In a notice published in the Federal Register on May 31, 2011, the Bureau of Consumer Financial Protection (CFPB) has identified the federal rules it will enforce.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB to identify both rules and orders of the seven federal agencies whose authority will be transferred to the CFPB on July 21, 2011. However, the CFPB’s list contains no orders and has several other noteworthy inclusions and exclusions as follows:
- The rules to be enforced by the CFPB include the Federal Reserve Board’s “traditional” consumer financial services rules (Regulations B, C, E, M, P, V, Z, and DD). Also to be enforced by the CFPB are residential mortgage-related rules, such as the U.S. Department of Housing and Urban Development’s RESPA rule (Reg. X) and the federal banking agencies’ rules regarding registration of mortgage loan originators and alternative mortgage transactions as applied to non-federally chartered housing creditors under the Alternative Mortgage Transaction Parity Act.
- Reg. AA (12 C.F.R. Part 227), which deals with unfair or deceptive credit practices, is not included among the Fed’s rules the CFPB will enforce. This exclusion suggests that the CFPB considers Reg. AA to effectively have been removed through the Dodd-Frank Act’s repeal of Section 18(f)(1) of the Federal Trade Commission Act (which empowered the Fed to issue Reg. AA). However, the CFPB could use its authority to identify unfair, deceptive, or abusive acts and practices to continue the Reg. AA prohibitions. (Indeed, the Federal Trade Commission’s (FTC) substantially similar Credit Practices Rule (16 C.F.R. Part 444) is among the FTC regulations identified in the CFPB’s notice.)
- The CFPB intends to enforce the FTC Telemarketing Sales Rule as well as various FTC trade regulation rules adopted under Section 5 of the FTC Act. In addition to the rules concerning prenotification negative option plans, door-to-door sales, and mail or telephone orders, the CFPB also intends to enforce the FTC rules governing franchising and business opportunities that seem tangential, at best, to the CFPB’s role in policing the market for consumer financial products or services.
- The notice indicates that the listed regulations generally include appendices and supplements. Because agency guidance such as advisories and interpretative letters is typically not codified in an appendix or supplement, it is possible the CFPB will not treat such guidance as binding when it considers whether to take enforcement action. As a result, the ability of financial institutions to rely on such guidance on or after July 21, 2011, is uncertain.
The notice states that the CFPB’s list is not subject to the notice-and-comment requirements of the Administrative Procedure Act because it reflects the CFPB’s interpretation of its authority under the Dodd-Frank Act and relates to its organization, procedure, or practice. Nevertheless, the CFPB has invited comments, which must be submitted by June 30, 2011, and intends to publish a final list not later than July 21, 2011.