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On March 2, FTC Commissioner Rohit Chopra testified before the Senate Committee on Banking, Housing, and Urban Affairs where he was asked about his plans should he be confirmed as the permanent CFPB director. Chopra released prepared remarks in which he discussed challenges stemming from the Covid-19 pandemic, specifically those related to loan defaults, auto repossessions, credit reporting, debt collection, and foreclosures. Highlighting the need for “fair and effective oversight” in the mortgage market, Chopra also emphasized the importance of addressing systemic inequities faced by families of color. In opening remarks, Senator Sherrod Brown (D-OH), in support of Chopra’s nomination, highlighted several of Chopra’s previous achievements at the Bureau as its first student loan ombudsman and emphasized his “strong record of protecting consumers and small businesses, promoting competitive markets, and holding bad actors accountable.”
Chopra fielded questions from Committee members on a range of topics, including credit reporting, student lending, servicemember protections, and mortgage lending. Chopra stressed his commitment to improving the “transparency, efficiency, and effectiveness” of the Bureau’s supervision and enforcement programs. He further emphasized the need to combat lending discrimination and that fair lending enforcement will be a priority for the Bureau, noting that the Bureau’s Fair Lending and Equal Opportunity office “is established by Congress and  should play a critical role in making sure the law is being followed.” With respect to credit reporting and debt collection, Chopra stated, “[I]f there are unlawful, egregious practices, it is important for enforcement to make sure that they stop. . . .[T]hat’s what’s best for consumers, that’s what’s best for the honest market participants and that’s the role Congress has asked the CFPB to play.”
With respect to fintech, Chopra said the Bureau needs to “take a hard look” at large technology companies’ expansion into financial services and their potential impact on consumer privacy and data security. He also raised concerns about the potential for bias in algorithm decision-making and underwriting. “[L]ooking at how big data, particularly by large platforms who have detailed behavioral data on all of us is something we must carefully look at. Because, it will change financial services fundamentally,” Chopra stressed. He also discussed the importance of providing restitution for consumers, reaffirming his commitment to ensuring that companies found to have committed violations of law are required to repay consumers for what was taken. “[W]hen victims of fraud and misconduct are not made whole, that doesn’t just hurt them. It also hurts every other business who is trying to follow the law and treat them  the right way,” Chopra stated.
If confirmed by the Senate Banking Committee, Chopra’s nomination will head to the full Senate for a vote.
On February 10, CFPB acting Director Dave Uejio published a blog post sharing his “broad vision” for the Division of Consumer Education and External Affairs (CEEA). This guidance, Uejio emphasized, will help to immediately advance the Bureau’s policy priorities and protect economically vulnerable consumers, which includes making sure consumers who submit complaints to the Bureau “get the response and the relief they deserve.” Observing that some companies have not met their obligations to respond to consumer complaints, Uejio reiterated that “[i]t is the Bureau’s expectation that companies provide substantive responses that address the issues consumers describe in their complaints.” He also noted that because consumer advocates have identified disparities in certain companies’ responses to Black, Brown, and Indigenous communities, he asked Consumer Response to provide an analysis identifying companies with poor track records on these issues. To achieve his goal of assisting economically vulnerable consumers, Uejio asked CEEA to take the following steps:
- Target resources to ensure struggling homeowners in delinquency or at risk of foreclosure and renters at risk of eviction know their rights.
- Increase coordination efforts with other agencies to provide assistance and information to at-risk homeowners and renters.
- Collaborate with coalitions of stakeholders, including consumer advocates, civil rights groups, grassroots, community-based organizations, and individual consumers to ensure homeowners receive information and assistance in languages and terminology they understand.
- Help ensure homeowners and renters can access HUD-approved housing counseling organizations so they can manage financial hardships due to Covid-19.
- Take the lead on updating the Bureau’s website so it is more user friendly and focused on consumers rights, and expand the Bureau’s social media presence so consumers can be heard from directly.
- Aggressively rebuild and repair the Bureau’s relationships with external stakeholders who support economically vulnerable consumers, including consumer, civil rights, racial justice, and tribal and Indigenous rights groups.
Since being named acting Director, Uejio has also published blog posts conveying his visions for the Division of Research, Markets, and Regulations and the Office of Supervision, Enforcement, and Fair Lending (covered by InfoBytes here and here).
On February 4, CFPB acting Director Dave Uejio published a blog post conveying his “broad vision” for the Division of Research, Markets, and Regulations (RMR). Uejio emphasized that in order for the Bureau to respond to his previously stated policy priorities—(i) relief for consumers facing hardship and economic crisis due to the Covid-19 pandemic, and (ii) racial equity (covered by InfoBytes here)—the agency must sharpen its focus on the consumer experience. To achieve this goal, Uejio is authorizing the Bureau’s use of its 1022(c)(4) data collection authority and has asked RMR to examine “the impact of specific industry practices on consumers’ daily budget and overall bottom line in order to target effective policy interventions.” Among other things, RMR has been asked to take the following immediate steps:
- Prepare an analysis assessing housing insecurities such as mortgage foreclosures, mobile home repossessions, and landlord-tenant evictions.
- Prepare an analysis to address pressing consumer financial barriers to racial equity in order to “inform research and rulemaking priorities,” and “[e]xplicity include in policy proposals the racial equity impact of the policy intervention.”
- Resume data collections paused due to Covid-19, including HMDA quarterly reporting, CARD Act data collection, PACE data collection, and the previously completed 1071 data collection.
- Focus mortgage servicing rulemaking on Covid-19 responses “to avert, to the extent possible, a foreclosure crisis” when pandemic forbearances end in March and April.
- Explore options for preserving the status quo with respect to QM and debt collection rules. (QM rules covered by InfoBytes here and a Buckley Special Alert; debt collection rules covered by InfoBytes here and here.)
Uejio also noted that he “will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with [the Bureau's] consumer protection mission and mandate,” and that he wants to “preserve, where possible, maximum policy flexibility” for President Biden’s nominee once confirmed.
On January 28, newly appointed CFPB acting Director, Dave Uejio, released a statement he sent to staff announcing his immediate priorities for the Bureau as: (i) relief for consumers facing hardship and economic crisis due to the Covid-19 pandemic, and (ii) racial equity. Acknowledging the recently released Covid-19 Supervisory Highlights (covered by InfoBytes here), Uejio stated he was “concerned” about the findings, which noted issues with mortgage servicing, auto loan servicing, student loan servicing, and small business lending (including banks' practice of only offering Paycheck Protection Program loans to pre-existing customers). Uejio stated that going forward, the Bureau will “take aggressive action to ensure that regulated companies follow the law and meet their obligations to assist consumers during the COVID-19 pandemic,” noting that companies will have already received or should expect to receive a letter dictating “remediat[ion] [to] all of those who are harmed” and should “change policies, procedures, and practices to address the root causes of harms.” Moreover, Uejio will be reversing policies put into place by the previous administration, including reinstating examinations of the Military Lending Act and rescinding “public statements conveying a relaxed approach to enforcement.”
Additionally, Uejio said fair lending enforcement is a “top priority,” calling it “time” for the CFPB to “take bold and swift action on racial equity.” Uejio noted plans to “elevate and expand existing investigations and exams,” as well as add new ones and focus broadly on “unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.”
On January 20, Kathy Kraninger resigned from her position as CFPB director and newly sworn-in President Biden announced that Dave Uejio would serve as acting director until permanent leadership is confirmed by the U.S. Senate. President Biden officially nominated Rohit Chopra as the permanent director of the Bureau.
Uejio has been with the Bureau since 2012, and prior to his appointment as acting director, he has served as the Bureau’s Chief Strategy Officer since 2015. Chopra, who is currently a Democratic Commissioner of the FTC, previously served as the Bureau’s first student loan ombudsman and assistant director of the Office for Students before leaving the Bureau in 2015.
Kraninger’s resignation is a notable departure from the Bureau’s original structure, as outlined in Dodd-Frank, which called for a single director, appointed to a five-year term and only removable by the president for cause (i.e., for “inefficiency, neglect of duty, or malfeasance in office”). As previously covered by a Buckley Special Alert, in June 2020, the Supreme Court, in a plurality opinion in Seila Law LLC v. CFPB, held that the CFPB’s statutory structure violates the constitutional separation of powers by restricting the president’s ability to remove the director. The Court remedied the constitutional violation by severing the “for cause” removal language from the remainder of the statute. When Kraninger submitted her resignation on President Biden’s Inauguration Day, she stated it was in “support of the Constitutional prerogative of the President to appoint senior officials within the government who support the President’s policy priorities…”
On January 17, the CFPB issued a statement from Bureau Director Kathy Kraninger announcing she has asked Congress to grant the Bureau “clear authority to supervise for compliance with the Military Lending Act (MLA).” The statement expresses Kraninger’s interest in protecting servicemembers and their families and notes the requested authority would complement the Bureau’s MLA enforcement work. The announcement acknowledges the recently introduced House legislation, H.R. 442, which would directly grant the Bureau supervisory authority over the MLA, and also includes suggested draft legislation the Bureau sent to both the U.S. House of Representatives and the U.S. Senate (here and here). The draft legislation would amend the Consumer Financial Protection Act to include a section providing the Bureau “nonexclusive authority to require reports and conduct examinations on a periodic basis” for the purposes of (i) assessing compliance with the MLA; (ii) obtaining information about the compliance systems or procedures associated with the law; and (iii) detecting and assessing associated risks to consumers and to markets.
As previously covered by InfoBytes, in August 2018, then acting Director Mick Mulvaney internally announced the Bureau would cease supervisory examinations of the MLA, contending the law did not explicitly grant the Bureau the authority to examine financial institutions for compliance. A bipartisan coalition of 33 state Attorneys General wrote to Mulvaney expressing concern over the decision and after her confirmation, a group of 23 House Democrats urged Kraninger to resume the examinations. (Covered by InfoBytes here and here.)
The Bureau’s request that Congress grant it authority to examine for compliance with the MLA suggests that it does not intend to do so unless Congress acts.
On December 19, new CFPB Director, Kathy Kraninger emailed staff stating she has decided to not move forward with changing the name of the agency to the Bureau of Consumer Financial Protection. Former acting Director Mick Mulvaney—to whom Kraninger previously reported at the Office of Management and Budget—had initiated the change and released an official agency seal referring to the Bureau of Consumer Financial Protection on the grounds that the Dodd-Frank Act generally used that name for the agency rather than Consumer Financial Protection Bureau. In an email to Bureau staff, Kraninger stated the seal and the “statutory name given in Dodd-Frank” will be used for “statutorily required reports, legal filings, and other items specific to the Office of the Director,” but “[t]he name ‘Consumer Financial Protection Bureau’ and the existing CFPB logo will continue to be used for all other materials.” The decision comes soon after an internal report allegedly calculated the name change to cost anywhere between $9 million and $19 million dollars and after a request by Senator Elizabeth Warren for the Bureau’s Inspector General to conduct an investigation into Mulvaney’s decision to change the name.
This appears to be one of the first significant decisions Kraninger has made since becoming the Bureau’s second confirmed Director. While her reversal of the course set by Mulvaney is noteworthy, her views on consumer financial protection issues are still largely unknown, and it remains to be seen whether she will continue with her predecessor’s initiatives on substantive matters.
On December 6, the U.S. Senate confirmed, in a 50 to 49 vote, Kathy Kraninger as the new Director of the CFPB for a five year term. Kraninger replaces acting CFPB Director Mick Mulvaney, under whom she served at the Office of Management and Budget (OMB) as the associate director for general government. Prior to OMB, Kraninger worked at the Department of Homeland Security and in Congress on the House and Senate Committees on Appropriations. In July, Kraninger testified before the Senate Banking Committee where she fielded questions covering a range of topics and notably stated that, “Congress, through [the] Dodd-Frank Act, gave the Bureau incredible powers and incredible independence from both the president and the Congress in its structure. . . . My focus is on running the agency as Congress established it, but certainly working with members of Congress. I’m very open to changes in that structure that will make the agency more accountable and more transparent.” (Detailed coverage on Kraninger’s hearing available here.)
While her views on consumer financial protection issues are largely unknown, Kraninger is expected to continue with Mulvaney’s initiatives, at least in the near term. Currently, the Bureau is, among other things, (i) expected to release a proposed rule reconsidering the ability-to-repay provisions of the rule covering Payday, Vehicle Title, and Certain High-Cost Installment Loans in January 2019 (covered by InfoBytes here); (ii) fighting three constitutional challenges to its single-director structure (InfoBytes coverage here and here and here); and (iii) receiving pushback from state Attorneys General on its reported decisions to no longer supervising financial institutions for compliance with the Military Lending Act (MLA) and reexamine the requirements and enforcement of the Equal Credit Opportunity Act (ECOA) (covered by InfoBytes here and here).
In a press statement released shortly after the vote, Mulvaney praised the Senate for confirming Kraninger and spoke of his time as acting Director, “[t]his last year has been an important step in the history of the Bureau as we take our place among the most notable regulatory bodies of our country -- and frankly the world. Like all transitions, it was not always as smooth as we would've all liked, but the Bureau has emerged stronger for it.”
On November 9, the CFPB issued its semi-annual report to Congress, covering the Bureau’s work from October 1, 2017 to March 30, 2018. The report, which is required by the Dodd-Frank Act, addresses, among other things, problems faced by consumers with regard to consumer financial products or services; significant rules and orders adopted by the Bureau; and various supervisory and enforcement actions taken during the majority of acting Director Mick Mulvaney’s tenure. Specifically, the report includes (i) a summary of five “significant” state Attorney General actions pursuant to Section 1042 of the Dodd-Frank Act, which allows states to enforce the federal law; (ii) a review of the Bureau’s fair lending efforts, noting that it “conducted fewer fair lending supervisory events. . .than in the prior period,” but “cleared a substantially higher number of MRAs or MOU items from past supervisory events than in the prior period”; (iii) a discussion of non-prime and secured credit cards marketed to consumers; and (iv) a list of upcoming initiatives, which includes requests for information regarding, among other things, the Bureau’s consumer complaint and consumer inquiry handling processes, the Bureau’s inherited regulations and inherited rulemaking authorities, the Bureau’s adopted regulations and new rulemaking authorities, Bureau rulemaking processes, Bureau public reporting practices of consumer complaint information, Bureau external engagements, the Bureau’s supervision program, and the Bureau’s enforcement processes.
Notably, the report also discusses the budget for FY 2018, acknowledging the unusual January 2018 request for zero dollars in funding for the Bureau’s quarterly operations (previously covered by InfoBytes here). As for FY 2019, Mulvaney most recently requested nearly $173 million for Q1, which is still significantly below former Bureau Director Richard Cordray’s FY 2017 Q1 request of $217 million.
On November 6, the U.S. District Court for the Western District of Texas granted two payday loan trade groups’ request to reconsider the court’s June decision to deny a stay of the compliance date (August 19, 2019) of the Bureau’s final rule on payday loans, vehicle title loans, and certain other installment loans (Rule). The court styed the compliance date until further order of the court. The court previously (twice) denied requests to stay the compliance date (covered by InfoBytes here and here). However, the court reconsidered its decision after an October 26 status update, in which the Bureau informed the court of its intention to issue a notice of proposed rulemaking in January 2019 to reconsider parts of the Rule and the compliance date (covered by InfoBytes here).
As previously covered by InfoBytes, the payday loan trade groups filed a lawsuit against the Bureau in April asking the court to set aside the Rule on the grounds that, among other reasons, the Bureau is unconstitutional and the rulemaking failed to comply with the Administrative Procedure Act.
- Sherry-Maria Safchuk to discuss UDAAP at an American Bar Association webinar
- Jeffrey P. Naimon to discuss "What to expect: The new administration and regulatory changes" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Steven R. vonBerg to discuss "LO comp challenges" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss “The False Claims Act today” at the Federal Bar Association Qui Tam Section Roundtable