BY NESSA FEDDIS, J.D.
IN THE WORLD OF CONSUMER FINANCIAL REGULATION, much has happened since the 2016 election. Consumer Financial Protection Bureau (CFPB) Director Richard Cordray resigned in November 2017 and designated his Chief of Staff, Leandra English, as Deputy Director and thus, upon his resignation, Acting Director. President Trump immediately appointed Mick Mulvaney to this
same position, and it was months before the leadership of the CFPB was resolved. In addition, while the
imminent demise of the bureau under Mulvaney was greatly exaggerated, there were clear changes in the
bureau’s tone, attitude, priorities, and goals.
Also with the 2016 Presidential election came new leadership
at the banking agencies:
■ ■ ■ Joseph Otting—Comptroller of the Currency;
■ ■ ■ Jelena Mc Williams—FDIC Chair;
■ ■ ■ And, at the Federal Reserve:
■ ■ ■ Jerome Powell, Chair;
■ ■ ■ Randal Quarles, Vice Chair for Supervision; and
■ ■ ■ Michelle Bowman, Community Bank Representative.
The new heads of these agencies have expressed a desire to
reduce unnecessary and ineffective regulation and to tailor and
streamline bank supervision so that banks may better serve customers, expand access to innovative new products and services, and
increase economic growth. Indications are that the shift in direction with the bank agencies will be more subtle and less dramatic
than those of the CFPB. Given its political nature—in its relatively
short existence—as well as its rulemaking authority, the CFPB will
have a relatively greater impact on consumer finance regulation.
The appointment of Mick Mulvaney as CFPB director did not
merely signal a change in the CFPB’s tone. Director Mulvaney also
made clear an intent to expand the bureau’s attention beyond the
protection of consumers from certain products and practices to
consumers’ overall financial well-being.
This broader objective demands:
■ ■ ■ An understanding of the perspective of financial service providers;
■ ■ ■ Measuring and balancing costs and benefits; and
■ ■ ■ Appreciating the impact of regulations on innovation and on
access to consumer financial products.
It also reflects a recognition that if service providers cannot make
profits and innovate, then consumers suffer because they will have
less access to and fewer choices in financial products.
Commitment to Follow the Law
The CFPB’s decision to turn away from “regulation by enforcement”
and “pushing the envelope” that previously drove its efforts, seems
clear with its objectives “to faithfully enforce the law in furtherance
of the mandate given to [the bureau] by Congress. But we will
go no further.” 1 The commitment to follow the statute is evident,
even in such matters as changing the lobby sign from “CFPB” to
“BCFP” to mirror the name in the statute that created it—Bureau
of Consumer Financial Protection.
The commitment to follow the statute is also evidenced by matters such as elimination of examination for compliance with the
Military Lending Act (MLA). Though widely misreported as a
“roll back…of protections” 2 for military members, the bureau is
applying the text of the Dodd-Frank Act that limits the bureau’s
supervisory authority to “Federal consumer financial laws,” which,
as defined, do not include the MLA. 3 This approach is in marked
contrast with Director Cordray’s approach as exemplified in his
decision to bring charges against PHH Corporation for violation
of the Real Estate Settlement Procedures Act. The charges in that
case ignored statutory and regulatory language, unilaterally applied
a new law retroactively, and asserted authority to bring charges for
indefinite periods on the basis that the statute of limitations does
not apply to the CFPB.