Many consumer finance company owners breathed a sigh of relief when Donald Trump was elected. During the 2016 campaign, President Trump promised to dismantle the Dodd-Frank Act and the CFPB. And, one of his first actions as President included the January 20, 2017 Memorandum to Heads of Executive Departments and Agencies instructing them to “send no regulation to the Office of the Federal Register until a department or agency head appointed or designated by [President Trump], reviews and approves the regulation.”
There is uncertainty as to whether the Memorandum affects the CFPB. But, whether it does or not, the Bureau has been exceedingly quiet as to its top three regulatory initiatives—Small Dollar Lending, Arbitration and Debt Collection—since that Memorandum was issued.
While we are waiting to hear from the Bureau on these initiatives that are teed-up and ready to go, the CFPB has not been quiet on the enforcement side. It continues to take actions against lenders who have committed unfair, deceptive or abusive acts or practices (“UDAAPs”) or otherwise violated federal consumer protection laws.
- On April 20th, the Bureau brought suit against a nationwide mortgage services provider.
- On April 26th, the Bureau fined a military lender $1.25 million for violating an earlier consent order.
- On April 27th, four online lenders were sued by the Bureau for collecting on debts that consumers allegedly did not owe.
And, while the CFPB continues this activity, the new Congress is entertaining legislation to reign in the Bureau. The House Financial Service Committee has approved the CHOICE Act, which would completely change the way the CFPB operates by:
- Terminating its supervisory authority.
- Curtailing rulemaking authority over the Small Dollar Lenders who are currently subject to the unfinished rulemaking discussed above.
- Repealing the Bureau's UDAAP authority all-together.
- Deleting from the Dodd-Frank Act the authority of the CFPB to address arbitration—the second unfinished rulemaking discussed above.
- Eliminating the publication by the Bureau of its consumer complaint database.
- Changing the way the CFPB is funded by Congress and how its Director may be removed from office.
With a willing Congress and President, we are likely to soon see significant changes in the CFPB's structure, power and remedial actions that it can pursue.