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  • CFPB Succession: Mulvaney pleads for Congress to restructure the CFPB; oral arguments held in English litigation

    Federal Issues

    On April 11 and 12, acting Director of the CFPB, Mick Mulvaney, testified before the House Financial Services Committee and the Senate Banking Committee regarding the Bureau’s semi-annual report to Congress. (Previously covered by InfoBytes here). Mulvaney’s prepared testimony, which was submitted to both committees, covers the salient points of the semi-annual report but also includes the same request to Congress that he made in the report: change the law “in order to establish meaningful accountability for the Bureau.” This request, which includes four specific changes (such as, subjecting the Bureau to the Congressional appropriations process and creating an independent Inspector General for the Bureau), was the focus of many of Mulvaney’s responses to questions posed by members of each committee. Specifically, during the House Financial Services hearing, Mulvaney encouraged the members of the committee to include the CFPB restructure in negotiations with the Senate regarding the bipartisan regulatory reform bill, S.2155, which passed the Senate last month. (Previously covered by InfoBytes here).

    Mulvaney also fielded many questions regarding the Bureau’s announcement that it plans to reconsider the final rule addressing payday loans, vehicle title loans, and certain other extensions of credit (Rule); however, his responses gave little indication of what the Bureau’s specific plans for the Rule are. As previously covered by InfoBytes, resolutions have been introduced in the House and the Senate to overturn the rule under the Congressional Review Act. Additionally, on April 9, two payday loan trade groups filed a lawsuit in the U.S. District Court for the Western District of Texas asking the court to set aside the Rule because, among other reasons, the CFPB is unconstitutional and the Bureau’s rulemaking failed to comply with the Administrative Procedure Act. The complaint alleges that the Rule is “outside the Bureau's constitutional and statutory authority, as well as unnecessary, arbitrary, capricious, overreaching, procedurally improper and substantially harmful to lenders and borrowers alike.” The complaint also argues that the rule is a product of an agency that violates the Constitution’s separation of powers due to the Bureau’s structure of a single director who may only be removed by the president “for cause.” A similar argument in CFPB v. PHH Corporation was recently rejected by the U.S. Court of Appeals for the D.C. Circuit (covered by a Buckley Sandler Special Alert).

    Additionally, on April 12, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in English v. Trump. In this suit, Leandra English, the current deputy director of the CFPB, challenges Mulvaney’s appointment as acting director. Unlike previous arguments, which focused on the president’s authority to appoint Mulvaney under the Federal Vacancies Reform Act (FVRA), the court spent considerable time discussing Mulvaney’s concurrent role as head of the Office of Management and Budget (OMB), and whether that dual role is inconsistent with the independent structure of the Bureau, as established by the Dodd-Frank Act.

    Federal Issues CFPB Succession Payday Lending Senate Banking Committee House Financial Services Committee Appellate D.C. Circuit CFPB

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  • CFPB releases RFI on consumer complaints and inquiries

    Federal Issues

    On April 11, the CFPB released its twelfth (and apparently final) Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in assessing its handling of consumer complaints and consumer inquiries. Pursuant to the Dodd-Frank Act, the CFPB is required to “facilitate the centralized collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services.” According to the RFI, a “consumer complaint” relates to an issue a consumer has with an identifiable entity, whereas a “consumer inquiry” is a consumer request for information from the CFPB regarding a financial product or service, a CFPB action, or the status of a complaint. While the Bureau is seeking feedback on all aspects of its consumer complaints and consumer inquiries processes, the RFI specifically seeks comments related to (i) how the Bureau distinguishes between complaints and inquiries, including if there should be a process for companies to reclassify consumer submissions; (ii) the complaint submission process, including the channels of submission and whether consumers should be allowed to authorize a third-party to submit on their behalf; and (iii) whether the Bureau should develop a process for companies to provide responses to consumer inquiries. The RFI is expected to be published in the Federal Register on April 16. Comments will be due 90 days from publication.

    The CFPB sought information on the publication of complaints in the Consumer Complaint Database and other forms of complaint reporting in an earlier RFI, previously covered by InfoBytes here.

    Federal Issues RFI CFPB Succession Consumer Complaints Consumer Finance

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  • Buckley Sandler Special Alert: New Jersey’s Office of Attorney General creates “state-level CFPB”

    State Issues

    New Jersey Attorney General Gurbir Grewal said in a press release last week that he and Governor Phil Murphy would “fill the void left by the Trump Administration’s pullback of the Consumer Financial Protection Bureau” by creating what the release referred to as a “state-level CFPB.”

    The effort includes the nomination of Paul R. Rodriquez as director of the New Jersey Division of Consumer Affairs, which enforces laws to protect consumers’ rights, regulates the securities industry, and oversees numerous state-licensing boards. Rodriguez, who is currently Acting Counsel to New York City Mayor Bill de Blasio, will start in his new role on June 1.

    * * *

    Click here to read the full special alert.

    If you have any questions about the initiative or other related issues, please see our State Attorneys General practice, whose lawyers have been defending AG enforcement actions for more than two decades, or contact Douglas Gansler or any Buckley Sandler attorney with whom you have worked in the past.

    State Issues CFPB State Attorney General CFPB Succession Enforcement

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  • CFPB releases RFI on financial education programs

    Federal Issues

    On April 4, the CFPB released its eleventh Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in “assessing the overall efficiency and effectiveness of its consumer financial education programs.” Pursuant to the Dodd-Frank Act, the CFPB develops education programs to educate and empower consumers to make better informed financial decisions, and to improve consumers’ financial literacy. The Bureau develops programs for the general public as well as programs designed for special populations. While the Bureau is seeking feedback on all aspects of its financial education initiatives, the RFI specifically seeks comments related to (i) the topics and delivery functions of the programs; (ii) the effectiveness of the programs, including how the Bureau should measure program success; and (iii) how to avoid duplication and improve coordination with other federal agencies. The RFI is expected to be published in the Federal Register on April 9. Comments will be due 90 days from publication.

    Federal Issues RFI CFPB Succession Consumer Finance Consumer Education Dodd-Frank Federal Register

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  • Mulvaney requests more oversight and accountability for the Bureau in semi-annual report to Congress

    Federal Issues

    On April 2, the CFPB issued its semi-annual report to Congress covering the Bureau’s work from April 1, 2017 to September 30, 2017. The report details, among other things, problems faced by consumers with regard to consumer financial products or services; significant rules and orders adopted by the Bureau; and various supervisory and enforcement actions prior to Mick Mulvaney’s appointment as acting director. Most notably, the report includes an opening letter from Mulvaney, which requests Congress make changes to the law to “establish meaningful accountability” for the Bureau which is “far too powerful.” Specifically, Mulvaney requests four changes (i) subject the Bureau to Congressional appropriations; (ii) require Congressional approval for major rules; (iii) make the director accountable to the President’s exercise of executive authority; and (iv) create an independent Inspector General for the agency. Mulvaney writes that the cycle of Congressional frustration with the CFPB will repeat “ad infinitum unless Congress acts to make [the Bureau] accountable to the American people.”

    Mulvaney is set to testify on April 11 before the full House Financial Services Committee regarding the Bureau’s semi-annual report. As he notes in his letter, he intends to discuss his recommendations regarding the Bureau’s oversight at the hearing.

    Federal Issues CFPB Succession Enforcement Congress CFPB

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  • CFPB Succession: CFPB drops payday lawsuit, new CRA measures introduced in Congress

    Federal Issues

    On March 22, Senator Moran, R-Kan, with 15 GOP co-sponsors introduced a resolution under the Congressional Review Act to block the CFPB’s Bulletin 2013-02 (Bulletin) on indirect auto lending and compliance with the Equal Credit Opportunity Act (ECOA). The resolution follows a December 2017 letter issued by the Government Accountability Office (GAO) to Senator Pat Toomey (R-Pa.) stating that the Bulletin is a “general statement of policy and a rule” that is subject to override under the CRA, previously covered by InfoBytes here.

    On the same day, Senator Graham, R-SC, introduced a resolution to overturn the CFPB’s final rule addressing payday loans, vehicle title loans, and certain other extensions of credit. A similar resolution was introduced in the House in December 2017 by a group of bipartisan lawmakers. As previously covered by InfoBytes, while acting Director Mick Mulvaney has suggested he would not seek his own repeal of the Bureau’s rule but may “reconsider” it, he has expressed his support for the Congressional measures to block the rule. Additionally, according to media reports, the CFPB has recently dropped a case against an online payday loan company and Mulvaney is currently reviewing whether to continue three other investigations into lenders of similar products.

    Federal Issues CFPB Succession Payday Lending Congressional Review Act Auto Finance

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  • CFPB releases RFI on guidance and implementation materials

    Federal Issues

    On March 28, the CFPB released its tenth Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in “assessing the overall effectiveness and accessibility of its guidance materials and activities (including implementation support).” Specifically, the Bureau is seeking feedback regarding interpretive rules and general statements of policy that the CFPB determined do not need to go through the Administrative Procedures Act (APA) notice and comment process, as well as other “non-rule guidance” such as compliance guides and webinars. While the Bureau is seeking feedback on all aspects of its various guidance materials, the RFI specifically seeks comments related to (i) the regulatory inquiries function; (ii) regulatory implementation and compliance aids; (iii) official interpretations and standalone interpretive rules; (iv) SEFL guidance materials; (v) disclaimers included on non-rule guidance materials; and (vi) recommendations for new forms of written guidance. The RFI is expected to be published in the Federal Register on April 2. Comments will be due 90 days from publication.

    Federal Issues RFI CFPB Succession Agency Rule-Making & Guidance

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  • FTC responds to CFPB RFI on CIDs

    Federal Issues

    On March 27, the FTC’s Bureau of Consumer Protection (BCP) released its comment letter responding to the CFPB’s Request for Information (RFI) on Civil Investigative Demands (CIDs) – the first RFI in a series seeking feedback on the CFPB’s operations (previously covered by InfoBytes here). According to the BCP, good government requires an agency to use restraint both when deciding to issue compulsory CIDs and when making specific demands, because courts are deferential to an agency’s request. The BCP emphasizes the need for a balance between the enforcement of laws by an agency and the potential burden on the party whom receives the demand.

    The FTC response is notable as it is not common for a federal agency to submit comments to another agency’s RFI. However, as the BCP points out, the CFPB originally used the FTC’s Rules of Practice and Procedure as a model when establishing its CID process, and in July 2017, the BCP implemented several reforms to its consumer protection CID process. (Previously covered by InfoBytes here.) The comment letter notes the BCP’s belief that the reforms “have been quite successful in lessening burdens on recipients and improving transparency while continuing to allow the agency to obtain the information it needs to enforce the law.” In response to the CFPB’s specific requests, the BCP outlined its internal processes and provided the Bureau with specific recommendations, while recognizing the inherent differences in each agency’s authority, mission and organizational structure. The BCP recommendations include:

    • Opening/closing investigations. Increase oversight by senior agency leadership with respect to the opening and closing of investigations by staff in the Office of Enforcement.
    • Issuing CIDs. Delegate authority to issue CIDs to more senior officials (as opposed to the Deputy Assistant Directors of the Office of Enforcement) or to officials who are not directly involved in the investigation.
    • Explaining purpose of investigation. Ratify the Bureau’s currently informal process of articulating a more specific purpose for the CID and using the CFPB’s “meet-and-confer” requirement under 12 C.F.R. § 1080.6(c) to constructively engage with the recipient to better improve their understanding of the CID’s purpose.
    • Scope of requests. Use the meet-and-confer process to resolve or narrow concerns regarding potentially broad CID requests in order to avoid unnecessary burdens on the recipient and delays caused by a petition to limit or quash a CID.
    • Incorporating certain Federal Rules by reference. For the taking of testimony of an entity and the handling inadvertent production of privileged information, publicly acknowledge the intent to follow the relevant standards under the Federal Rules of Civil Procedure and Evidence. 
    • Rights afforded to individuals in investigational hearings. Continue to prevent witnesses from consulting with counsel while a question is pending and counsel from objecting to a question or instructing the witness not to answer (except with regard to privilege).  The BCP stated that, in addition to being consistent with its rules, these limitations are “consistent with federal court practice and are appropriate given that the investigational hearing is part of the agency’s non-public investigation to determine whether a violation has occurred and whether an action would be in the public interest.”
    • Response requirements. Consider streamlining guidelines for document submission of electronically stored information

    As for the process for petitions to modify or set aside CIDs, without providing a specific recommendation to the Bureau, the BCP spent considerable time outlining certain outside criticisms of its own process, including that petitioners do not receive the BCP rely brief given to the assigned Commissioner in response to a petitions and that the Commissioner’s ruling on the petition is placed on the public record, revealing the underlying non-public investigation. The BCP defended these practices, emphasizing that the reply briefs contain protected information regarding the FTC’s internal investigation process and the burden to redact the information outweighs the minimal benefit to the petitioner. Additionally, the BCP stated that publicly disclosing the Comissioner’s ruling is consistent with ensuring the government is subject to the “watchful eye” of the public.

    As previously covered by InfoBytes, all comments to the CFPB RFI are now due by April 26.

     

    Federal Issues CFPB Succession RFI FTC CIDs

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  • CFPB releases RFI on inherited rules, extends comment period for first three RFIs

    Federal Issues

    On March 22, the CFPB released its ninth Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in deciding “whether it should amend the regulations or exercise the rulemaking authorities that it inherited from certain other Federal agencies.” Specifically, the Bureau is seeking feedback regarding its “Inherited Regulations” – the consumer financial laws that were previously vested in other federal agencies but were transferred to the CFPB assumed by the Dodd-Frank Act. The RFI seeks information related to all aspects of the Inherited Regulations, including (i) whether the Inherited Regulations should be tailored to an institution of a particular size or are incompatible with new technologies; (ii) changes the Bureau could make to the Inherited Regulations to more effectively meet the specific law’s statutory purpose; (iii) changes the Bureau could make to the Inherited Regulations to advance the statutory purposes stated in Section 1021 of the Dodd-Frank Act; (iv) whether the Bureau should introduce pilots, field tests, demonstrations or other activities to better analyze the cost/benefits of potential Inherited Regulations; and (v) where the Bureau could exercise more of its rulemaking authority to better align with the objectives of the applicable consumer financial laws. The RFI is expected to be published in the Federal Register on March 26. Comments will be due 90 days from publication.

    On March 19, the CFPB extended the comment period of the first three RFIs released in the series to 90 days (previously covered by InfoBytes here, here, and here). The comment periods were originally set for 60 days after publication in the Federal Register but now the 90-day deadline applies to the following to match those of subsequent issuance:

     

    Federal Issues RFI CFPB Succession Agency Rule-Making & Guidance

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  • CFPB releases RFI on adopted regulations and new rulemaking authorities

    Federal Issues

    On March 14, the CFPB released its eighth Request for Information (RFI) in a series seeking feedback on the Bureau’s operations. This RFI solicits public comment to assist the Bureau in deciding “whether it should amend any rules it has issued since its creation or issue rules under new rulemaking authority provided for by the Dodd-Frank Act,” which the RFI defines as the Bureau’s “Adopted Regulations.” This RFI does not seek information related to the Bureau’s “Inherited Regulations” that have not yet been amended by the CFPB. Inherited Regulations are those promulgated under the consumer financial laws that were previously vested in other federal agencies but the Bureau assumed responsibility over through the Dodd-Frank Act.

    The CFPB is requesting feedback regarding the content of all Adopted Regulations, except for its 2015 HMDA final rule (or its subsequent amendments) and its final rule addressing payday loans, vehicle title loans, and certain other extensions of credit. Specifically, the RFI seeks information related to all aspects of the Adopted Regulations, including (i) whether the Adopted Regulations should be tailored to an institution of a particular size or are incompatible with new technologies; (ii) changes the Bureau could make to the Adopted Regulations to more effectively meet the specific law’s statutory purpose; (iii) changes the Bureau could make to the Adopted Regulations to advance the statutory purposes stated in Section 1021 of the Dodd-Frank Act; (iv) whether the Bureau should introduce pilots, field tests, demonstrations or other activities to better analyze the cost/benefits of potential Adopted Regulations; and (v) where the Bureau could exercise more of its rulemaking authority to better align with the objectives of the applicable consumer financial laws. The Bureau also requested comment on aspects of the adopted regulations that should not be amended. The RFI is expected to be published in the Federal Register on March 19. Comments will be due 90 days from publication.

    Federal Issues RFI CFPB Succession Agency Rule-Making & Guidance

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