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  • CFPB releases RFI on enforcement process

    Federal Issues

    On February 7, the CFPB released its third Request for Information (RFI) in a series seeking feedback on the bureau’s operations.  This RFI solicits public comment on “information to help assess the overall efficiency and effectiveness of [the bureau’s] processes related to the enforcement of federal consumer financial law.” The RFI broadly requests feedback on all aspects of the enforcement process but also highlights specific topics on which comment is requested, including (i) timing and frequency of communication from the Bureau during investigations, including information about the status of the investigation; (ii) length of investigations; (iii) the Notice and Opportunity to Respond and Advise (NORA) process, including whether invocation of the NORA should be mandatory and whether the bureau should afford subjects of potential enforcement actions the right to make an in-person presentation to bureau personnel prior to the bureau determining whether to initiate legal proceedings; (iv) civil money penalty (CMP) amounts, including whether the bureau should adopt a CMP matrix; (v) the standard provisions of consent orders; and (vi) how the bureau should coordinate its enforcement activity with federal or state agencies with overlapping jurisdictions. The RFI is expected to be published in the Federal Register on February 12. Comments will be due 60 days from publication.

    InfoBytes coverage of previous RFIs can be found here and here.  

    Federal Issues RFI CFPB CFPB Succession Enforcement

  • CFPB Succession: Mulvaney removes Fair Lending office enforcement power; Warren sends payday congressional inquiry

    Federal Issues

    On February 1, it was reported that Mulvaney has moved The Office of Fair Lending and Equal Opportunity from the Supervision, Enforcement and Fair Lending division (SEFL) of the CFPB to the Office of the Director. According to sources, Mulvaney sent an email which states that the Fair Lending office will now be focused on “advocacy, coordination and education” as opposed to the day-to-day responsibility of enforcement and supervision oversight, which will remain in the SEFL division. A spokesperson for the acting director stated, “by elevating the Office of Fair Lending to the Director’s Office, we have enhanced its ability to focus on its other important responsibilities...by combining these efforts under one roof, we gain efficiency and consistency without sacrificing effectiveness.”

    On January 31, Senator Elizabeth Warren and five other Democratic members of congress sent a letter to the CFPB inquiring about the Bureau’s decision to reconsider its final rule addressing payday loans, vehicle title loans, and certain other extensions of credit, as previously covered by InfoBytes. The letter expresses dissatisfaction with the lack of explanation for this decision and for the CFPB’s decision to end a multiyear investigation into a national installment loan lender (previously covered by InfoBytes here). The letter requests specific information related to the payday rule decision, such as, (i) lists of personnel involved in providing legal advice and lists of meetings attended by political appointees related to the payday decision; (ii) an explanation of the analysis that lead to the decision; and (iii) information related to communications with certain members of the payday loan industry. Interestingly, the letter is addressed to Leandra English as “Acting Director” of the CFPB and Mick Mulvaney as “Director” of the Office of Management and Budget.

    As for Leandra English’s litigation, on January 31, English filed her corrected Appellant’s Brief with the U.S. Court of Appeals for the D.C. Circuit. The brief does not raise any significantly new arguments. The government’s response is due by February 23.  Additionally, on February 1, a judge for the U.S. District Court for the Southern District of New York dismissed a similar complaint brought by a NY credit union (previously covered by InfoBytes here). In granting the government’s motion to dismiss, the judge agreed that the credit union did not allege a “concrete and particularized injury caused by CFPB actions under Mulvaney’s leadership” and therefore, did not have standing to bring the action.   

    Federal Issues CFPB Succession Fair Lending Payday Lending Enforcement English v. Trump

  • CFPB releases RFI on administrative adjudications

    Federal Issues

    On January 31, the CFPB released its Request for Information (RFI) on administrative adjudications, which solicits public comment on the process for the Bureau to “better understand the benefits and impacts of its use of administrative adjudications, and how its existing process may be improved.” The RFI broadly requests feedback on “all aspects” of the administrative adjudication process but also highlights specific topics on which comment is requested, including (i) whether the Bureau should abandon the process and pursue contested matters only in federal court; (ii) the policy for proceedings to be conducted expeditiously, including the associated timeframes; (iii) whether the Bureau should make documents available to respondents electronically at its own expense; (iv) whether CFPB staff should be permitted to issue subpoenas without approval of the administrative law judge; (v) limitations on expert witnesses; (vi) limitations on discovery, including deposing fact witnesses or servicing interrogatories; and (vii) whether there should be the opportunity to stay a decision of the director pending appeal by filing a supersedeas bond. The RFI was published in the Federal Register on February 5 and comments are due by April 6. 

    This is the second RFI released related to the CFPB’s plan to publish a series of RFIs seeking input on the way the Bureau is performing its statutory obligations. As previously covered by InfoBytes, the CFPB’s first RFI related to Civil Investigative Demands (CIDs). 

    Federal Issues RFI Enforcement CFPB CFPB Succession

  • Buckley Sandler Special Alert: D.C. Circuit upholds CFPB’s constitutionality but rejects its interpretation of RESPA

    Courts

    On January 31, the U.S. Court of Appeals for the D.C. Circuit issued its long-awaited en banc decision in CFPB v. PHH Corporation. In a 7-3 decision, the court concluded that the CFPB’s single-director structure is constitutional, even though the president can only remove the director for cause. Importantly, however, the court also reinstated the portion of t he October 2016 panel opinion concluding that the CFPB misinterpreted the Real Estate Settlement Procedures Act (RESPA) and its statute of limitations. As a result, the $109 million penalty imposed on PHH is vacated and the case will go back to the CFPB, where new leadership must decide whether to pursue the action. PHH has 90 days to seek review by the Supreme Court.

    Ten judges issued seven separate opinions in this case, totaling 250 pages. The following is a summary of the key holdings.

    * * *

    Click here to read the full special alert.

    If you have questions about the decision or other related issues, please visit our Consumer Financial Protection Bureau practice page, or contact a Buckley Sandler attorney with whom you have worked in the past.

    Courts Federal Issues CFPB PHH v. CFPB Dodd-Frank CFPB Succession Single-Director Structure

  • NYDFS promises to fill CFPB regulatory void

    State Issues

    On January 25, the New York Department of Financial Services (NYDFS) Superintendent, Maria T. Vullo, issued a statement critical of the recent policy changes by the CFPB’s new leadership. As previously covered by InfoBytes, acting CFPB Director Mick Mulvaney announced, among other things, that the CFPB will no longer “push the envelope” in pursuit of the agency’s mission. Vullo stated that NYDFS remains “committed to its mission to safeguard the financial services industry and protect New York consumers,” and promised to fill the “regulatory voids” left by the new administration.

    In December, as previously covered by InfoBytes, seventeen state attorneys general sent a letter to President Trump expressing concern about Mulvaney serving as acting director, and emphasizing that if the CFPB does not do the job, the states will “redouble our efforts at the state level to root out such misconduct and hold those responsible to account.”

    State Issues NYDFS Enforcement Consumer Finance CFPB Succession CFPB

  • CFPB finalizes prepaid rule updates; moves effective date

    Agency Rule-Making & Guidance

    On January 24, the CFPB released updates to the final rule governing prepaid accounts (Rule) delaying the effective date of the rule by one year, to April 1 2019. In December, as previously covered by InfoBytes, the Bureau announced its plan to delay the effective date and adopt final amendments to the Rule. In addition to certain clarifications and other minor adjustments, the updates include: (i) finalizing that the requirement for consumers to register their accounts to receive fraud and error protection benefits will only be applied prospectively, after a consumer’s identity has been verified; and (ii) creating a limited exception to certain provisions of the Rule for instances where traditional credit card accounts, subject to Regulation Z open-end credit rules, are linked to digital wallets.

    Agency Rule-Making & Guidance CFPB Succession CFPB Prepaid Rule Regulation Z

  • CFPB releases RFI on CIDs

    Federal Issues

    On January 25, the CFPB released its Request for Information (RFI) on Civil Investigative Demands (CIDs), which solicits public comment on “how best to achieve meaningful burden reduction or other improvement to the CID processes while continuing to achieve the Bureau’s statutory and regulatory objectives.” The RFI broadly requests feedback on “all aspects” of the CID process but also highlights specific topics on which comment is requested, including (i) the Bureau’s process for initiating investigations and issuing CIDs; (ii) the delegation of authority to officials within the CFPB’s Office of Enforcement; (iii) steps the Bureau could take to improve recipients’ understanding of investigations and the information sought by CIDs; (iv) timeframes and certifications for responses; (v) modifications and objections to CIDs; and (vi) the rights of entities and individuals who are compelled to provide testimony, including the right to have counsel present. 

    As previously covered by InfoBytes, the CFPB announced its plan to publish a series of RFIs seeking public input on the way the Bureau is performing its statutory obligations. The RFI was published in the Federal Register on January 26 and comments are due by March 27.  

    Federal Issues CFPB Succession RFI Enforcement CIDs

  • CFPB Succession: An end to “regulation by enforcement,” says Mulvaney

    Federal Issues

    On January 23, acting CFPB Director Mick Mulvaney sent an email to staff (a similar version was later published as an op-ed in the Wall Street Journal) outlining his vision for how the CFPB will enforce consumer protection laws. In the email, Mulvaney emphasizes that the CFPB will no longer “push the envelope” in pursuit of the agency’s mission, a phrase which he attributes to former CFPB Director Richard Cordray. While Mulvaney acknowledges that there will be times the agency will need to take “dramatic action to protect consumers,” he states that this will only be done as “the most final of last resorts,” after all other resolutions have failed. In terms of what this means for the Bureau’s current work, Mulvaney states that enforcement will be focused on “quantifiable and unavoidable harm to the consumer.” As for regulation, there will be “more formal rulemaking on which financial institutions can rely, and less regulation by enforcement.” Mulvaney also suggests that prioritization will be guided by complaint data, specifically noting that, in 2016, debt collection accounted for almost a third of complaints received by the CFPB whereas prepaid cards and payday lending accounted for nine-tenths of a percent and two percent respectively. 

    The statements in Mulvaney’s letter to staff are in line with many of the CFPB’s recent actions, including last week’s announcement that the Bureau intends to reconsider its final rule addressing payday loans and its December 21 announcement that it will be amending its prepaid card rule (previously covered by InfoBytes here and here). Additionally, on January 23, a national installment loan lender announced an end to a multi-year investigation by the CFPB, stating that the Bureau does not intend to recommend an enforcement action into the company’s practices. As previously covered by InfoBytes, the CFPB also recently dismissed its case against four online installment lenders.

    Leandra English’s challenge to Mulvaney’s authority to serve as acting director of the CFPB continues. On January 23, a three-judge panel for the U.S. Court of Appeals for the D.C. Circuit agreed to the expedited appeal of English’s case, ordering English’s brief due by January 30 and the government’s response due by February 23. 

    Federal Issues CFPB Succession Enforcement Payday Lending Prepaid Rule English v. Trump

  • CFPB succession update: CFPB requests zero funding; seeks public comment regarding Bureau’s activities; & more

    Federal Issues

    On January 17, in a letter to Federal Reserve Chair Janet Yellen, acting CFPB Director Mick Mulvaney requested zero dollars for the Bureau’s quarterly operating funds. Each fiscal quarter, as required by law, the CFPB formally requests that the Federal Reserve transfer a specified amount of money to the Bureau so it can perform the functions outlined in its budget. In his letter, Mulvaney stated that the prior Director maintained a “reserve fund” for the CFPB, and the money in this fund is sufficient to cover the CFPB’s expenses for the second quarter. This will be the first time in the history of the CFPB that its Director has requested no additional amount to fund quarterly operations. The CFPB also announced its plan to publish a series of Requests for Information (RFIs) in the Federal Register seeking public input on the way the Bureau is performing its statutory obligations. These RFIs will request “comment on enforcement, supervision, rulemaking, market monitoring, and education activities.” The first RFI will seek information regarding the Bureau’s Civil Investigative Demand processes and procedures.

    On January 18, the CFPB voluntarily dismissed its case against four online installment lenders for allegedly deceiving customers by collecting debts that were not legally owed, previously covered by InfoBytes here. The complaint, filed in the United States District Court for the Northern District of Illinois, alleged, among other things, that the lenders engaged in unfair, abusive, and deceptive acts—a violation of the Dodd-Frank Act—by collecting on installment loans that are partially or wholly void under state law. In September 2017, the case was transferred to Kansas, where the Bureau’s notice of dismissal was filed. The notice does not specify a reason for the dismissal.

    Federal Issues CFPB Succession CFPB Enforcement CIDs Federal Reserve Federal Register UDAAP Installment Loans Debt Collection

  • CFPB plans to reconsider payday rule

    Agency Rule-Making & Guidance

    On January 16, the CFPB announced plans to reconsider its final rule addressing payday loans, vehicle titles loans, and certain other extensions of credit (previously covered in a Buckley Sandler Special Alert) by engaging in a rulemaking process. While the announcement was made on the effective date of the final rule, most provisions do not require compliance until August 19, 2019. However, the deadline for submitting a preliminary approval to become a registered information system is April 16, 2018. The Bureau noted that it will consider waiver requests from potential applicants.

    Notably, this marks the second recent announcement in which the agency refers to itself as “the Bureau of Consumer Financial Protection,” instead of the more-commonly used “Consumer Financial Protection Bureau.” Both titles are used in the text of the Dodd-Frank Act, though the sections of the Dodd-Frank Act authorizing creation of the CFPB used the “Bureau of Consumer Financial Protection” naming convention.  The agency also previously updated its mission statement located at the bottom of each release.

    For more InfoBytes coverage on the latest CFPB changes, click here.

    Agency Rule-Making & Guidance CFPB Succession CFPB Payday Lending

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