Consumer Law & Policy Blog

Mulvaney's Calendar is Mostly Empty of CFPB Items: "Enforcement Deep Dive" Takes Only an Hour

by Jeff Sovern

The CFPB has posted online Interim Director Mulvaney's calendar for December and January. I can't tell how complete it is, but it has only a fraction of the number of items that former Director Cordray's calendar (also online at the same site) had for the months I randomly selected. Either Mulvaney is doing many fewer things or he is less forthcoming about his activities. I know it's only a part-time gig for him, but this looks like he's working part-time at being part-time.  My favorite item was on December 12 from 1:00 to 2:00: Enforcement Deep Dive.  If a deep dive takes an hour, I would love to know how much time a shallow dive would require. No wonder the Bureau hasn't announced any new enforcement actions. Some blocks of time are labelled CFPB without more information, so it's impossible to tell whether he also attended to enforcement matters during those blocks.  But if all the time he devotes to the CFPB is reflected on this calendar, it is hard to believe he is taking much time to learn about the Bureau or consumer protection. This looks like the calendar of a person who doesn't bother to learn what he's deciding about, which may be part of a pattern.

Zywicki vs. TransUnion

by Jeff Sovern

On Monday, I posted a link to Todd Zywicki's WSJ op-ed in which he accused Cordray's CFPB of pummeling consumers and wrote that "The pain was especially acute for low- and middle-income consumers who lost access to credit cards, faced higher bank fees and reduced access to free checking, and found it harder and costlier to obtain mortgages, especially as first-time homebuyers." It is interesting to contrast Zywicki's view with TransUnion's report yesterday that Consumer Credit Market Concludes 2017 on a High Note which explains that the consumer credit market is seeing a "strong performance across multiple credit products. * * * most indicators point to a healthy credit market * * *." TransUnion reports that auto loans, credit card loans, mortgages, and personal loans are all up by 2.5% to 7.5%. Of course, many factors contribute to increased borrowing, and we can't know what would have happened if there had been no CFPB. TransUnion was speaking about the consumer credit market generally while Zywicki was focused more on low- and middle-income borrowers. Still, the picture Zwyicki painted is very different from the TransUnion's findings.  

 

CFPB Not Hiring for Honors Attorney Program This Year Under Any Name

by Jeff Sovern

A student forwarded me the following email (I've omitted identifying information to protect the student's confidentiality):

Good afternoon,

Thank you for your interest in the CFPB’s Honors Attorney Program.  Unfortunately we will not be extending offers for the program this year.

Please keep the Bureau in mind as you plan your future career.

Thank you,

Ryan Pond

Student Programs Manager

Office of Human Capital

Up until December, the CFPB operated the Louis D. Brandeis Honors Attorney Program. On December 19, the Bureau announced that it was changing the name of the program to the Joseph Story Honors Attorney Program. The Bureau's December 19 announcement states:

We hope that Associate Justice Joseph Story’s legacy will inspire our new honors attorneys as we work to enforce federal consumer financial laws for the benefit of American consumers and realize the Founders’ vision for our Republic.

The student had applied for a job in the Story program and received the email quoted above. It looks like there won't be any new honors attorneys under any name to be inspired by Justice Story's legacy this year, which makes sense as it also appears the Bureau won't be enforcing federal consumer financial laws this year--at least judging by the fact that the Bureau still hasn't announced any new enforcement actions since Mr. Mulvaney took over. Speaking of announcements, I can't find any on the CFPB's web site to the effect that it is not hiring for the program this year, which makes me wonder what else the Bureau is doing that hasn't been made public. I also wonder if the Bureau is going to have an honors attorney program going forward. But then we know that if Mr. Mulvaney had his way,we wouldn't have a CFPB going forward either.

 

Todd Zywicki: Cordray's CFPB "Pummeled" Consumers

by Jeff Sovern

George Mason's Todd Zywicki has an op-ed in the WSJ, The CFPB Could Be a Force for Good, in which he lays out his vision for what the CFPB should do and attacks what it did under Cordray. Zywicki is the only academic whose name has been bruited about as a potential Trump appointee to be the next director. It's hard to know what this essay signifies as to Zywicki's prospects to lead the CFPB: it could be an attempt to drum up support for Zywicki's candidacy, or conversely, as candidates for such positions are often urged to lie low until after confirmation, it could mean that Zwyicki has concluded he will not be the director and is offering suggestions for what the next director and the interim director should do. While the op-ed makes many claims, it does not link to any sources to substantiate them. Here is an excerpt:

During Richard Cordray’s tenure as director of the Consumer Financial Protection Bureau, the CFPB pummeled American consumers and the economy while doing little to promote financial stability. The pain was especially acute for low- and middle-income consumers who lost access to credit cards, faced higher bank fees and reduced access to free checking, and found it harder and costlier to obtain mortgages, especially as first-time homebuyers. * * *

* * * 

American families know better than bureaucrats what financial products best meet their needs. One justification for the CFPB’s broad scope of authority was to enable it to oversee the entire consumer-credit ecosystem and break down the traditional regulatory silos that focus on who issues financial products instead of how consumers use them. The CFPB should concentrate its efforts on empowering families instead of banning products or using trendy behavioral-economics theories to “nudge consumers toward decisions central planners favor. * * * 

Mr. Cordray’s CFPB viewed consumers as too dumb, irrational or vulnerable to make their own decisions about whether to enter into a contract with an arbitration clause, take out a payday loan, or bargain with a car dealer over an auto loan. * * * 

 

Sixth Circuit holds that bare allegation of FDCPA statutory violation is not an Article III injury under Spokeo

In today's decision in Hagy v. Demers & Adams, the Sixth Circuit held that a bare allegation that a debt collector's letter that fails to say it's "from a debt collector" as required by the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e(11), is not an article III injury under the Supreme Court's decision in Spokeo v. Robins.

Judge Jeffrey Sutton says that, in ditching the case, he's rejecting the "anything-hurts-so-long-as-Congress-says-it-hurts" theory of article III injury. 

Nelson/Wright Article Applies CBA to State Unfairness Cases

Elise M. Nelson of Freshfields Bruckhaus and Joshua D. Wright of George Mason have written Judicial Cost-Benefit Analysis Meets Economics: Evidence from State Unfair and Deceptive Practices Laws, 81 Antitrust Law Journal (2017). Here is the abstract:

Section 5 of the Federal Trade Commission Act (FTC Act) prohibits "unfair or deceptive acts or practices in or affecting commerce." State statutes prohibiting unfair and deceptive acts and practices (UDAPs) often mirror Section 5 of the FTC or include harmonization provisions instructing courts to interpret and apply the state UDAP in a manner consistent with the FTC Act. It is well documented that courts applying state UDAPs have nevertheless frequently interpreted them in a manner inconsistent with the FTC Act. We highlight a different schism in unfairness analysis: the role of economic analysis. Specifically, we identify and examine differences between the application of the simple cost-benefit approach adopted by the FTC in the Unfairness Policy Statement and codified by Congress in Section 5(n) of the FTC Act, and the approach used by courts to resolve state UDAP claims. We assigned expert consumer protection economists to a "Shadow Commission" to evaluate a sample of state UDAP unfairness claims applying the simple FTC cost-benefit standard. Our results suggest there is little or no economic analysis at work in evaluating state UDAP claims, raise important questions about the efficacy of state UDAP unfairness enforcement, and identify a potential role for the FTC in guiding improved state UDAP enforcement.

Am. Banker: Mulvaney looks to neuter CFPB’s most potent weapon

Here, by Kate Berry (behind a paywall). The most potent weapon is, of course, the Bureau's UDAAP powers. Excerpt:

[The Bureau's] vision statement unveiled as part of the new strategic plan dropped any reference to so-called UDAAP claims, suggesting that the agency will not use the Dodd-Frank authority as the same kind of blunt enforcement tool that resulted in scores of fines under Cordray. * * *

* * *

The CFPB's reliance on UDAAP in recent years is important because more than 90% of the $12 billion in consumer relief awarded by the CFPB came in cases in which the bureau uncovered evidence of deception, according to data through 2015.

Mulvaney Was Actually Obliged to Issue the Strategic Plan

by Jeff Sovern

In a blog post Tuesday, I asked Am I the only one who thinks it's weird for a temporary and part-time CFPB director to create a five-year strategic plan? But as Barbara S. Mishkin pointed out in the Consumer Finance Monitor, the CFPB is obliged to issue a strategic plan this month by statute--which means it wasn't weird at all. I also should have noted that Mr. Cordray's strategic plan was only a draft (though the Bureau did issue a strategic plan in 2013). I apologize for my error and thank Ms. Mishkin for pointing it out.

"The CFPB’s Declaration of Dependence"

ProPublica has an article about the Consumer Financial Protection Bureau today. Here is the lead:

Born as a fiercely independent agency meant to protect citizens, the Consumer Financial Protection Bureau has quickly been subsumed into the Trump administration. Banks, student-loan agencies and payday lenders are the winners.

The full article is here.

Cordray op-ed: "The Trump administration is trying to undermine the CFPB. It will fail."

Former Director of the Consumer Financial Protection Bureau Richard Cordray has an op-ed in the Washington Post today, expressing concerns about the agency's current path:

The CFPB was designed to serve as a tough and independent watchdog for consumers. Yet Trump and White House budget director Mick Mulvaney, the bureau’s putative acting head, have bullied the CFPB and put their thumbs firmly on the scale in favor of the predators — the same lenders who for years had strong influence in Washington, powered by armies of lobbyists and a torrent of campaign contributions.

The full op-ed is here.