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Trump's CHOICE on CFPB


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Jun 19 2017
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Trump's CHOICE on CFPB

Trump’s CHOICE on CFPB? By: Tom Brannon / CEO, Compliance Umbrella _______________________________________________________    Many statutes and regulations have a sponsoring agency, one that is assigned primary rulemaking (and perhaps enforcement) responsibility and authority. Dodd-Frank bundled much of the rulemaking and enforcement authority and passed it solely (or primarily) to the CFPB. The controversy and short history of enforcement (since 2012) by the CFPB led to a stinging rebuke in an early Executive Order by the new administration (EO13772, Core Principles for Regulating the United States Financial System). In its Summary of Recommendations, under “Driving Economic Growth,” the CFPB was referred to as unaccountable, abusive, and unduly broad. The Bureau would be replaced by the pending CHOICE ACT (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs). Much ...

Is Compliance Umbrella an Insurance Policy?


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Mar 17 2017
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Comments to us from more than one attorney have described what we're doing as a federal audit insurance policy. We're not an insurance policy but the thought is worth mentioning. So our service is not insurance - we don't sell insurance. Most worthy of mention is that the Bureau, in their Consent Orders, expressly forbids using insurer funds to pay a civil money penalty. This exclusion is not mentioned in regard to the primary fine (the big amounts for restitution, redress, etc. - the actual harm to the consumers). These awards go up to nine figures (that's hundreds of million$). And these amounts are not appropriate for insurance coverage as these are simply refunds as redress to consumers injured by illegal actions. In the alternative, these amounts are shown by the CFPB to have occurred willfully and intentionally AND as was mentioned to us by a top CFPB defense attorney, no law firm ...

CFPB Focus on Attorneys and Law Firms


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Mar 17 2017
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Last year, vis-a-vis the relationship between attorneys and the Bureau, the chant that arose was . . . "THE BUREAU'S IN CHARGE OF OUR FIRM? NO WAY"  Lots of folks are saying "Yes Way." After the Hanna case and the way vendor cases are heating up, many firms feel the CFPB is trying to control the practice of law. Of seven Consent Orders issued last year, five deal with vendor relations and two were issued against law firms in New Jersey and New York. And 2015 featured, of course, the CFPB actions involving Hanna, Pressler, et al. What’s going on here? When a paralegal works on a case, the attorney is responsible for that person’s work. And the ABA defines your legal assistants/paralegals as: A legal assistant or paralegal is a person, qualified by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency or otherentity an ...

What's the Real Story on Buying a CMS


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Mar 17 2017
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Are you a bank, lendor, attorney, law firm - 1st or 3rd Party Collections - Pay Day lender - SMB With monthly receivables - Autodealer or vehicle business - Vendor of any of the above? Then you're on the radar screen at the CFPB and below is a turn-key solution. The Bureau enforces numerous consumer protection laws. Maximum risk lies within the Fair Debt Collection Practices Act and the Unfair, Deceptive, Abusive Acts (UDAAP). When auditing a business, their objective is to “assess the quality of the entity’s CMS.” They also state: “THE CFPB EXPECTS EVERY ENTITY TO HAVE AN EFFECTIVE CMS.” This is in their exam manual. The CMS is not optional, it’s required and it has to be populated. (http://ComplianceUmbrella.com) 1. The CFPB is a real risk: They’ve assessed over $12 billion in fines, shut down violating businesses, won’t allow businesses to cover civil money penalties with insurance. T ...

Tidbits on CFPB Risk


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Mar 17 2017
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The PHH case is red hot. This is the one that may be the giant-killer, since the first big effect was a federal court decision that a CFPB action was unconstitutional, violated due process and started a protracted battle that may topple the CFPB. Here are other tidbits: 1. No Statute of Limitations in RB4:   Referred to in the PHH v. CFPB Amicus Brief from the Chamber of Commerce as a “breathtaking assertion of raw administrative power that, if permitted to stand, would open the door to similarly unfair and unauthorized sanctions by the bureau under its broad enforcement authority,” the Director’s office of the Bureau first increased the money penalty by over $100 million for RESPA violations, then announced that statutes of limitations (SOL) don’t apply to administrative proceedings under RESPA. The issues are still pending but it’s hard to believe that the Bureau can pick and choose wh ...

New 4th Branch of Government


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Mar 17 2017
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PREMISE The effect of Dodd-Frank and the CFPB has started us down a new road of regulatory risk. Particularly for SMBs, addressing the risk, building a new portfolio of compliance activities and solutions has become mission critical. Numerous segments of the marketplace are calling this the rise of a fourth branch of government – one that is a heavy burden for all of America, but especially SMBs and the middle class. Without the help of Congress and the Legislative Branch, government agencies are making law. They call it rulemaking, regulations, interpretations, guidelines and all of these carry the power of law. In fact, a strong argument can be made that the work product coming out of this new 4th branch (referred to as “underground regs”) rises above being mere laws, thanks to a number of factors, briefly listed here: 1.      ENFORCEMENTS – Is the bureau playing “Let’s Pretend?” They ...

Obfuscation Strategy at one Regulatory Branch


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Mar 17 2017
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A major change in the way our government functions began in 2012 and is today a powerful ad hoc 4th branch of our federal government, the Regulatory Branch. The output of this branch and the bureaucracy driving it creates new laws - it’s their primary goal. These new laws are referred to as regulations, guidance, interpretations, rulemaking, amicus briefs, supervisions, and administrative acts or enforcements. In virtually every case, the new 4th branch has far more effect on us than what comes from Congress. It’s easy to see that the greatest risks are visited upon small and medium-sized businesses. There are about 1,000 times more SMBs than enterprises. SMBs have never before been audited for federal consumer laws while enterprises have long been active in the compliance (GRC) space. Up until recently SMBs have chosen to largely ignore this risk – the CFPB is changing their focus with ...

Want to Run With the Race Horses?


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Mar 02 2017
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Want to Run With the Race Horses?

       I attended a new company launch party after work last night. And I didn't have to leave the office to do that. My office is at DevDigital in Nashville. The company I founded is one of the first group of equity partnerships at Kernel Equity . . . the newest high-tech company in Nashville.        And yes, I want to run with these race horses. The founders of Kernel are amazing. And once they decide to put an entry into a particular race - that race is won, before the starting gate opens.  If there's a good idea involved and the Kernel assessment is positive, that idea and founder gets to run with a Fortuner 500 trainer (Todd McCullough), as well as a partner that built a $100 million dollar company, and a national fiber network with locations across the U.S. and in Europe, and the largest online store ever on eBay (Peter Marcum).        Every deal selected by these two race horses w ...

Governance by Stealth


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Mar 01 2017
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Governance by Stealth

I have a friend in IT at a Fortune 20 company. He did system upgrade testing (black box, white box, walk around). One day a new version of a subsystem was launched with no testing. How could that be? He called the development manager - "What, no testing?" His answer, "We used stealth testing on this one." He explained that stealth testing saved a lot of money, a lot of time. They were short on time so they launched first and let help-desk tickets replace pre-launch testing. That was brave but who could test better than users? So here's another stealth process many of us can benefit from. If you're a small-medium business and can't budget a full-blown G.R.C. product, just buy the "C". If it's a complete compliance system with quality procedures and training, along with the complaint database, reports, etc. YOU WILL RECEIVE GOVERNANCE BENEFITS and RISK MANAGEMENT BENEFITS, DELIVERED BY A S ...

Piling On - Trump Considers the Mountain of Regs


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Mar 01 2017
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Piling On - Trump Considers the Mountain of Regs

Recent conversations on regulations – along with the new administration – has centered on reducing regulations. For years, the government has been adding to the mountain of regs – will they stop now? Some housecleaning is possible, especially when federal courts step up to say that the most powerful regulator is operating unconstitutionally. The CFPB earned that distinction and we can expect remediation somewhere between reforming the CFPB to function the way other agencies do – to a whole new agency to replace it (The CHOICE Bill). If you listen closely, reform is centered on “new” regulations, Dodd-Frank and the five years after that. The other point to remember is that the real discussion is about enforcement. Many of the laws that piled up were passed years ago – some 30-50 years ago. Most importantly, regulators are primarily enforcers, although the last few years have revealed the ...

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