Mick Mulvaney, Office of Management and Budget director and interim leader of the Consumer Financial Protection Bureau.

Updated Dec. 4

Companies in the crosshairs of the Consumer Financial Protection Bureau, hoping to seize on the tumultuous transition of power that unfolded following Richard Cordray's resignation, are weighing overtures to the new leadership to cut short costly investigations or even escape litigation altogether, according to several corporate defense lawyers who have matters pending at the agency.

On Monday, hours after taking over the Obama-era consumer bureau as acting director, White House budget director Mick Mulvaney announced a 30-day freeze on hiring and new regulations. Mulvaney offered less clarity on how he would address the agency's investigations or pending lawsuits—the “100 or so” cases he was set to be briefed on the next day.

In remarks Monday, he said, “I'm a member of the executive branch of government, we intend to execute the laws of the United States, including the provisions of Dodd-Frank that govern the CFPB. That being said, the way we go about it, the way we interpret it, the way we enforce it will be dramatically different under the current administration than it was under the last.”

Even without a clear sense of the agency's future enforcement priorities, defense lawyers see a window to win relief for their financial industry clients.

“He's going to get flooded with requests, because everyone is going to want to go to the top and circumvent the staff. He might want to set up a transparent mechanism to give companies a chance to approach him in an orderly way, as opposed to it being a case of who's got the connections, who screams loudest or who picks [the] right time to start bugging him,” said a lawyer in the consumer financial services sector, who like several others spoke on the condition of anonymity to avoid compromising matters pending before the CFPB. “Everyone is going to want to go and say my case is [the] one you should shut down.”

Companies largely resisted the urge to immediately jump this week on the perceived opportunity, several defense lawyers said. Mulvaney is buried in briefing materials and splitting time between the CFPB and Office of Management and Budget. Still, the change in leadership has fueled brainstorming about how to get client matters to the top of the pile on Mulvaney's desk.

“They all know Mulvaney is a new voice, but they don't have other trusted entry points” into the CFPB, where officials are “not likely to be sympathetic,” said another lawyer with matters pending before the CFPB. “Everyone is trying to figure out where that is—short of calling Mulvaney himself, which people are obviously reluctant to do. Everyone has their own angle.”

 

When's the Right Time to Call?

 

In-house lawyers and their private attorneys are asking questions that include: Who do you call? When's the right time? Is there a right message?

Defense lawyers described a range of options for putting their clients' matters on Mulvaney's radar screen. In any pending case, a company could file motions that require a response from the CFPB that might need Mulvaney's review. As one lawyer said, the strategy would be “to do anything that would force the hand of the agency, to find some way of putting the agency in the position to address the case—essentially require the CFPB to act.”

Many lawyers expect to see an increase in the number of formal challenges to agency subpoenas—known in CFPB parlance as “petitions to modify or set aside” civil investigative demands—that trigger an administrative appeal adjudicated by the agency director.

Under Cordray's tenure, many defense lawyers considered filing such an appeal to be a fool's errand, as the challenges were consistently struck down and resulted in an earlier disclosure of the CFPB probe. But under Mulvaney and whomever is confirmed as the permanent director, defense lawyers expect to have a more sympathetic ear in those appeals.

Some companies might need to be more forward, lawyers said.

Investigations often take months—and hundreds of thousands of dollars in fees—before a company is invited to submit a written statement responding to the CFPB's allegations. The CFPB extends offers to file those statements in so-called “NORA” invitations—”notice and opportunity to respond and advise—before recommending any formal enforcement action.

Companies staring down the barrel of an extensive investigation could be more inclined to directly contact Mulvaney.

“Nobody is worried about having a consent order slipped by Mulvaney. They are worried they could still face weeks or months, depending on what's in the immediate future, of an investigation they could shut down,” one of the defense lawyers said in an interview.

 

Mick Mulvaney's Mark

 

Mulvaney's mark on CFPB enforcement efforts may already be appearing.

On the same day Mulvaney strolled into the CFPB with a sack of doughnuts, agency lawyers were playing hardball in their case against Nationwide Biweekly Administration, a company that was ordered in November to pay a nearly $8 million penalty for peddling a deceptive mortgage payment program.

CFPB lawyers, in a Monday court filing, opposed Nationwide Biweekly Administration's request for a stay of the civil penalty, arguing that the company should be required to post a bond before any further briefing in the case.

Two days later, on Wednesday, those same CFPB attorneys changed their tune. They withdrew their earlier filing, writing on Wednesday that the bureau “takes no position” on whether the posting of a bond should be a condition for staying the penalty.

A CFPB spokesman declined to comment.

Nationwide Biweekly Administration's defense lawyer, Helen Mac Murray of Mac Murray & Shuster, confirmed Friday that the change in the CFPB's posture was a direct response to a letter she'd sent overnight to Mulvaney informing him of the agency's Monday filing.

“It was directly connected,” she said. “I saw that as an end-run around the new leadership team. I called [the CFPB lawyer] on it and his office obviously changed the position.”

U.S. District Judge Richard Seeborg on Dec. 4 granted the temporary stay of enforcement of the judgment. “Plaintiff initially filed opposition, but has since withdrawn the opposition and advises that it now takes no position on the merits of defendants' motion,” Seeborg wrote. Under all the circumstances, a stay on any efforts to collect the monetary judgment is hereby granted, pending an order disposing of defendants' post-trial motions, or other further order lifting the stay.”

Mulvaney this week left no doubt that changes in the agency's approach to enforcement were coming. He said it would be “naive” to think the CFPB would operate under a President Donald Trump-appointed director as it did during the Obama administration.

Mulvaney delivered those remarks against the backdrop of a lawsuit filed by Leandra English, the CFPB's deputy director, that challenged his claim to the acting director role. A federal judge in Washington on Tuesday denied English's request for a temporary restraining order that would have blocked Mulvaney's appointment. Her lawyers are weighing further options.

Hudson Cook partner Lucy Morris, a former deputy enforcement director at the CFPB, said it is unclear what exactly the 30-day freeze and Mulvaney's review of enforcement cases will yield.

“It's a little early to say what the opportunity is,” Morris said. “At this point, I think, it's appropriate to reach back out to the CFPB on pending investigations or enforcement actions and ask the staff whether anything has changed, whether we should be thinking about things differently, whether it makes sense to delay certain conversations. I'm sure that, internally, they are still trying to understand what they can and cannot do.”

Mick Mulvaney, Office of Management and Budget director and interim leader of the Consumer Financial Protection Bureau.

Updated Dec. 4

Companies in the crosshairs of the Consumer Financial Protection Bureau, hoping to seize on the tumultuous transition of power that unfolded following Richard Cordray's resignation, are weighing overtures to the new leadership to cut short costly investigations or even escape litigation altogether, according to several corporate defense lawyers who have matters pending at the agency.

On Monday, hours after taking over the Obama-era consumer bureau as acting director, White House budget director Mick Mulvaney announced a 30-day freeze on hiring and new regulations. Mulvaney offered less clarity on how he would address the agency's investigations or pending lawsuits—the “100 or so” cases he was set to be briefed on the next day.

In remarks Monday, he said, “I'm a member of the executive branch of government, we intend to execute the laws of the United States, including the provisions of Dodd-Frank that govern the CFPB. That being said, the way we go about it, the way we interpret it, the way we enforce it will be dramatically different under the current administration than it was under the last.”

Even without a clear sense of the agency's future enforcement priorities, defense lawyers see a window to win relief for their financial industry clients.

“He's going to get flooded with requests, because everyone is going to want to go to the top and circumvent the staff. He might want to set up a transparent mechanism to give companies a chance to approach him in an orderly way, as opposed to it being a case of who's got the connections, who screams loudest or who picks [the] right time to start bugging him,” said a lawyer in the consumer financial services sector, who like several others spoke on the condition of anonymity to avoid compromising matters pending before the CFPB. “Everyone is going to want to go and say my case is [the] one you should shut down.”

Companies largely resisted the urge to immediately jump this week on the perceived opportunity, several defense lawyers said. Mulvaney is buried in briefing materials and splitting time between the CFPB and Office of Management and Budget. Still, the change in leadership has fueled brainstorming about how to get client matters to the top of the pile on Mulvaney's desk.

“They all know Mulvaney is a new voice, but they don't have other trusted entry points” into the CFPB, where officials are “not likely to be sympathetic,” said another lawyer with matters pending before the CFPB. “Everyone is trying to figure out where that is—short of calling Mulvaney himself, which people are obviously reluctant to do. Everyone has their own angle.”

 

When's the Right Time to Call?

 

In-house lawyers and their private attorneys are asking questions that include: Who do you call? When's the right time? Is there a right message?

Defense lawyers described a range of options for putting their clients' matters on Mulvaney's radar screen. In any pending case, a company could file motions that require a response from the CFPB that might need Mulvaney's review. As one lawyer said, the strategy would be “to do anything that would force the hand of the agency, to find some way of putting the agency in the position to address the case—essentially require the CFPB to act.”

Many lawyers expect to see an increase in the number of formal challenges to agency subpoenas—known in CFPB parlance as “petitions to modify or set aside” civil investigative demands—that trigger an administrative appeal adjudicated by the agency director.

Under Cordray's tenure, many defense lawyers considered filing such an appeal to be a fool's errand, as the challenges were consistently struck down and resulted in an earlier disclosure of the CFPB probe. But under Mulvaney and whomever is confirmed as the permanent director, defense lawyers expect to have a more sympathetic ear in those appeals.

Some companies might need to be more forward, lawyers said.

Investigations often take months—and hundreds of thousands of dollars in fees—before a company is invited to submit a written statement responding to the CFPB's allegations. The CFPB extends offers to file those statements in so-called “NORA” invitations—”notice and opportunity to respond and advise—before recommending any formal enforcement action.

Companies staring down the barrel of an extensive investigation could be more inclined to directly contact Mulvaney.

“Nobody is worried about having a consent order slipped by Mulvaney. They are worried they could still face weeks or months, depending on what's in the immediate future, of an investigation they could shut down,” one of the defense lawyers said in an interview.

 

Mick Mulvaney's Mark

 

Mulvaney's mark on CFPB enforcement efforts may already be appearing.

On the same day Mulvaney strolled into the CFPB with a sack of doughnuts, agency lawyers were playing hardball in their case against Nationwide Biweekly Administration, a company that was ordered in November to pay a nearly $8 million penalty for peddling a deceptive mortgage payment program.

CFPB lawyers, in a Monday court filing, opposed Nationwide Biweekly Administration's request for a stay of the civil penalty, arguing that the company should be required to post a bond before any further briefing in the case.

Two days later, on Wednesday, those same CFPB attorneys changed their tune. They withdrew their earlier filing, writing on Wednesday that the bureau “takes no position” on whether the posting of a bond should be a condition for staying the penalty.

A CFPB spokesman declined to comment.

Nationwide Biweekly Administration's defense lawyer, Helen Mac Murray of Mac Murray & Shuster, confirmed Friday that the change in the CFPB's posture was a direct response to a letter she'd sent overnight to Mulvaney informing him of the agency's Monday filing.

“It was directly connected,” she said. “I saw that as an end-run around the new leadership team. I called [the CFPB lawyer] on it and his office obviously changed the position.”

U.S. District Judge Richard Seeborg on Dec. 4 granted the temporary stay of enforcement of the judgment. “Plaintiff initially filed opposition, but has since withdrawn the opposition and advises that it now takes no position on the merits of defendants' motion,” Seeborg wrote. Under all the circumstances, a stay on any efforts to collect the monetary judgment is hereby granted, pending an order disposing of defendants' post-trial motions, or other further order lifting the stay.”

Mulvaney this week left no doubt that changes in the agency's approach to enforcement were coming. He said it would be “naive” to think the CFPB would operate under a President Donald Trump-appointed director as it did during the Obama administration.

Mulvaney delivered those remarks against the backdrop of a lawsuit filed by Leandra English, the CFPB's deputy director, that challenged his claim to the acting director role. A federal judge in Washington on Tuesday denied English's request for a temporary restraining order that would have blocked Mulvaney's appointment. Her lawyers are weighing further options.

Hudson Cook partner Lucy Morris, a former deputy enforcement director at the CFPB, said it is unclear what exactly the 30-day freeze and Mulvaney's review of enforcement cases will yield.

“It's a little early to say what the opportunity is,” Morris said. “At this point, I think, it's appropriate to reach back out to the CFPB on pending investigations or enforcement actions and ask the staff whether anything has changed, whether we should be thinking about things differently, whether it makes sense to delay certain conversations. I'm sure that, internally, they are still trying to understand what they can and cannot do.”