Since taking over the Consumer Financial Protection Bureau last year, White House budget director Mick Mulvaney has not hidden his dissatisfaction with the agency's enforcement record.

Mulvaney declared an end to the days of “pushing the envelope.” He signaled, in a strategic plan released this month, that the agency would make lighter use of perhaps the most powerful weapon in its enforcement arsenal: the authority to police “unfair, deceptive or abusive acts or practices.” In industry jargon, that's “UDAAP” for short.

But there is only so much Mulvaney, or any leader of the CFPB, can do to pull back on those enforcement efforts. The Dodd-Frank Act, which created the CFPB, also handed state attorneys general the power to claim violations of that federal law's prohibition on unfair and deceptive practices.

That authority has become particularly meaningful at a time when state attorneys general are taking steps to pick up any slack left by federal regulators under the Trump administration. On Wednesday, with Mulvaney appearing at the winter meeting of the National Association of Attorneys General, Pennsylvania Attorney General Josh Shapiro pressed for the CFPB to not interfere with any states' efforts to bring claims under Dodd-Frank.

Josh Shapiro

“I think it's important we continue to have that latitude to bring the cases that we think are important,” Shapiro said.

States are required to consult with the CFPB before bringing an enforcement action under Dodd-Frank, and the bureau is allowed to intervene. When asked about his philosophy toward states exerting their Dodd-Frank authority, Mulvaney appeared to endorse a hands-off approach, saying “we are not there to get in your way.”

“My interest has been whether or not we are going to spend our efforts on what I consider to be solid legal claims,” Mulvaney said. “I've been a little bit surprised at how hard we have pushed the envelope in a couple of circumstances. So I'm much more interested not in who's bringing the case but the merits of the case that we're bringing. If we think it's a good case, we'll bring it. If not, we're happy to get out of the way and let you all do it by yourselves.”

Shapiro's office in Pennsylvania has stepped up its attention to the financial industry since Trump took office. Last year, Shapiro launched a consumer financial protection unit that, he said, would “focus on lenders that prey on seniors, families with students, and military service members, including for-profit colleges and mortgage and student loan servicers.”

He chose a veteran of the CFPB, Nicholas Smyth, to lead the new unit. Smyth joined Shapiro's office from Reed Smith's Pittsburgh office.

State attorneys general in Connecticut, Florida, Illinois and Mississippi all filed lawsuits in 2014 using their Dodd-Frank authority.

In August 2017, Massachusetts Attorney General Maura Healey included a Dodd-Frank claim in her office's lawsuit against the Pennsylvania Higher Education Assistance Association, one of the largest servicers of student loans in the United States. The lawsuit, which is pending in Suffolk Superior Court, alleges PHEAA mismanaged federal loan forgiveness programs, sometimes by overcharging borrowers and preventing them from staying on track with repayment programs.

“Attorneys general, a core group of them, are interested in making sure they are in a position to bring enforcement actions and pursue investigations in the consumer financial services area,” said Venable partner Allyson Baker, a former CFPB enforcement attorney. “And there's no doubt there's a huge uptick in that space.”