Five Senate Banking Democrats Press CFPB to Provide Relief to Consumers Facing Financial Harm During COVID Crisis

Earlier this week, in a letter to Consumer Financial Protection Bureau Director Kathleen Kraninger, Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and Committee Members Brian Schatz (D-Hawaii), Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), and Jack Reed (D-R.I.), urged the Bureau to focus on providing relief for Americans during the economic crisis arising from the COVID-19 pandemic.

“We write with serious concern regarding the Consumer Financial Protection Bureau’s (CFPB) recent steps to roll back protections for consumers during the novel coronavirus-19 (COVID-19) pandemic,” the Senators wrote. “We urge you to reverse course and instead utilize the full scope of the CFPB’s expertise, resources, and supervisory and regulatory authority to provide meaningful relief for consumers.”

Specific actions that the Senators asked the CFPB to undertake include:

• Directing lenders to uniformly apply a disaster code on the account of any consumer experiencing economic hardship and ensure that the application of the disaster code prevents damage to consumer credit scores.
• Directing credit scoring companies to treat any account with a disaster code as credit neutral so that the placement of the code prevents lowering of the consumer’s credit score.
• Providing advice on safe bank accounts or prepaid accounts for unbanked consumers looking for an account to receive payments and protect against overdraft fees.
• Issuing guidance announcing that the CFPB will consider certain acts and practices to be unfair, deceptive, or abusive during the pandemic period, including attempts to seize or garnish stimulus payments and the pursuit of collection lawsuits, garnishments, or auto repossessions during the pandemic period when consumers cannot defend themselves.
• Requiring that mortgage servicers prioritize outreach to borrowers who fall behind before initiating any foreclosure action.

The full letter is available at https://www.banking.senate.gov/imo/media/doc/CFPB%20Letter%20Final.pdf.