On March 22, 2018, the Consumer Financial Protection Bureau (“CFPB”) issued a request for information (“RFI”) on both inherited regulations and inherited rulemaking authorities. This is the ninth such request from the CFPB as a part of its broader call for evidence soliciting public input on its operations and regulations. The tenth in the series— expected to cover the Bureau’s guidance and implementation—will be issued later this week. The Bureau anticipates additional requests for information on Guidance and Implementation Support, Consumer Education, and Consumer Inquiries in the weeks to come. The RFI requires all comments on the issues raised to be submitted within 90 days of March 26, 2018, the date of the RFI’s publication in the Federal Register.
“Inherited Regulations” are those regulations that were promulgated and enforced by other federal agencies prior to the establishment of the CFPB. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the responsibility for promulgating all rules related to consumer financial protection laws was transferred from various federal agencies, including the Board of Governors of the Federal Reserve System and the Federal Trade Commission, to the CFPB. The CFPB then republished the “inherited” regulations and assumed responsibility for them. These Inherited Regulations, and the rulemaking authority that the CFPB inherited that its predecessors did not exercise, are the focus of the RFI.
The CFPB seeks suggestions for modifications or updates to the Inherited Regulations and specific suggestions as to provisions that should not be changed. The CFPB provides a non-exhaustive list of potential aspects of the Inherited Regulations for public comment. The RFI suggests comment on aspects of the Inherited Regulations that (1) should be directed to institutions of certain types or sizes; (2) produce unintended consequences; (3) conflict or overlap with other regulations or laws, making it difficult or burdensome for compliance by institutions; (4) are not compatible or aligned with new technology, such as limiting a provider’s ability to deliver mandatory disclosures or other relevant information to consumers electronically; and (5) could be modified in order to provide consumers with greater protection from identity theft. The CFPB also particularly attempts to elicit potential changes to the Inherited Regulations to meet the objectives and purposes of federal consumer finance laws and the CFPB’s predecessors’ specific goals for each Inherited Regulation.
The CFPB particularly seeks potential changes to the Inherited Regulations to advance the statutory purposes and objectives in section 1021 of the Dodd-Frank Act. The RFI exhaustively lists these purposes, demonstrating the CFPB’s ongoing efforts to withdraw from the agency’s reputation for overreaching that is commonly criticized among the CFPB’s detractors. The CFPB also requests information on demonstrations, tests, or other activities it could launch to quantify costs and benefits of revisions to those Inherited Regulations, or make compliance with them more efficient and more effective. Finally, the RFI suggests commenters point to areas where the CFPB has inherited rulemaking authority and has not utilized it, where the utilization of such rulemaking would align with the applicable federal consumer finance laws’ purposes and objectives.
This RFI should be read alongside the March 7 request for information on the rulemaking process, and the March 21 request for information on adopted regulations. The running themes throughout the CFPB’s suggestions in the RFI are the promotion of efficiency, adherence to statutory parameters governing the CFPB’s conduct, and reduction of overly broad regulations. These goals are consistent with Acting Director Mick Mulvaney’s approach to running the CFPB since his appointment by President Trump in November of last year. Those monitoring the CFPB’s activity should note that the United States Court of Appeals for the DC Circuit held in January that the one-director structure of the CFPB is constitutional. So, whether Mulvaney continues to head the CFPB for the foreseeable future or President Trump appoints a permanent Director, institutions and consumers should expect a similarly streamlined approach for the next five years.