Good afternoon —
Who's watching the watchdog? In the case of the CFPB, one entity is the Government Accountability Office, which in a recent report takes the CFPB to task for the way it reorganized its fair lending activities in 2018. Two key members of the CFPB's supervision team left in the wake of that report, as Senior Mortgage Reporter Georgia Kromrei writes about in this article.
The GAO found that the reorganization shifted the CFPB's fair lending enforcement from specialists to generalists at the enforcement office and distributed nearly three quarters of its fair lending staff to other divisions. "The reorganization limited the enforcement division's power to open investigations without outside approval," Kromrei writes.
Why would the GAO weigh in on CFPB enforcement of fair housing policies? After all, it used to be called the Government Accounting Office and you can still see that legacy in its mission statement, which says the GAO "examines how taxpayer dollars are spent and provides Congress and federal agencies with objective, non-partisan, fact-based information to help the government save money and work more efficiently."
How does fair housing fit into that mission? It's hard to tell.
The lack of enforcement certainly means less money collected in fines, as Kromrei notes in her story. "While Kathy Kraninger helmed the CFPB, from 2018 to 2020, it fined companies about $800 million. That figure is dwarfed by the $12 billion in fines it charged companies during six years under the agency's first director, Richard Cordray."
But much of that money was distributed to consumers harmed by financial companies as opposed to lining government coffers.
Still, money is money, and in the end, the GAO works for Congress. When someone in Congress asks for an audit or investigation, they spring into action. The GAO doesn't have any enforcement powers itself, but if the departure of two senior enforcement leaders is any indication, the CFPB is taking the report's findings seriously. Which means those in the mortgage industry better be shoring up their fair lending compliance. Even the watchdog's watchdog has you in their crosshairs.
Until tomorrow —
Sarah Wheeler
HousingWire Editor in Chief
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