Tearing Down the House that Richard Cordray Built
While some have described the CFPB as in a state of “radio silence” since late November, others said the agency's attorneys have perked back up and are pushing forward with investigations begun before Mick Mulvaney took control.
April 30, 2018 at 05:30 PM
7 minute read
The original version of this story was published on National Law Journal
On his first day in his side job as the Consumer Financial Protection Bureau's interim leader, White House budget director Mick Mulvaney spoke into a cluster of microphones to spread the word that, no, he would not be shutting down the agency.
“Rumors that I'm going to set the place on fire or blow it up or lock the doors are completely false,” Mulvaney said in November. (In February, addressing a gathering of state attorneys general in Washington, he questioned whether such a hostile move could even be successful, given the brutalist design of the CFPB's headquarters.)
Six months after that first day, there have been no explosions or reports of arson at the CFPB. Nor has there been a new enforcement action—as of the mid-April deadline for this story—even as Mulvaney has kept the doors unlocked. (Ed note: After the deadline for this magazine story, on April 20, the CFPB reached a $1 billion settlement with Wells Fargo over mortgage and auto-lending abuses.)
With that lack of new enforcement activity, Mulvaney's CFPB has, in fact, walked away from more cases than it has brought. Earlier this year, the CFPB dropped its case in Kansas federal court against Golden Valley Lending and three other payday lending firms affiliated with Native American tribes. More recently, Mulvaney's CFPB chose not to sue Kansas-based National Credit Adjusters, a debt collector for online lenders operating on tribal land, according to Reuters.
The abandonment of that case has fed the sense that Mulvaney would bring a lighter touch to the agency's enforcement efforts. Mulvaney himself has repeatedly said that “elections have consequences” and declared an end to the days of the CFPB “pushing the envelope” in enforcement actions.
Beneath his public remarks, the financial industry's defense lawyers see a more nuanced approach. While some have described the CFPB as in a state of “radio silence” since late November, others said the agency's attorneys have perked back up and are pushing forward with investigations begun before Mulvaney took control.
“I think the No. 1 thing I've seen in the last couple months is enforcement waking up,” said Mayer Brown partner Ori Lev, a former deputy enforcement director at the CFPB. “Mulvaney came in at the end of November, and there was almost nothing happening in any case. In the last two months, I've seen outreach in a number of pending matters.”
Appearing before the House Financial Services Committee in April, Mulvaney acknowledged that the CFPB had not brought a single new case under his tenure but said the agency was actively litigating 25 cases and conducting 100 investigations.
“My sense is the last several months since Mulvaney came in were about him and his staff getting the lay of the land,” said Reed Smith partner Maria Earley, a former CFPB enforcement attorney. “It's quite possible they're waking up from hibernation now and things are happening.”
Mulvaney has said his experience leading the CFPB has crystallized his past criticism, from his days as a Republican lawmaker on the House Financial Services Committee, of the power held by the agency's independent director. He has sustained that criticism in increasingly passive-aggressive correspondence with the agency's original architect, Sen. Elizabeth Warren, D-Mass., tracing her frustrations with his stewardship of the CFPB to its independence.
“I encourage you to consider the possibility that the frustration you are experiencing now, and that which I had a few years back, are both inevitable consequences of the fact that Dodd-Frank Wall Street Reform and Consumer Protection Act insulates the bureau from virtually any accountability to the American people through their elected representatives,” Mulvaney wrote in a letter to Warren dated April 4. “Put another way: the bureau was created to be less accountable than other government bureaucracies.”
Mulvaney has gone beyond writing individual lawmakers. Just days before his April 4 letter to Warren, he issued a semiannual report to Congress urging steps that have been fixtures of Republican proposals to reform the CFPB, namely making the agency subject to congressional appropriations and making its director readily removable by the president, as opposed to being fireable only “for cause.” Saying that the “bureau is far too powerful, with precious little oversight of its activities,” he also proposed a reform that would require Congress to approve any major rules from the CFPB.
For consumer advocates, that latter proposal proved particularly breathtaking.
“It would really mean that the CFPB couldn't issue major rules at all: Anything it wanted to do would require legislation enacted by both Houses of Congress and signed by the President (or passed by a majority sufficient to override a presidential veto),” wrote Public Citizen attorney Scott Nelson on Public Citizen's Consumer Law & Policy blog. “None of the major regulatory agencies is subject to that kind of limitation; if it were, it wouldn't be a regulatory agency, just a proposer of legislation, a particularly futile role in an era of partisan gridlock in Congress.”
From his new perch, Mulvaney has also paved the way for discretionary moves that would effectively rip up the floorboards and replace the wallpaper inside the house Richard Cordray, the CFPB's first director, built. In recent weeks, the first comments have begun to arrive in response to Mulvaney's various requests for information—an ongoing process that is growing to touch every corner of the CFPB operation, from its investigations and enforcement process to rule-making.
Mulvaney opened his comment requests on the topic of the CFPB's subpoenas—known as civil investigative demands—that financial firms have long bemoaned as overbroad and burdensome. In his early days at the CFPB, Mulvaney said he read up on a little-known role of the agency's director: ruling on companies' challenges to investigative demands.
Even after Mulvaney extended the first comment deadline by a month, at the request of the Financial Services Roundtable and Consumer Bankers Association, some trade groups wrote in urging the agency to tighten the scope of its demands and avoid fishing expeditions. Some asked that the CFPB no longer post records on its website concerning appeals to investigative demands. Without that secrecy, financial industry lobbyists argued, firms are essentially forced to pick their poison: Appeal a subpoena and trigger disclosure of an otherwise nonpublic investigation or go along with a probe they view as flawed or unjust.
More recent solicitations have sought comments on the CFPB's handling of consumer complaints, along with its enforcement processes and regulations.
“The [requests for information] are revisiting almost everything Richard Cordray did,” said Venable partner Gerry Sachs. “They're revisiting all of Richard Cordray's regulatory and some of his enforcement legacy. At the end of the [requests for information] process, the only thing left in Rich Cordray's legacy may be very well be past enforcement actions.”
Correction: The original version of this story attributed a post on the Consumer Law & Policy blog to St. John's University law professor Jeff Sovern. The story has been updated to reflect the blog's correct author, Public Citizen attorney Scott Nelson.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTravis Lenkner Returns to Burford Capital With an Eye on Future Growth Opportunities
Legal Speak's 'Sidebar With Saul' Part V: Strange Days of Trump Trial Culminate in Historic Verdict
1 minute readLegal Speak's 'Sidebar with Saul' Part IV: Deliberations Begin in First Trump Criminal Trial
1 minute readJosh Partington of Snell & Wilmer Is in Fact a Rock Star in the Office (and Out of It)
1 minute readTrending Stories
- 1Elon Musk Names Microsoft, Calif. AG to Amended OpenAI Suit
- 2Trump’s Plan to Purge Democracy
- 3Baltimore City Govt., After Winning Opioid Jury Trial, Preparing to Demand an Additional $11B for Abatement Costs
- 4X Joins Legal Attack on California's New Deepfakes Law
- 5Monsanto Wins Latest Philadelphia Roundup Trial
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250