Financial institutions looking to offer new banking products have to be aware of the Consumer Financial Protection Bureau's authority to take action against what it views as unfair, deceptive, or abusive acts and practices, according to speakers at the American Bankers Association's risk management forum in Baltimore.

One way to avoid CFPB scrutiny is to focus on the basic value of new financial products, said Ballard Spahr attorney Stefanie H. Jackman. Products that generate extraordinarily high margins are going to raise red flags, Ms. Jackman said. For example, major banks' boom-era captive mortgage reinsurance subsidiaries, which are the focus of an ongoing CFPB kickback probe, caught the Bureau's attention based on their extremely high returns.

"You don't want to be saying 'we make a lot of money on these products' without being able to articulate why that's appropriate," Ms. Jackman said.

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