On January 5, 2021, the CFPB’s (the “Bureau”) Taskforce on Federal Consumer Financial Law (the “Taskforce”) released a report (the “Report”) recommending how consumer protection in the financial marketplace may be improved. Chartered by the Bureau in January of 2020, the Taskforce was charged with “examin[ing] the existing legal and regulatory environment facing consumers and financial services providers,” and “report[ing] its recommendations for ways to improve and strengthen consumer financial laws and regulations.”
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CFPB Fall Preview
As we turn the page on the summer, the Consumer Financial Protection Bureau is poised to be active – and actively overseen – in the months ahead. Here’s an overview of some of the issues and events ahead.
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CFPB Issues Semi-Annual Report, Calls for Legislative Changes
On April 2, 2018, the Consumer Financial Protection Bureau issued its semi-annual report to Congress. Along with the traditional review of Bureau activities for the 6-month period covered by the report, the report is most notable for the 4 legislative proposals offered by Acting Director Mulvaney in his introductory letter, each of which would serve as a substantial check on the Bureau’s authority and independence.
The four proposals, which reflect concerns voiced by Republicans in Congress about the Bureau’s authority since its founding, are as follows:
- Alter the current funding mechanism to fund the Bureau through Congressional appropriations.
- Require affirmative legislative approval of “major” rules by Congress.
- Ensure that the Bureau’s Director, who presently can only be terminated for cause, is answerable to the President.
- Create an independent Inspector General to provide additional oversight.
In proposing these changes – which are described only in broad outlines – Acting Director Mulvaney asserts that the Bureau’s “lack of accountability” should be a “warning sign that a lapse in democratic structure and republican principles has occurred.” To address those concerns, he proposes these structural reforms that will long outlive the Acting Director’s tenure, and invites a discussion of these proposals during his upcoming Congressional testimony.
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CFPB Introduces New Strategic Plan under Acting Director Mulvaney
Yesterday, the CFPB released a new Strategic Plan for fiscal years 2018 to 2022. The new Plan is a further demonstration of Acting Director Mulvaney’s efforts to reshape the Bureau. As the Acting Director says in the message that prefaces the Plan, “if there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.”
The result is a plan that is half the size of the earlier Draft Strategic Plan (issued in October 2017 when Richard Cordray was still the Bureau’s Director) and offers a vision of markets “where the rights of all parties are protected by the rule of law.” Consumer access to products now stands alongside consumer protection as a central goal, and reducing unwarranted regulatory burdens commands a place beside promulgating needed regulations.
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D.C. Circuit Holds CFPB Structure Constitutional in PHH v. CFPB Reversal
Today, the D.C. Circuit Court of Appeals, sitting en banc, held that the structure of the CFPB is constitutional, overturning an earlier ruling by a panel of the Court that would have allowed the President to fire the CFPB director at will. The Court’s decision, finding that the Bureau’s structure is protected by well-established precedent and does not violate the separation of powers provision of Article II of the U.S. Constitution, preserves the CFPB’s current structure as an independent agency headed by a single Director removable only for cause. As a result, the pending nomination of the Bureau’s next Director takes on more weight, while litigation relating to PHH itself has been remanded to the Bureau for further proceedings.
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Director Cordray Leaves: Dispute Erupts Over CFPB Leadership
On Friday, November 24, Richard Cordray left the CFPB — but not before appointing his Chief of Staff, Leandra English, as Deputy Director of the Bureau. Under the Dodd-Frank Act, the Deputy Director “shall . . . serve as acting Director in the absence or unavailability of the Director.”
Hours later, President Trump named Mick
Richard Cordray Resigns from the CFPB
Richard Cordray, the first and only Director of the Consumer Financial Protection Bureau, announced today that he will resign from the Bureau by the end of November–presumably in order to explore a run for governor in his home state of Ohio. Cordray, a Democrat, was appointed to serve as the agency’s first Director in a recess appointment by former President Obama in 2012. He was subsequently confirmed by the Senate in July of 2013. Since that time, Cordray has been the face of the young agency as it pursued aggressive policy and enforcement initiatives.
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Senate Votes to Repeal CFPB’s Arbitration Rule
After months of speculation, the Senate voted tonight to strike down the CFPB’s controversial Arbitration Rule pursuant to the Congressional Review Act (CRA). Since the House voted to repeal the Rule back in July, the repeal now heads to the President, who is expected to sign it promptly. Once signed into law, the CRA repeal
Law360: A Pro-Consumer, Pro-Arbitration Approach At The CFPB
See our article in Law360, A Pro-Consumer, Pro-Arbitration Approach At the CFPB, regarding the CFPB’s arbitration rule, which Congress is weighing whether to overturn pursuant to the Congressional Review Act.
CFPB Publishes Final Rule on Pre-Dispute Arbitration Agreements
Earlier this week, the Consumer Financial Protection Bureau published a final rule substantially curtailing the ability of financial services providers and consumers to enter into voluntary pre-dispute arbitration clauses. The final rule, like the proposed rule that preceded it, would i) prevent financial services providers from including arbitration clauses in consumer contracts unless those arbitration