.

January 19, 2021 at 9:43 am 1 comment

When a Company’s Comments Violate Federal Law

If you’ve never been to the South Side of Chicago, one of the only things you know about it is that it’s the poor part of town; after all, it is the home of Jim Croce’s Bad, Bad Leroy Brown and Frank Gallagher (Shameless) and, more than a few times the scene of crimes investigated by the cleverly corrupt Frank Voight in Chicago PD. But a local Chicago mortgage banker went too far when it used its local radio show/podcast to discourage people from buying homes in the area, according to the CFPB.

In one of the highest profile fair lending cases of the Kathy Kraninger era, the Bureau is suing Townstone Mortgage Company for violating the Equal Credit Opportunity Act and its implementing regulations, as well as for engaging more generally in discriminatory practices. I’ve been hesitant to talk about the case because the fact pattern is so unique that I wasn’t sure that much useful guidance could be gleaned from the litigation. But last week, the Defendant company moved to dismiss the lawsuit, ensuring that this is not a case that will go away quietly.  

According to the CFPB’s complaint, “Townstone acted to meet the needs of majority-white neighborhoods in the Chicago MSA (metropolitan statistical area) while ignoring the credit needs of majority African-American neighborhoods, thereby discouraging prospective applicants from applying to Townstone for mortgage loans in their neighborhoods.” The core of the CFPB’s complaint stems from the Townstone Financial Show, which started airing in 2014. It was co-hosted by executives at the company, and the company generated more than 90 percent of its applicants from radio advertising, including through the show. Among the statements, during a 2017 segment, the CEO described having to visit an old grocery store as “having to go to the Jewel on Division, we used to call it Jungle Jewel, there were people from all over the world going into the Jewel. It was packed. It was a scary place.” In another episode, he describes the South Side of Chicago between Friday and Monday as “hoodlum weekend.” 

Last Friday, the company filed a motion seeking to dismiss the CFPB’s complaint. First, it argues that the ECOA isn’t applicable in this case because it outlaws discrimination against mortgage applicants, not potential mortgage applicants. However, to win this argument, the company will have to successfully show that Regulation B, which outlaws discrimination against applicants, goes beyond the scope of federal law by also prohibiting lenders from discouraging potential applicants from applying for mortgage loans. The Defendant also makes a free speech argument, contending that even if its statements were discriminatory, they were protected under the first amendment. 

I will keep you posted, but I trust readers of this blog already know that we are well-past the age where it is acceptable for lenders to disparage potential customers because of where they come from or what they look like.  

October 29, 2020 at 9:28 am 1 comment

Three Things To Know Before You Head To DC

Washington DC is the adult version of Disney Land. There are those of us who love the place and return year after year; there are those of you who visit the place, can’t stand it and vow never to return again and finally there are those of you who go simply out of a sense of obligation to your kids. No matter why you go to DC, if you are one of the more than 5,000 people joining the industry in the nation’s Capital next week, you are actually coming at one of the most unique times you are ever going to see. For me,  this year’s trip is not so much about specific legislation as it is about getting a sense of how credit unions can best integrate themselves into a vastly changed political landscape.

For example, there are 101 new representatives and 10 new Senators. Not only that,  but this is the most diverse class of representatives ever including a large influx of women and minorities. In the New York delegation alone we have 29-year-old Congresswoman/celebrity Ocasio-Cortez who personifies so many of these trends. You have to go back to Teddi Roosevelt to find a young person who has had a bigger impact on New York politics so quickly. We also have several new members including Antonio Delgado, Anthony Brindisi, Max Rose, and former Assemblyman Joe Morelle.

With so many new members and so many new staffers, the most important thing to do next week is not simply to advocate for credit union priorities but to explain what credit unions are, how they are different from banks and why they are worth protecting. We are seeing more than a generational shift. Many of the newest members do not come from traditional political backgrounds which means that they are taking a fresh look at stale issues and wondering if things can be done differently.

By the way, the same type of shift is taking place on the state level. So many democrats won seats in the Senate that freshman Senators are now holding key committee Chairmanships. In addition, someone told me the other day that 40% of the assembly never served under Sheldon Silver. Considering how little turnover has traditionally been experienced in New York, this is truly remarkable. Hope to see you in DC.

CFPB Won’t Rule Out Additional Payday Loan Changes

Banking law 360 is reporting this morning that CFPB Director Kathy Kraninger wouldn’t rule out proposing additional changes to payday loan rules in Congressional testimony yesterday. I haven’t been able to watch the testimony yet but I must be missing something. A few weeks ago the CFPB proposed regulations that would gut the payday lending rules by eliminating the requirement that lenders ascertain a borrower’s ability to repay a  short-term loan. It’s hard to see what more the CFPB would have to do to take all the teeth out of the regulation.

New Jersey AG Brings Deceptive Practice Lawsuit Against Car Dealerships

I’ve decided to flag this story this morning because it highlights two trends which I think are going to become more prevalent in the coming months and years. The lawsuit I’m talking about alleges that certain dealerships in New Jersey engage in predatory lending practices by providing people with bad credit high price loans to get second-hand vehicles. This is the latest example of how, with or without a proactive CFPB, Attorneys General are going to fill in the gaps where they have the jurisdiction to do so. I also find the lawsuit interesting because policy makers continue to squabble over how much control should be exercised over car lending practices in which government bodies should exercise this control.

Hope to see you in DC. Don’t be afraid to say hi. Have a good weekend.

March 8, 2019 at 9:19 am 1 comment

Global Warming, Mortgage Insurance and Bad Christmas Music

(Updated 2:50) Greetings, people. If all goes according to plan this is the weekend that the Meier family will be cutting down, yes cutting down, the family Christmas tree. That being said, there’s a lot I have to get off my chest before I focus in on my Christmas joy. So here it goes.

It appears that we are once again seeing a last second reprieve of the NFIP take shape.  Late last night the Senate and house did agree on a seven day extender of the program which now does not expire until December 7.  Sorry I missed that this morning.

Here’s an analysis from the Mortgage Bankers Association of what the consequences of the lapse may be. One thing I would add however is that unless you are portfolio-ing your loan, in other words you do not want the option of selling them to secondary market participants, I would continue to insist on flood insurance for mortgages in flood zones.

No matter what variation of kick-the can Congress ultimately decides to play  it seems to me that the increasingly contentious debates about how to fund and make more effective our flood insurance program exposes gross hypocrisy on both sides of the global warming debate.

For the record, I am not one of those conservatives who feel that a good republican buries his head in the sand with the flood waters rise around it. That being said, it does seem odd to me that democrats such as New Jersey Senator Robert Menendez are scrambling to prop up a program which provides incentives for people to buy housing in areas that are simply going to become more expensive to maintain in the coming years. For instance, the Union of Concerned Scientists (Does that mean there’s a union of unconcerned scientists?) issued a report in September calculating “that by 2045—near the end of the lifetime of a 30-year home mortgage issued today—sea levels are projected to have risen such that nearly 311,000 of today’s residential properties, currently home to more than half a million people, would be at risk of flooding chronically, representing a doubling of at-risk homes in the 15 years between 2030 and 2045. Not only are the mortgage loans on these homes at growing risk of default if the value of the properties drops, but each successful sale of one of these homes represents the potential transfer of a major latent financial liability. Eventually, the final unlucky homeowners will hold deeds to significantly devalued properties.”

By the way, even if you are a climate change skeptic, insurance companies are going to use statistics like these in assessing the risk to property. Against this backdrop, one must wonder if a system predicated on subsidizing insurance costs with the American public ultimately on the hook, is a sustainable policy.

Nominee to Head CFPB Clears Important Hurdle

Kathy Kraninger, President Trump’s pick to be the anti-Cordray CFPB Director, cleared a procedural vote by a 50-49 vote yesterday indicating that she will shortly win approval to take the reins of the controversial but still hugely powerful independent agency. As I like to remind credit unions, Presidents and Directors will come and go but the CFPB will always be here, like it or not.

Worst Christmas Song Ever

It’s not even December, but this year’s winner of the blog’s occasional award bestowed on the most annoying Christmas song in the Universe is “Last Christmas” by Wham!, which has spawned several equally  obnoxious covers. Yoko Ono has previously won this prestigious prize.

Nothing says Happy Holidays like this beautiful lament from a spurned lover who is determined not to be jolted again even as he is apparently still obsessed with talking to the jolter. “Last Christmas, I gave you my heart, But the very next day you gave it away, This year, to save me from tears I’ll give it to someone special.” I’ll be sure to play that song as we set out to cut the tree and decorate the house for the Holidays. See you Monday.

November 30, 2018 at 9:30 am 3 comments

More Good News On ADA Litigation

Carroll v. ROANOKE VALLEY COMMUNITY CREDIT UNION is the latest victory for credit unions arguing that the individuals seeking to bring claims against credit unions because their websites violate the ADA lack standing to bring these suits.

This case involved a blind individual who argued that the credit union’s website. Among other things lacked alternative text which prevented visitors from obtaining vocal descriptions of the credit union’s graphics. However, the court refused to address the merits of the claim, concluding that “Carroll does not allege that he actually uses or plans to use RVCCU’s services. And it is implausible that he would travel more than 200 miles to visit a RVCCU physical location when he has never done so before, has no immediate plans to do so, and falls outside RVCCU’s limited membership field.”

This case is noteworthy because the court rejected the plaintiff’s argument that even though he was not within the credit union’s field of membership, he nonetheless had standing as a “tester.” Under this argument, standing is available to test compliance with the ADA on behalf of others who might be eligible to join the credit union. The court quickly rejected this argument concluding that one status as a “tester” does not by itself establish standing.

Keep in mind that this is the latest example of a very good decision for credit unions that is only binding on credit unions located in the Fourth Circuit, which includes Virginia, Maryland and parts of North Carolina. We haven’t seen much litigation in other areas yet such as the Second Circuit in New York. However, the Fourth Circuit’s ruling constitutes persuasive authority which complicates the ability of plaintiffs to bring successful class action lawsuits in other jurisdictions.

OMB Insider To Be Nominated As CFPB Head

One of the first rules of understanding the Trump Administration is to expect the unexpected. So no one should have been surprised when word came out over the weekend that the Administration would be nominating Kathy Kraninger to head the CFPB. So much for retiring Congressman Darrell Issa and current NCUA Board Chairman J. Mark McWatters.

Now anyone who tells you they know what kind of Director Kraninger would make is either lying or needs a life. All we know from press reports is that she currently is an official at the OMB which is currently overseen by acting CFPB Director Mick Mulvaney. Still that hasn’t stopped the opposing sides in what promises to be a lengthy nomination process from running to the ramparts.

The White House informs us that she will bring a “fresh perspective and much needed management experience” to the Bureau which it contends has been “plagued by excessive spending, dysfunctional operations and politicized agendas.”

In contrast, Carl Fish, Executive Director of Allied Progress informs us that her nomination is “nothing more than a desperate attempt by Mick Mulvaney to maintain his grip on the CFPB.”

If she is ultimately approved, Kraninger will serve a five-year term. Stay tuned. 

Medallion Update

Lately I have unabashedly made this blog The New York State of Medallions blog. According to Craines New York, Nordo Acquisitions, Incorporated bought 131 of the medallions for $170,000 apiece. To put this into perspective, the same group bought 46 of the King’s medallions last September for $186,000. The company is hoping to lease the medallions, between $1,000 -$1,200 a month, for a return of approximately 7% annually. They are effectively betting that the medallions have hit their floor.

The medallions that sold for $250,000 were purchased by buyers who already own the loans and offered them at a price they knew no one would meet in order to maintain control of their assets.

It’s Only Money

Last but not least, New York State’s Attorney General Barbara D. Underwood announced a $100 million settlement to settle claims brought against it by 42 states resulting from its manipulation of LIBOR. “Our office has zero tolerance for fraudulent or manipulative conduct that undermines our financial markets,” said Attorney General Underwood. “Financial institutions have a basic responsibility to play by the rules – and we will continue to hold those accountable who don’t.”

June 18, 2018 at 9:06 am Leave a comment


Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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