Mulvaney outlines new CFPB governing philosophy

Ballard Spahr LLP
Contact

Mick Mulvaney, President Trump’s appointee as CFPB Acting Director, plans to make the CFPB’s practices of “pushing the envelope” and “rulemaking by enforcement” things of the past.

In a memorandum to CFPB staff and a Wall Street Journal article, Mr. Mulvaney described his governing philosophy for the CFPB’s exercise of its authority.  Mr. Mulvaney indicated that:

  • It is not appropriate for a government entity to “push the envelope” because of the potential harm to companies and their employees, with the possibility that a company may have to “close[] its doors under the weight of a multiyear Civil Investigative Demand” cited as an example of such harm.  While observing that there will be times when “dramatic action” is needed to protect consumers and that, at such times, he expected the CFPB “to be vigorous in [its] enforcement of the law,” Mr. Mulvaney stated that “bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed.”
  • In using its enforcement authority, the CFPB will focus on “quantifiable and unavoidable harm to the consumer” and when such harm does not exist, the CFPB “won’t go looking for excuses to bring lawsuits.”  In addition, there will be “more formal rule making and less regulation by enforcement”  because “the people we regulate should have the right to know what the rules are before being charged with breaking them.”
  • CFPB priorities should be guided by data such as 2016 complaint data which showed that “almost a third of the complaints” received by the CFPB related to debt collection and “[o]nly 0.9% related to prepaid cards and 2% to payday lending.”
  • In light of the Dodd-Frank Act requirement for the CFPB to “consider the potential costs and benefits to consumers and covered persons,” CFPB decisions should be driven by quantitative analysis.  Although qualitative analysis can play a role, it should not be to the exclusion of measurable “costs and benefits.”

We have been critical of the CFPB’s consistent attempts to “push the envelope” by adopting broad interpretations of its statutory authority with perhaps the most aggressive and public example of the CFPB’s “jurisdictional creep” being its efforts to indirectly regulate the conduct of car dealerships (which is expressly carved out from the CFPB’s jurisdiction by Dodd-Frank) by applying a questionable interpretation of the ECOA to impose disparate impact liability against auto finance companies.  Last month, we reported on the General Accountability Office’s determination that the CFPB’s bulletin setting forth its interpretation is a “rule” subject to override under the Congressional Review Act (CRA) and expressed our hope that Congress will override the bulletin under the CRA.

We were encouraged by the CFPB’s recent announcement that it intends to engage in a rulemaking process to reconsider its final small-dollar loan rule.  While a CRA override would provide a “cleaner” and quicker vehicle for overturning both the final small-dollar loan rule and the auto finance bulletin, we hope Mr. Mulvaney will also consider taking steps to reconsider the bulletin.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.