In another action demonstrating that a “new CFPB” is in place under the Biden Administration, the CFPB has issued an interpretive rule setting forth the basis for its determination that it has authority to examine institutions that it supervises for Military Loan Act (MLA) compliance.
In 2018, under the leadership of former Acting Director Mulvaney, the CFPB stopped examining its supervised institutions for MLA compliance on the ground that it did not have the requisite statutory authority. Dave Uejio, soon after becoming the current Acting Director in January 2021, publicly shared a statement sent to CFPB staff in which he criticized prior CFPB leadership’s approach to the MLA and indicated that the CFPB planned to resume supervisory examinations for MLA compliance.
Mr. Uejio’s views are reflected in the CFPB’s press release announcing the change in position on the CFPB’s MLA authority. It states that “current CFPB leadership does not find [CFPB leadership’s] prior beliefs [as to the CFPB’s MLA authority] persuasive and the CFPB will now resume MLA-related examination activities.” (In 2019, the CFPB sent a proposal to Congress that would have amended the Consumer Financial Protection Act (CFPA) to give the CFPB express statutory authority to examine supervised nonbanks and very large banks and credit unions for MLA compliance.)
The Bureau’s analysis in the interpretive rule of its MLA authority includes the following key arguments:
In the interpretive rule, the CFPB also sets forth the arguments that had persuaded the Bureau under its prior leadership that it lacked the authority to examine for MLA compliance and provides the reasons why the Bureau “no longer finds these arguments persuasive.”