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Earlier today the Trump administration’s nominee to lead the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), Jonathan McKernan, testified before the Senate Committee on Banking, Housing and Urban Affairs.  McKernan was most recently a member of the Board of Directors of the Federal Deposit Insurance Corporation and has also worked in private practice, in Congress, and at the Federal Housing Finance Agency.

During the hearing, news broke that the CFPB had moved to dismiss a number of pending lawsuits with prejudice.  Dismissing a case with prejudice is significant because it essentially prohibits the Bureau from filing the same claims against the defendant in the future.  These developments follow other moves the agency made to reverse prior actions, including filing a motion to withdraw an amicus brief it submitted in a lawsuit shortly before Trump’s inauguration.Continue Reading McKernan Testifies before Senate Committee amidst Rollback of CFPB Actions

The Consumer Financial Protection Bureau issued its latest set of Supervisory Highlights and reminded us that “unforeseen” means “unforeseen.”

The CFPB’s regulations generally prohibit reducing a loan originator’s compensation in selective cases. While lower compensation sounds good for consumers, the CFPB asserts that allowing loan originators to decrease their compensation in selective cases is actually…

Mayer Brown has launched a cross-office, multidisciplinary Residential Finance Market Stress Task Force (the “Task Force”) to advise market participants navigating the current market stress. As one of a discrete group of law firms with significant expertise in residential finance transactional, restructuring, capital markets, regulatory, government enforcement and litigation practices, the team offers particular insight…

In a ruling with important implications for the Consumer Financial Protection Bureau (Bureau or CFPB), the Ninth Circuit has revived the CFPB’s claims for substantial civil penalties and restitution in a lawsuit that was first filed some seven years ago. In a May 23, 2022 opinion, the court reversed and remanded a district court…

On January 28, 2021, the Consumer Financial Protection Bureau (CFPB or the Bureau) provided the first official details regarding its new direction under the Biden administration. In a statement originally issued internally to Bureau employees, Acting Director Dave Uejio outlined his two main priorities: (1) relief for consumers facing hardship due to COVID-19 and the related economic crisis and (2) racial equity. While these two areas of focus were largely expected, the details of Acting Director Uejio’s statement provide helpful clarity to companies subject to the Bureau’s supervisory and/or enforcement jurisdiction.
Continue Reading CFPB will Prioritize COVID-19 Relief and Racial Equity under Acting Director Uejio

On January 13, 2021, the Bureau issued a guidance statement regarding the provision of financial products and services to consumers with limited English proficiency (the Statement). In the Statement, the Bureau defines a consumer with “limited English proficiency” or a “limited English proficient” (LEP) consumer as a person who has a limited ability to read,…

On October 30, 2020, the US Consumer Financial Protection Bureau announced a final rule, Regulation F, to implement the Fair Debt Collection Practices Act.  The final rule comes nearly 18 months after the proposed rule and more than four years after the CFPB first released an initial outline of debt collection proposals.  The final rule…

News broke last week of a major reorganization at the Consumer Financial Protection Bureau (CFPB or Bureau), with headlines focusing on how the shakeup will hamper investigations and limit the Office of Enforcement’s autonomy. To better understand what happened, it’s helpful to have a little bit of perspective on the CFPB’s authorities and organization. While it’s too soon to know how the reorganization will impact the agency’s enforcement docket, it is not at all clear that it will have the limiting impact that some expect.

The CFPB was created as a somewhat unique regulator, combining the traditional tools of prudential regulators like the Federal Reserve or Office of the Comptroller of the Currency (supervision and examination) and those of law enforcement agencies like the Federal Trade Commission (investigation and litigation). While the prudential regulators also have enforcement authority, that authority is generally limited to entities over which the agency has supervisory authority (and related individuals and service providers). And that enforcement authority is exercised only after an examination by supervisory personnel; that is, it is the culmination of the supervisory process, not an independent process. By contrast, the CFPB’s enforcement jurisdiction is much broader than the defined set of covered persons over whom it has supervisory jurisdiction, extending to any company or individual that is subject to one of eighteen different statutes or who offers or provides a consumer financial product or service. While some CFPB enforcement actions arise out of examinations, the vast majority to date have been outgrowths of organic enforcement investigations that were not tied to examinations.

At bottom, these two tools—supervision and enforcement—are just different legal authorities by which the agency can gather information from institutions subject to its jurisdiction to determine if legal violations occurred. For a brand new agency, that raises a difficult question – which of these tools do you use in any given circumstance to determine if a particular institution is violating the law? Do you send in examiners or enforcement attorneys?

That question wasn’t answered immediately at the agency’s creation. Instead, the offices of Supervision and Enforcement each focused on hiring staff and building out processes for the exercise of their respective functions.
Continue Reading Unpacking the Enforcement Shakeup at the CFPB – A (Former) Insider’s View

On May 15, House Democrats passed on the Heroes Act, a $3 trillion package that revives, among other things, many of the severe debt collection-related restrictions House Democrats have been pushing since the start of the pandemic.  Although the Heroes Act has no promise of becoming law, the Act, combined with other federal and state…

Against the backdrop of the COVID-19 pandemic and the economic stress it is imposing on residential mortgage borrowers, lenders and servicers, the Consumer Financial Protection Bureau recently released a compliance bulletin and policy guidance regarding the handling of information and documents in mortgage servicing transfers. While not specifically motivated by the COVID-19 crisis, Bulletin 2020-02…