Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued its semiannual report (the "Report") to the President and Congress. In the Report, Acting CFPB Director Mick Mulvaney proposes to significantly reform the CFPB's structure and oversight. He claims that the structure of the CFPB "ignore[s] due process and abandon[s] the rule of law in favor of bureaucratic fiat and administrative absolutism." (Report 2.) He offers four specific proposals to reform the agency.
First, he wants Congress – not the Federal Reserve – to fund the CFPB through the appropriations process. Second, he proposes that the CFPB obtain congressional approval for the passage of any major rules. Third, he recommends that the CFPB Director answer to the President, which means that the president could fire the CFPB Director "without cause." (Currently, the President may only fire the CFPB Director "with cause.") Finally, he wants to create an independent Inspector General for the CFPB.
The Report, which is mandated by Section 1012(c) of the Dodd-Frank Act, details the activities of the CFPB from April 1, 2017 through Sept. 30, 2017, which predated Mulvaney's tenure at CFPB. President Donald J. Trump appointed him in November 2017 following the departure of the agency's inaugural director, Richard Cordray.
By law, the Report must include nine separate sub-sections, including a list of significant rules and orders adopted by the CFPB during the time period at issue. (Section 3) The Report identifies two significant Final Rules enacted by the CFPB from April 1, 2017 through Sept. 30, 2017. The first Final Rule is about Arbitration Agreements, which banned pre-dispute arbitration clauses in consumer agreements, preventing consumers from bringing class action lawsuits. This Rule, however, will not become effective because Congress subsequently adopted a joint resolution of disapproval, which the President signed pursuant to the Congressional Review Act.
The Report also identifies the adoption of a second significant Final Rule by the CFPB regarding Payday, Vehicle Title and Certain High Cost Installment Loans, which bars lenders from making short-term or longer-term balloon-payment loans, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay the loans according to their terms.
The Report also includes an analysis of complaints received by the CFPB about consumer financial products. (Section 4.) Over the past year, the CFPB received 317,200 complaints from consumers. Twenty-seven percent of the complaints are about debt collection, and another 27 percent are about credit or consumer reporting; the remainder of the complaints are about mortgages, credit cards and student loans.
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