Consumer Law & Policy Blog

House to Vote on Senate Bill Amending Dodd-Frank and Senate Agrees to Take Up House Bills

by Jeff Sovern

It sounds like the House will vote on, and presumably pass, the Senate bill as is. In return, the Senate will take up certain as-yet-unidentified House bills that passed by a margin of at least two-thirds, meaning that at least some Democrats voted for them.  It's not clear, but it looks like the CFPB structure will be unaffected, though the Senate bill is a net negative for consumers. The Hill has a report here.

Impact of House Vote to Rescind CFPB Indirect Auto Guidance Remains Unclear

Joseph Lawler reports in the Washington Examiner. Excerpt:

[T]he resolution passed Tuesday raises a tricky legal question regarding what it means for Congress to disapprove of informal guidance that an agency sends to businesses. When Congress disapproves of a rule enforced by an agency, the meaning is clear: The agency is not allowed to enforce the rule any more. But when it disapproves of guidance relating to an underlying law, the intent is murkier.

* * * 

“In the longer term, if the bureau gets leadership that wants to enforce the underlying law, I still doubt that it changes enforcement because the CRA does not say anything about enforcement,” noted Jeff Sovern, a law professor at St. John’s University, “but rather only prohibits disapproved rules from taking effect and bars the agency from issuing rules that are substantially the same.”

* * * 

Christopher Willis, a partner with the [Ballard Spahr] firm, argued that congressional disapproval meant that Congress has ruled out the legal theory the CFPB was using — that lenders could be held liable for loans arranged by auto dealers for which minorities were thought to be disproportionately overcharged.

* * * 

“The disapproval has to mean something,” he added.

The president is expected to sign the resolution.

"White House looks to extend Mulvaney's CFPB tenure"

American Banker reports that the "White House is dragging out the nomination of a permanent director for the Consumer Financial Protection Bureau to ensure that acting CFPB Director Mick Mulvaney calls the shots at the agency until the end of the year or longer."

President Trump is expected to name J. Mark McWatters, the chairman of the National Credit Union Administration, as his CFPB nominee close to June 22, according to sources familiar with the situation.

McWatters' nomination has long been rumored, but waiting until late June would also maximize the tenure of Mulvaney, who has moved aggressively to reshape the agency. Under the Federal Vacancies Reform Act, Mulvaney can only serve for six months — a deadline up in late June — unless a permanent successor is nominated. Once that nomination is made, however, the acting appointee can stay in office as long as it is pending, a period that could extend for months.

The full story is here.

Companies with the most complaints in CFPB database were Mulvaney donors

Eight of the 10 financial institutions that are the subjects of the most complaints in the Consumer Financial Protection Bureau public database contributed to acting Director Mick Mulvaney while he was in Congress, according to an analysis published today by Public Citizen.

Since 2012, the CFPB has maintained the publicly available database of consumer complaints against fraud, abuses and scams by financial institution. 

Mulvaney recently suggested that he is considering making the CFPB database non-public.

House Expected to Vote on CFPB Indirect Auto Guidance Tuesday

Adam Levitin has written about what this means--or doesn't mean--at Credit Slips.

Wells Fargo settles securities fraud class action

The Wall Street Journal reports: "Wells Fargo said Friday it reached a $480 million preliminary settlement agreement in a securities fraud class-action suit. The settlement comes at a difficult time for Wells Fargo, which is dealing with multiple investigations and settlements. The problems kicked off in September 2016 when its sales-practices scandal erupted, and the bank later disclosed it opened up to 3.5 million sham retail banking customer accounts."

The full article is here.

Lazarus Slams Senate Bill for Preempting Stronger State Credit Freeze Laws

Here, in the LA Times.  The headline reads White House-backed bill purports to strengthen consumer protection. It does the opposite.  Excerpt:

California's credit-freeze law, for example, says no one can access your credit file if a freeze is in place, including a potential employer performing a background check or an insurance company.

The new federal bill, however, stipulates that even if you freeze your credit file, its contents still could be accessed by "any person using the information for employment, tenant or background screening purposes" and "any person using the information in connection with the underwriting of insurance."

That obviously means more business for the credit agencies, freeze or no freeze.

"At the end of the day, this is a bill that benefits the big three credit agencies,"[U.S. Public Interest Research Group consumer campaign director Mike]  Litt said.

Is Mulvaney Trying to Get CFPB Employees to Quit?

by Jeff Sovern

During the House Financial Services Committee hearing in which the Committee heard from CFPB Acting Director Mick Mulvaney, there was some discussion about how the number of CFPB staffers had barely gone down under Mr. Mulvaney's leadership--it was said that the number of CFPB employees had declined by something like ten--and that it is difficult to shrink the staff. Bloomberg is reporting that Mulvaney is considering several plans to cut costs, including moving some jobs to the basement or Dallas, Texas, and forcing staffers to share desks. It may be that Mulvaney's intent is simply to save taxpayers money (though not all members of the Trump administration seem to share that goal).  But given that Mulvaney has been open in his opposition to the agency, it is natural to wonder if he is trying to achieve indirectly something he cannot easily accomplish directly. Presumably, employees whose jobs are moved to Texas and are not able to move themselves (e.g., because of a spouse who works in the Washington area and whose job is not portable) would leave the Bureau. Employees forced to share desks or work in a basement might prefer to pursue other opportunities as well. On the other hand, another possibility mentioned in the Bloomberg article is to permit employees to work from home, which might make Bureau jobs even more attractive. It will be interesting to see which, if any, of these options Mulvaney chooses.

House Could Vote on Senate Dodd-Frank Amendments as Soon as This Month

by Jeff Sovern

It remains unclear whether the House would simply pass the Senate bill (which seems more likely after recent remarks by House Financial Services Chair Hensarling) or whether the two chambers will negotiate changes, but Reuters reports here that House majority leader McCarthy has said the House vote could come this month.  The Senate bill does not change the CFPB but does facilitate discriminatory lending.

FTC and FDA act against companies marketing nicotine products that resemble children’s juice boxes, candy, and cookies

The Federal Trade Commission and the Food and Drug Administration today jointly issued 13 warning letters to manufacturers, distributors, and retailers for selling e-liquids used in e-cigarettes with labeling and/or advertising that resemble kid-friendly food products, such as juice boxes, candies, or cookies, some of them with cartoon-like imagery. Several of the companies receiving warning letters also were cited for illegally selling the products to minors.

The FTC's press release is here.