Consumer Law & Policy Blog

Speculation About What a New CFPB Director Might Do

From Kate Berry at American Banker. Hint: it will be better for banks than consumers.

The Intercept's Excellent Piece on CFPB Attackers: No Protection for Protectors

There is too much valuable material in this one, by Gary Rivlin and Susan Antilla, to post excerpts.  It should be read in its entirety.

Chris Peterson Study Finds Financial Choice Act Would Eliminate Chilling Number of CFPB Enforcement Actions Costing Consumers Billions

Christopher Lewis Peterson of Utah has written Choosing Corporations Over Consumers: The Financial Choice Act of 2017 and the CFPB Consumer Finance Law Quarterly Report (forthcoming). Here is the abstract:

The Consumer Financial Protection Bureau (CFPB) is the U.S. Government’s primary regulator and civil law enforcement agency governing consumer lending, payment systems, debt collection, and other consumer financial services. Created in the wake of the financial crisis, Congress tasked the agency with stopping deceptive, unfair, and abusive consumer finance. However, Congress is currently considering legislation which would significantly change the CFPB’s law enforcement authorities. This Article analyzes the proposed Financial Choice Act of 2017 which would rename the CFPB, and eliminate many of the CFPB’s law enforcement powers. If the Financial Choice Act were the law of the United States from 2012 to 2016, how would the CFPB’s enforcement track record have changed? Drawing upon pleadings, consent orders, settlement agreements, press releases, and other public documents, this Article presents an empirical study of every publicly announced CFPB enforcement case to determine what law enforcement cases and awards would have been eliminated had the bill been law. Among the study’s findings, had the Financial Choice Act had been adopted in 2012 it would have eliminated:
• Over 91 percent of consumer restitution for illegal home mortgage lending practices, amounting to $2.7 billion dollars;
• Over 94 percent of consumer restitution for illegal credit card practices amounting to $6.8 billion dollars; and
• Every single case addressing illegal practices in the “payday” and car title lending industry. 
The study concludes that the Financial Choice Act of 2017 will, if enacted, seriously weaken the CFPB’s law enforcement program.

Senate Confirms Former Banker Otting to Be Comptroller of the Currency,

The Hill has a story here. Excerpt:

Otting was the president and CEO of OneWest Bank, where he worked with Treasury Secretary Steven Mnuchin, and a vice chairman at U.S. Bancorp before that. He presided over hundreds of thousands of foreclosures at OneWest Bank, which has been investigated for multiple federal and state housing violations.

* * *

As OneWest president, Otting signed a settlement with federal regulators who accused the bank of automatically signing foreclosure papers without reviewing them properly, called “robo-signing.”

Otting claimed that OneWest didn’t robo-sign documents but that he had to sign the consent order to save the business and his employees. 

Trump considers vocal CFPB opponent as interim head of CFPB

Bloomberg reports:

Mick Mulvaney once called the Consumer Financial Protection Bureau “a sad, sick joke.” Now, he may get to oversee Elizabeth Warren’s favorite regulator.

Mulvaney, President Donald Trump’s Office of Management and Budget director, is being considered for a temporary role as interim director of the consumer watchdog after Richard Cordray steps down later this month, according to two people familiar with the matter. Mulvaney would be expected to name someone else or a team of people to run the CFPB on a day-to-day-basis so he could keep his focus on OMB, said one of the people.

 

The goal is to hit the ground running in overhauling an agency that some Republicans have called corrupt, and that GOP lawmakers widely blame for burdening lenders with unnecessary red tape. It could be months before Trump nominates a permanent CFPB director and his selection is confirmed by the Senate.

 

The full story is here.

Seventh Circuit decision on American Pipe tolling

The Seventh Circuit today decided Collins v. Village of Palatine about when class-action tolling under the American Pipe doctrine stops. Here's the court's answer: 

When a plaintiff files a complaint on behalf of a proposed class, the statute of limitations for the claim is tolled for each member of the class. Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 550 (1974). The tolling continues until the case is “stripped of its character as a class action.” United Airlines, Inc. v. McDonald, 432 U.S. 385, 393 (1977) (quoting FED. R. CIV. P. 23 advisory committee’s note to 1966 amendment). This “stripping” occurs immediately when a district judge denies class certification, dismisses the case for lack of subject-matter jurisdiction without deciding the class-certification question, or otherwise dismisses the case without prejudice. The question before us is whether a dismissal with prejudice also strips a case of its class-action character. The district court concluded that it does. We agree and adopt a simple and uniform rule: Tolling stops immediately when a class-action suit is dismissed—with or without prejudice—before the class is certified.

Who Will Trump Nominate to Head the CFPB?

by Jeff Sovern

Several names have surfaced. Both the NY Times and the Wall Street Journal have mentioned the possibility of George Mason Law professor Todd Zywicki.  The American Banker has a slide show of potential directors here (free content). I fear the nominee will be someone who believes that consumer protection largely consists of depending on the free market, which failed so miserably in the many recent consumer scandals, including Wells Fargo, Equifax, robosigning, and of course, the subprime mortgage disaster that led to the Great Recession.

More coverage of Cordray stepping down as director of CFPB

The Washington Post reports on Richard Cordray's apparently imminent resignation from the CFPB, here.

More Sad News for Consumers: CFPB Director Cordray Told Staff He Will Step Down by the End of the Month

So reports Evan Weinberger at Law360.com.

Uber sued in consumer-protection class action for failing to protect customers from sexual assaults by its drivers

The complaint makes class claims under California's consumer protection laws and for assault and battery. The beginning of the complaint provides an overview:

        I. Uber will stop at no lengths to make a profit.

2. Since Uber launched in 2010, thousands of female passengers have endured unlawful conduct by their Uber drivers including rape, sexual assault, physical violence an gender-motivated harassment. Recently, the number of reported sexual assaults and rapes of female passengers by male Uber drivers has sky-rocketed.

3. On notice of the magnitude of the number of passengers who have experienced sexual harassment and gender-based violence, Uber should have made drastic changes to the way that it screens and monitors drivers, as well as advancing safety measures on its app and in vehicles, and disclosed the truth to consumers about its insurance coverage during rides.

4. Instead, over the last seven years, Uber has done everything possible to continue using low-cost, woefully inadequate background checks on drivers and has failed to monitor drivers for any violent or inappropriate conduct after they are hired. Nothing meaningful has  been done to make rides safer for passengers - especially women. 

5. This is no longer an issue of "rogue" drivers who act unlawfully. Uber has created a system for bad actors to gain access to vulnerable victims. Specifically, drivers have the means and opportunity to veer off route without detection, trap passengers inside the vehicles and commit physical and sexual violence without witnesses.