Change in Leadership Marks Turning Point for CFPB

ABSTRACT: For those wondering if Director Cordray's retirement would truly bring about as much change as anticipated, the CFPB's first actions in 2018, under the leadership of acting director Mick Mulvaney, have demonstrated a stark change in philosophy from the days of Cordray.

He now leads the Consumer Financial Protection Bureau (the “CFPB”) – the very organization he once called a “sad, sick joke.” But acting director Mick Mulvaney assures the public that he has no intention to burn it down, and that the CFPB will continue enforcing consumer protection laws.

2017 ended with former CFPB Director Richard Cordray stepping down from his post, so that he could pursue his candidacy for Governor in Ohio.  Mulvaney was subsequently appointed by President Trump as interim director, and he will continue in this role until a permanent replacement is appointed by the Senate.

Mulvaney issued a memo last week stating his intentions with respect to how the CFPB would change under his leadership.  He focused on the language of his predecessor, Cordray, who publicly described the CFPB during his tenure as “pushing the envelope” in its fight to protect consumers from unscrupulous practices of lenders and other businesses.  Contrarily, Mulvaney reasoned that the CFPB works for all people, including “those who use credit cards, and those who provide the cards; those who take loans, and those who make them; those who buy cars, and those who sell them.” 

That, it seems, could be the most significant change in tune from the Cordray to the Mulvaney era.  Since its inception, we have seen the CFPB’s one-sided focus on protecting the consumer; after all, that is the “C” in “CFPB,” and the assumption was that business can take care of itself.  Now, we see a new perspective – that banks, creditors, and merchants are people in need of protection under the law, because they are comprised of people.

Mulvaney further assured that the CFPB would strive to protect consumers from unavoidable harm but would not “look for lawsuits to file,” and that the CFPB would no longer engage in the unpredictable practice of regulation by enforcement.

We already have the first concrete examples of the CFPB policy shift.  Earlier this month, the CFPB issued a statement that the Bureau intends to engage in a rulemaking process so that it may reconsider the Payday Rule, which if it went into effect, would place the onus on payday lenders to determine the borrower’s ability to repay before making the loan. Just two days later, the CFPB dismissed a lawsuit that it had filed last year in Kansas federal court against four payday lending companies.

The CFPB has also invited industry personnel and attorneys to comment on the Civil Investigative Demand process, recognizing that many in the financial services industry felt their critiques about the enforcement process were disregarded or ignored in the past.

The full content of Mulvaney’s memo concerning the CFPB policy shift may be found here.