All Things FinReg


Earlier this week, Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney met with state attorneys general at the National Association of Attorneys General (NAAG) in Washington, DC, in his second public speaking appearance since taking over as acting director at the end of November 2017. While Mulvaney’s prepared remarks did not break new ground, his Q&A session with the state attorneys general was illuminating.

Mulvaney said that he does not intend to dismantle the CFPB, but that he does intend to change it so that it acts within the confines of the law as written. He does not intend to use his regulatory authority to break new ground and he does not intend to use his enforcement authority to “regulate through litigation,” a thinly veiled criticism of his predecessor’s aggressive use of the CFPB’s statutory “unfair, deceptive, and abusive acts and practices” (UDAAP) authority. Mulvaney also stated that he intends to focus a great deal more on education and less on enforcement.

Mulvaney further said that he intends to be more quantitative in the analysis of what ought to be the CFPB’s priorities, using the example of debt collectors, which account for one-third of all complaints to the CFPB, versus payday lenders, which account for only 2% of those complaints.

The Q&A session was useful, particularly because it was dominated largely by Democratic attorneys general who have criticized Mulvaney’s appointment and who have filed amicus briefs in support of another claimant to Mulvaney’s position as CFPB head. During the session, Mulvaney was polite and deft, and had clearly studied up on the law. Specifically, we noted the following:

  1. He does not intend to interfere in the attorneys general’s use of the Dodd-Frank Act/Consumer Financial Protection Act (CFPA) UDAAP authority to bring actions in federal court. Where possible, he will work with the states on matters of mutual interest or concern. When an attorney general does not wish to pursue a matter, Mulvaney will consider whether the lack of enthusiasm is due to a shortage of state resources or a policy view. If the latter, he would not be inclined to proceed against the attorney general’s wishes.
  2. While Mulvaney was pushed hard on student debt issues, he declined to make a commitment to prioritizing the topic, instead referring back to his quantitative approach.

Whatever the direction of the CFPB may be going forward, it appears that state attorneys general, particularly Democrats, will increase their enforcement activities as the CFPB eases off. While we have said before that we thought this trend would develop, the CFPB’s leadership interestingly appears to have signaled that it won’t object to (or at least won’t stand in the way of) increased regulatory consumer financial protection activity at the state level. In our view, this means that financial services entities covered by the CFPA would do well to consider closely monitoring and managing the risk of state actions in addition to federal activities, inasmuch as the enforcement and regulatory initiative may be shifting from Washington to the state capitals.