As federal legislation abridging the Dodd-Frank Act remains in play, comparably radical changes to federal financial supervision could come without any need for Congressional action. This could happen through federal banking agencies’ modifications to the regulations they issue, and how they choose, or decline, to enforce them. This could effect sweeping changes to the current framework—or even dismantle it altogether.
While the latter possibility may sound extreme, the Consumer Financial Protection Bureau (CFPB) is in the process of reevaluating essentially every aspect of what the agency does. This initiative is taking place under the leadership of Mick Mulvaney, a longtime adversary of the CFPB and one of the two people currently claiming the right to be known as Acting CFPB Director. (The other, Leandra English, appointed to that role by outgoing Director Richard Cordray, is continuing to pursue her lawsuit. The latest oral argument in the case is scheduled for this Thursday, April 12 in the US Court of Appeals for the DC Circuit.)
Under Mulvaney’s direction, the CFPB has issued numerous Requests for Information (RFIs) over the past few months. These requests broadly invite public comment on everything from the CFPB’s enforcement approach to its financial education initiatives. They include the following:
- RFI on CFPB Civil Investigative Demands and Associated Processes—The CFPB seeks comments “to assist the Bureau in assessing potential changes that can be implemented to the Bureau’s Civil Investigative Demand (CID) processes, consistent with law, to consider whether any changes to the processes would be appropriate.” (Comments are due by April 26.)
- RFI on CFPB Rules of Practice for Adjudication Proceedings—The CFPB seeks comments “to assist the Bureau in considering whether and how to amend the Bureau’s Rules of Practice for Adjudication Proceedings.” (Comments are due by May 7.)
- RFI on CFPB Enforcement Processes—The CFPB seeks comments “to assist the Bureau in considering whether any changes to the Bureau’s enforcement processes would be appropriate.” (Comments are due by May 14.)
- RFI on the CFPB’s Supervision Program—The CFPB seeks comments “to assist the Bureau in assessing the overall efficiency and effectiveness of its supervision program and whether any changes to the program would be appropriate.” (Comments are due by May 21.)
- RFI on CFPB External Engagements—The CFPB seeks comments “to assist the Bureau in assessing its public and non-public external engagements, including but not limited to field hearings, town halls, roundtables, and meetings of the Advisory Board and Councils.” (Comments are due by May 29.)
- RFI on Public Consumer Complaint Reporting—The CFPB seeks comments “to assist the Bureau in assessing potential changes that can be implemented to the Bureau’s public reporting practices of consumer complaint information, consistent with law, to consider whether any changes to the practices would be appropriate.” (Comments are due by June 4.)
- RFI on CFPB Rulemaking—The CFPB seeks comments “to assist the Bureau in assessing the overall efficiency and effectiveness of its rulemaking processes and, consistent with law, considering whether any changes to its rulemaking processes would be appropriate.” (Comments are due by June 7.)
- RFI on Adopted Regulations and New Rulemaking Authorities—The CFPB seeks comments “to assist the Bureau in considering whether, consistent with its statutory authority to prescribe rules pursuant to the Federal consumer financial laws, the Bureau should amend those rules it has promulgated since its creation or issue certain new rules.” These include the rulemaking authority created by Dodd-Frank regarding unfair, deceptive, or abusive acts or practices (UDAAP) and any regulations the CFPB has issued itself, such as the mortgage rules. (Comments are due by June 19.)
- RFI on Inherited Regulations and Inherited Rulemaking Authorities—The CFPB seeks comments “to assist the Bureau in considering whether, consistent with its statutory authority to prescribe rules pursuant to the Federal consumer financial laws, the Bureau should amend the regulations or exercise the rulemaking authorities that it inherited from certain other Federal agencies.” These include regulations that have been unchanged since their transfer to the CFPB, such as certain provisions of Regulations B, E, Z, and others. (Comments are due by June 25.)
- RFI on CFPB Guidance and Implementation Support—The CFPB seeks comments “to assist the Bureau in assessing the overall effectiveness and accessibility of its guidance materials and activities (including implementation support) to members of the general public, including regulated entities.” (Comments are due by July 2.)
- RFI on CFPB Financial Education Programs—The CFPB seeks comments “to assist the Bureau in assessing the overall efficiency and effectiveness of its consumer financial education programs.” (Comments will be due 90 days after publication in the Federal Register; the RFI was issued April 4 but was not yet published in the Federal Register as of this writing. Thus, comments will be due no earlier than some time in July.)
These RFIs offer an unprecedented chance to submit comments and impact the future approaches of the CFPB—both because the topics are so wide-ranging and because seemingly any outcome could be on the table. One particularly notable opportunity is to comment on existing regulations, including those the CFPB inherited from other agencies like the Federal Reserve, that would otherwise not be open for comment. Commenters could, for instance, suggest clarifications to provisions that have, for years, been vexingly opaque and were never revised to resolve those issues. (Some of the error resolution provisions of Regulation E might come to mind.)
The prospect also looms that the RFI process may be intended not simply as a way to make helpful tweaks to regulations, but instead as a path to disabling the CFPB by curtailing its activities. Mulvaney has never made any secret of his opposition to the existence of the CFPB and, in fact, co-sponsored legislation to eliminate the agency while serving in Congress. Mulvaney recently stated that the CFPB is “far too powerful”; but the power the agency wields includes the power to weaken itself from the inside, even without any act by Congress to weaken it. Theoretically, for instance, in purported response to comments that the CFPB’s enforcement approach is too harsh or unfair, the CFPB could choose to halt enforcement activities altogether.
But the ultimate outcome of the CFPB’s RFI process remains unknown. For one thing, it is possible that new CFPB leadership could be in place by the time the agency decides what (if any) actions to take in response to comments. If so, such actions might be different than those Mulvaney would have chosen. And even with Mulvaney still at the helm, the specific outcomes are far from certain. A complicating factor is that the CFPB, like other federal banking agencies, is composed largely of career employees rather than political appointees. This could impact the ability of a single leader to implement a sweeping agenda on his or her own without career employees willing to help that process. It is not clear how far a critical mass of CFPB employees would be willing to go to depart from the agency’s original mission.
Overall, the question of whose views, and comments, will carry the day at the CFPB and other federal banking agencies remains to be answered. Whatever the outcome of the RFI process, the process itself demonstrates the power the CFPB wields to continue or curb its own activities, without the need for Congress to pass legislation bringing about that result.