With President Joe Biden’s inauguration as the Nation’s 46th President, change is coming to Washington. And that change will be felt quickly and acutely at the Consumer Financial Protection Bureau (CFPB). At President Biden’s request, CFPB Director Kathy Kraninger submitted her resignation on Wednesday, clearing the way for the President to appoint current FTC Commissioner and former CFPB official Rohit Chopra as the next Director of the agency. Given the CFPB’s single Director structure, the new Director will have significant opportunities to shape the direction of the CFPB over the next four years. Below we address what we can expect to see from CFPB under the new administration.
Continue Reading A New Day Dawns at the CFPB

On November 30, 2020, the US Consumer Financial Protection Bureau (CFPB) issued its final Advisory Opinion Policy, along with two Advisory Opinions (AOs) addressing the applicability of the Truth in Lending Act (TILA) to certain earned wage access (EWA) programs and private education loans. The CFPB first proposed a pilot AO program in June 2020.

Consumer financial services providers likely think of state licensing requirements as a state law compliance issue. But the Consumer Financial Protection Bureau (CFPB) views these issues as federal matters as well. In a consent order issued December 8, 2020, the CFPB asserted that an unlicensed debt collector’s threat of suit and actual suit to collect on a debt violated the federal prohibition against deceptive practices. The consent order represents the CFPB’s latest action that essentially federalizes state law violations.
Continue Reading State Licensing and Federal UDAAP – What’s the Connection?

On October 28, 2020, the CFPB’s Private Education Loan Ombudsman published its annual report on student loans, as required by the Dodd-Frank Act. Despite an increased focus on student loans by many state legislatures and regulators and some members of Congress, the report reflects a significant decline in the number of consumer complaints about student loans over the past year. The report analyzes complaints submitted by consumers about student lenders and servicers between September 2019 and August 2020. Notably, the report covers a period during which many student loan borrowers have experienced financial hardships as a result of the COVID-19 pandemic and the federal government – as well as some state governments (in partnership with holders of private student loans) – has offered a myriad of loss mitigation options for eligible student loan borrowers.

Continue Reading 2020 CFPB Student Loan Ombudsman’s Report Shows Significant Trend of Declining Consumer Complaints

We recently received a response to several FOIA requests we had made  to the Consumer Financial Protection Bureau (CFPB or Bureau) regarding various enforcement statistics and processes. Because the CFPB does not make these materials generally available to the public, we share them here. The materials include the Enforcement Policy and Procedures Manual and Consent Order template, and data regarding the number enforcement investigations, opened, closed and pending each fiscal year, and the number of matters referred from supervision to enforcement. 
Continue Reading CFPB: Enforcement Manual and Stats

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

The Real Estate Settlement Procedures Act is ambiguous, and compliance often turns on the facts of arrangements. For that reason, settlement service providers have been asking the Consumer Financial Protection Bureau for guidance since it took responsibility for RESPA nearly 10 years ago. These calls were amplified when Section 8 of RESPA was an early

On September 29, 2020, the CFPB, FTC, and state and federal law enforcement agencies announced a new initiative, called Operation Corrupt Collector, to address certain abusive and threatening debt collection practices, including “phantom” debt collection. If the partnership sounds familiar, it is. Operation Corrupt Collector was essentially announced almost exactly five years after the FTC announced Operation Collection Protection. Though the programs have different names, the goals appear to be the same: bring cases against debt collectors who engage in abusive debt collection practices.

Continue Reading New Name, Same Initiative? Federal and State Regulators Partner (again) to Limit Abusive Debt Collection Practices

On July 15, 2020, the Consumer Financial Protection Bureau filed a lawsuit against Townstone Financial, Inc., a Chicago-based mortgage lender and mortgage broker, alleging that Townstone “redlined” African-American neighborhoods in the Chicago Metropolitan Statistical Area and discouraged prospective applicants from applying to Townstone for mortgage loans on the basis of race. This marks the first

Nearly ten years after passage of the Dodd-Frank Act, the Supreme Court has finally put to bed the raging argument about whether it was constitutional for Congress to establish the Consumer Financial Protection Bureau (CFPB or Bureau) as an independent agency with a single Director removable by the President only for cause. In an anti-climactic end to nearly a decade of heated rhetoric, political battle and costly litigation, the Court held that the Bureau’s structure is unconstitutional but that it can continue to operate as an Executive branch agency, with the Director subject to the President’s removal authority. While that will certainly have implications for the agency’s leadership—and policy—in the future, it does little to change the current legal landscape for regulated entities (with the possible exception, discussed below, of the need to ratify rules the agency has previously issued).
Continue Reading The Big Bang Fizzles: CFPB Unconstitutional But Not Inoperable