Acting Director Urges Changes in CFPB's Structure

By: Jann Swanson •

The Acting Director of the Consumer Financial Protection Bureau (CFPB) presented the Bureaus semi-annual report to Congress on Monday.  The report, which details CFPB's work through the end of the 2017 Fiscal Year, was not the main event.

Mick Mulvaney, who holds the temporary position in the CFPB along with being director of the Office of Management and Budget (OMB), prefaced the report with a memo suggesting Congress make changes that will fundamentally alter the mandate and structure of the agency.

Mulvaney, the legality of whose appointment is being challenged in court, had harsh words for the Bureau. He states that it has been evident since the Dodd-Frank Act, which created CFPB, was enacted that it was "far too powerful and with precious little oversight of its activities."  Dodd-Frank. he said, set up the bureau's director to wear three hats; a one-man legislature empowered to write rules that bind parties in new ways; an executive officer over whom the President has only limited control, and an appellate judge presiding over the Bureau's in-house court-like adjudications.  He said this combining of all three branches of government was, in the words of James Madison and the Federalist Papers, "the very definition of tyranny."

The power wielded by the director "could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets," he said.  The temptation of power is strong, and laws should be written to restrain that human weakness, not empower it.

Mulvaney, who as a member of Congress argued for the elimination of CFPB, made the following suggestions for legislative action:

1.      Fund the Bureau through Congressional appropriations;

2.      Require legislative approval of major Bureau rules; 

3.      Ensure that the Director answers to the President in the exercise of executive authority; and

4.      Create an independent Inspector General for the Bureau.

The report itself set forth the following accomplishments:

  • During FY2017 the Bureau handled approximately 317,200 consumer complaints. The most-complained-about products or services were debt collection at 27 percent of complaints, credit reporting at 27 percent, and mortgages at 13 percent. Approximately 80 percent of all consumer complaints were submitted through the Bureau's website. Companies have responded to approximately 93 percent of complaints sent to them for response during the period.
  • Released Data Point: Becoming Credit Visible which explored the means by which consumers transitioned out of credit invisibility.
  • Enacted two "significant" final rules; the first, Arbitration Agreements, will not go into effect because Congress adopted a joint resolution of disapproval, signed by the President. The second was Payday, Vehicle Title, and Certain High-Cost Installment Loans.
  • Released seven "less significant" final rules, including amendments to the Truth-in-Lending Act, RESPA, and the Mortgage Servicing Act.

Subsequent to the appointment of Mulvaney, the Bureau has issued a dozen Requests for Information about existing Bureau rules and operations and has opened rulemaking to reconsider the aforementioned Payday Loan rule (and postponed its implementation until 2019).  It has also opened rulemaking to reconsider certain aspects of the Bureau's 2015 rule titled Home Mortgage Disclosure Act (Regulation C), which could involve issues such as the institutional and transactional coverage tests and the rule's discretionary data points.