The Consumer Finance Protection Bureau (CFPB) continues to see big changes under the leadership of Acting Director Mick Mulvaney and is now opening itself up to public comment. Mulvaney, a Trump appointee, has sought to reorient the CFPB’s enforcement priorities towards a less punitive and more even-handed application by opening a dialogue with businesses to reform existing agency procedures. Mulvaney’s approach differs from that of former Director Richard Cordray, who critics felt wielded the Bureau’s power in opaque ways that required businesses to infer regulatory priorities from enforcement actions. To date Mulvaney and the CFPB have issued four requests for information (RFI) seeking public comment on how the agency can reduce its regulatory burden on the economy while continuing to meet its statutory goals and ensuring transparency.
The first RFI released seeks comment on the CFPB’s civil investigative demand (CID) procedure, a process where the bureau subpoenas documents and deposes individuals to investigate business practices. Document production for a CID can take months and cost respondents tens of thousands of dollars in production costs and attorney’s fees. While companies have used petitions to modify and challenge the scope of CIDs, the CFPB has taken a broad view of its investigative powers and such attempts usually result in an expensive failure for the CID recipient. Recognizing the need for improvement, the RFI presents an opportunity for businesses to contribute their own thoughts on how to reduce the burden and cost of the CID process.
The second RFI seeks comment on the CFPB’s administrative adjudication process and, like the first RFI, targets specific aspects of the Bureau’s enforcement procedures. The RFI encourages individuals and companies to provide suggestions for every step of the adjudication process but identifies several general areas that “may be more deserving of an immediate focus.” The CFPB’s administrative adjudications have proceeded inconsistently thus far, with most disputes being resolved through consent order. Of the eight adjudications not immediately resolved through consent order, six have been settled, and one is pending. Only one of these adjudications, against PHH Corporation, resulted in a final decision following protracted multi-year litigation and is now embroiled in appeals challenging the CRPB’s actions and the constitutionality of its structure. Citing the potential for CFPB adjudications to result in “undue burdens, impacts, or costs on the parties subject to these proceedings,” the RFI provides businesses and individuals a chance to have a direct say in the CFPB’s decision-making process.
The third RFI in the CFPB’s series invites comments on the “overall efficiency and effectiveness” of the bureau’s enforcement processes. Unlike the first two RFIs targeting CIDs and adjudications, the third RFI seeks advice more broadly and aims to address concerns regarding the zealousness and cost of the bureau’s investigatory procedures. While not openly modifying the CFPB’s practice of regulation through enforcement, the RFI seeks advice on how to clarify controversial aspects of the CFPB’s enforcement schemes including the calculation of civil monetary penalties, standard provisions for CFPB consent orders, and the possibility for pre-enforcement hearings.
The fourth, and most recent, RFI seeks comments on the Bureau’s supervision processes. The Bureau has supervisory jurisdiction over large banks and credit unions; companies in certain financial services markets, regardless of size, such as mortgage companies, payday lenders and private education lenders; and larger participants in many other financial services areas such as auto finance, debt collection, and consumer reporting. Like in prior RFIs, the Bureau seeks broad public input on ways to update its supervisory processes to better align with processes used by other agencies and improve their efficiency while fulfilling its statutory objectives.
Additional RFIs are expected during the coming weeks on topics including external engagement, complaint reporting, rulemaking processes, consumer education, and consumer inquiries.
M&S encourages all financial service providers and their vendors to take advantage of this unparalleled opportunity to have a say in the operations of what has been described by some as the nation’s most powerful consumer protection agency. Each RFI is only open for comment for 60-90 days after publication in the Federal Register, which usually occurs a few days after its announcement, so time is limited. M&S has extensive experience in developing regulatory comments and stands ready to assist its clients, old and new, in seizing this unique opportunity.