Trouble With A Capital C: Cordray’s Move To Name His Own Successor At The CFPB

In contrast to his big wins on Jeopardy! in the 1980s, Richard Cordray lost badly in 2017 after staking so much on the Consumer Financial Protection Bureau’s (“CFPB”) Final Rule, which would have prohibited the use of class action waivers in the arbitration clauses of consumer financial contracts, such as credit card agreements and mortgages. The CFPB’s Final Rule drew sharp, valid criticism from both the U.S. Treasury Department and the Office of the Comptroller of the Currency. After the House of Representatives and the Senate acted pursuant to the Congressional Review Act to nullify the Final Rule, Mr. Cordray pleaded unsuccessfully with President Trump for a veto. It is unsurprising, really, that he decided to step down far earlier than anticipated.

Mr. Cordray’s parting-shot - his effort to name his own successor by appointing a presumably sympathetic Deputy Director - will likely miss its mark. Under the provision of Dodd-Frank that Senator Elizabeth Warren has cited in support of Mr. Cordray’s maneuver, the CFPB’s Deputy Director serves as acting Director only “in the absence or unavailability of the Director” (12 U.S.C. § 5491(b)(5)), not in the event the Director resigns. Moreover, 12 U.S.C. § 5491(b)(3) states that, “…the Director shall be appointed by the President, by and with the advice and consent of the Senate.”  Senator Warren’s November 24th “tweet,” that “if there is a [CFPB] Director vacancy, the Deputy Director becomes the Acting Director … [and] [President Trump] can’t override that[,]” simply appears to read too much into the provision of Dodd-Frank she cites. More ›

CFPB Director Richard Cordray Resigning

In news that is still breaking, the first and only Consumer Financial Protection Bureau director, Richard Cordray, has announced he will be resigning at the end of this month. He announced his departure in an email to staff that was reported out by several news agencies. His term was set to expire in July, 2018. Many predict Cordray will make a run for Ohio governor. More ›

U.S. Senate Joins The House To Eliminate The CFPB’s Final Rule Against Class Action Waivers in Arbitration Clauses; The President Is Expected To Sign

With Vice President Pence casting a dramatic tie-breaking vote just after 10 p.m. E.D.T. on October 24th, the U.S. Senate joined the U.S. House of Representatives to eliminate, based on their authority under the Congressional Review Act (CRA), the Consumer Finance Protection Bureau's (CFPB) controversial Final Rule on arbitration agreements, which was issued in July. The CFPB's Final Rule would bar providers of consumer financial products and services from including mandatory class action waivers in the arbitration clauses of their agreements with consumers. More ›

Take Note: Employers are Helping Pay Student Loans and Consumer Advocates are Watching Closely

A growing number of employers are offering student loan repayment assistance as a means of attracting and retaining talent. Industries like tech, financial services, and health services are among the early adopters, offering variations of the same general benefit:  the employer agrees to pay a certain amount—either a set figure or a percentage of salary—toward their employee’s student loan debt. Since student loan repayment benefits are relatively novel, the rules for both employers offering the benefit, and the student loan servicers administering it, are not yet explicit. More ›

In a Bind about CFPB's Arbitration Rule?

Don't be. At least Republican lawmakers are certainly not. On Tuesday, the U.S. House of Representatives voted overwhelmingly, 231-190, to eliminate the CFPB's final rule arbitration rule using a procedural mechanism called the Congressional Review Act.

The Congressional Review Act allows both houses of Congress to vote on resolutions of disapproval within 60 legislative days of a proposed rule being published in the Federal Register. Under the CRA, the resolution can be brought to the House floor without going to a committee vote, and does not need a filibuster-proof, 60 vote majority to pass in the Senate. If the President signs the resolution, the CFPB would be barred from developing a regulation that is substantially similar to the one disapproved unless Congress specifically authorizes it. More ›

CFPB Rule Bars the Use of Mandatory Arbitration Clauses to Prohibit Class Actions; Some Members of Congress Vow to Take Action to Reverse

This week, the Consumer Financial Protection Bureau (CFPB) adopted a final rule prohibiting a broad range of financial firms from using mandatory arbitration clauses to bar class action suits and received wide press coverage. The CFPB announced that this final rule would "restore the ability of groups of people to file or join group lawsuits." Some in the financial services industry potentially subject to the rule have already issued statements opposing and attacking it and asking that Congress use its statutory authority to reverse the CFPB's action. More ›

CFPB Releases State by State Report on Consumer Complaints

This week, the Consumer Financial Protection Bureau (CFPB) released its June 2017 complaint report. The format is different than usual. Normally, the report spotlights complaints from a particular industry and state. This month, the report provides a state by state overview of what consumers are complaining about across the country. You can see the top 5 industries receiving complaints by volume and quarterly percent change for each state. More ›

Treasury Echoes Trump: Deregulate to Improve Financial Systems

Shortly after taking office, President Trump issued an Executive Order to establish a policy for regulating the United States financial system under seven "Core Principles," and to order a report from the United States Treasury that assesses financial markets. Last week, Treasury responded with its first 150 page report on the current state of the financial system that outlines proposed regulatory changes. Treasury points the finger at the Obama administration’s 2010 enactment of Dodd-Frank for imposing regulatory requirements insufficiently tailored or coordinated among agencies, unrelated to addressing the problems leading to the great recession, and applied in an overly prescriptive manner. In no uncertain terms, the report concludes that the scope and excess costs imposed by Dodd-Frank have resulted in a slower rate of growth in the financial markets. Unsurprisingly, Treasury’s regulatory recommendations coincide with Congress’ current legislative effort at replacing Dodd-Frank with the Financial Choice Act. More ›

Congress Takes a Significant Step Towards Replacing Dodd-Frank and Gutting the CFPB

On Thursday, as we anticipated in a previous blog post, the House of Representatives voted along party lines to pass the Financial CHOICE ACT ("FCA"), which would repeal Dodd-Frank and strip the CFPB of its authority.

The debate leading up to the vote also appeared to divide sharply along partisan lines, with Republicans urging their colleagues to vote for the Bill, and Democrats insisting that it was the "Wrong Choice" for Americans. Despite their differing opinions, representatives from all parties appeared to articulate the same goal: putting Main Street America ahead of Wall Street.

Supporters of the FCA contend that the purported benefits of Dodd-Frank have never materialized. They argue that due to Dodd-Frank’s excessive and expensive regulatory burdens, small banks and businesses have failed, while big banks have continued to thrive. Imposing the same regulations on every financial institution, they say, has strangled small community banks, and forced many to shut down. This problem triggered another major concern of the bill's supporters, namely an alleged lack of choice of financial products and the increased cost of these same products. More ›

Congress Seeks Dodd-Frank Overhaul and Elephant Dart for Consumer Financial Protection Bureau

On May 4, 2017, the House Financial Services Committee passed HR 10, the Financial CHOICE ACT ("FCA") by a 34-26 vote, with all proposed Democratic redlines rejected. The FCA is expected to go to a full House vote as early as this week. 

The FCA purports to keep the protections Dodd-Frank aimed to enact, while at the same time freeing regulations on the American economy. It promises to "create hope and opportunity for investors, consumers, and entrepreneurs," by, among other things, ending bailouts and "holding Washington and Wall Street accountable."

FCA, as drafted, would repeal the Dodd-Frank Act in its entirety, remove CFPB supervisory authority over financial institutions, and allow the President to appoint, and remove at will, a CFPB director.  Moreover, FCA would remove any authority the CFPB has to investigate actions it deems abusive, but would keep the agency in place, changing its name from the Consumer Financial Protection Bureau to the Consumer Law Enforcement Agency (CLEA). More ›