Consumer Law & Policy Blog

Am. Banker: CFPB on Collision Course with Trump's Justice Department

Here.  Excerpt:

* * * Title X of the Dodd-Frank Act * * * gives the agency explicit authority to pursue its own litigation up to and including the Circuit Court level. But when it comes to the Supreme Court, the law says the CFPB must first file a written request to the U.S. Attorney General within a specified timeframe and that the "Attorney General concurs with such request or fails to take action within 60 days of the request."

But Sen. Jeff Sessions, R-Ala., Trump's pick for attorney general, could conceivably withhold such concurrence. That would mean the Trump administration effectively blocks the CFPB's decision to appeal to the Supreme Court.

This leaves CFPB with relatively few scenarios to prevail in the PHH v CFPB case. The agency has requested an en banc rehearing of the matter before all sitting justices on the D.C Circuit, and if either that request for rehearing is denied or is granted and the panel upholds the earlier ruling, the Justice Department could prevent the CFPB from appealing the case further. * * *

But if the CFPB prevails en banc, * * * presumably PHH would appeal to the Supreme Court * * * if the high court did grant cert and heard the case, Ohio State University law professor Peter Shane said, the court would likely assign an amicus defendant to stand in the government's place if it decides it does not want to defend its side of the case.

Amicus Briefs Filed in PHH Case Support CFPB

Ten leading consumer protection organizations have one here, with blog co-coordinator Deepak Gupta as lead counsel, while current and former members of Congress, including Senator Elizabeth Warren and former Congressman Barney Frank, have another one here.

Trump Names Point Man on CFPB Who Opposes Regulation, Supports ALEC

by Jeff Sovern

President-Elect Trump has named former SEC Commissioner Paul Atkins his "landing team" member for the CFPB, among other federal agencies.  Atkins has a history of opposing regulation and supporting business.  Politico has a piece about him titled Trump team member slams unions, activists in favor of businesses. Excerpt:

“While Paul is in some ways more of an establishment Republican, I would put him in the free-market category,” said Thaya Brook Knight, an official at the Cato Institute, a libertarian-leaning think tank. * * *

As for whether Atkins would return to government for Trump, Knight said “it is customary” for transition team people to end up in a president’s administration.

Others are not as thrilled at that prospect.

“Tick down the list of issues we care about and you will typically find him on the other side,” said Lisa Gilbert, an official with Public Citizen, a liberal advocacy group.

“We are nervous about what his placement in the transition means,” Gilbert said. * * *

He has spoken in favor of the American Legislative Exchange Council, the controversial, Koch brothers-backed group that has pushed for voter ID laws and “stand your ground” statutes in many states. * * *

“ALEC is a great organization,” Atkins said at the July 3, 2012, Heritage Foundation event, according to an audio recording available online.

For more on ALEC's position on consumer protection laws, go here.  This does not bode well for consumer protection.

WSJ: Trump Transition Team Considering Killing CFPB

by Jeff Sovern

The Journal's editorial, behind a paywall, is here.  Excerpt:

By all rights the [Consumer Financial Protection] bureau should be killed, and we’re told the Trump transition team is considering this and other options. The political problem is that killing the bureau would probably require 60 Senate votes, and Democrats would be able to portray themselves as defending “consumer protection,” which sounds better than it has turned out. * * *

* * *

Mr. Trump should dismiss Mr. Cordray on his first day as President . . . .

* * *

These abuses can be eliminated with a new director, but Congress should move to restrain the bureau further. One idea would be to put it under the Treasury, like the IRS and Comptroller of the Currency, to make it more accountable to elected officials. It’s also crucial to make the agency subject to annual discretionary appropriations so it must compete with other priorities. * * *

The editorial never mentions that the Bureau has obtained $11.7 billion in relief for more than 27 million consumers, or the CFPB's role in connection with the unauthorized Wells Fargo accounts, or the many other positive things the Bureau has done. 

 

DC Circuit Orders PHH to Respond to CFPB's Petition for Rehearning En Banc, Invites Solicitor General to Comment

So reports my fellow blogger Deepak Gupta on Twitter.  This is in the PHH case in which the panel ruled that the CFPB was unconstitutional unless the President could fire the Bureau's director without cause.  The response is due in early December, well before the shift in administrations. 

Debt Collection Journalist Jake Halpern Asks in the Times: Will Guys With Guns Replace the Agency Elizabeth Warren Created?

Here (behind paywall).  Excerpt:

Brandon Wilson is a former armed robber who, after serving roughly a decade in prison, reinvented himself as a successful debt broker. * * *

* * * [Wilson]  explained it: “Part of the package you get of being my business associate or my friend is that I’m gonna protect you from the sharks.”

* * *

* * * On one occasion, Mr. Wilson rounded up a posse of armed men, drove to Buffalo, tracked down a stolen file of debts, and retrieved it — at gunpoint.  * * *

* * *

If the [Dodd-Frank] law is repealed, it could mean the end of the consumer [Financial] protection bureau. Even if Mr. Trump doesn’t disband the agency, he could simply hobble it by replacing its director, Richard Cordray, with someone who is content to let the market regulate itself. If that happens, one of the few recourses that honest debt buyers will have, to protect themselves and their businesses, will be to hire a savvy fixer like Brandon Wilson.

A few days ago, I called Mr. Wilson to see how he was doing. “There’ll be less intrusion from the government, more lending, and more defaults — which creates more business for collectors,” he said. That means Mr. Wilson’s services will be in high demand once again. He concluded, “We’re back in business.”

Could a President Trump Fire CFPB Director Cordray on Day One Even While the PHH Suit is Pending?

Aditya Bamzai of Virginia argues that he could here.  Excerpt:

[The] premise [that the president has to let the litigation runs its course] appears to rest on two mistaken assumptions: (1) that the President cannot exercise his removal authority absent an Article III judgment authorizing such removal, especially when a pending case may address the very same legal question; and (2) that the CFPB Director could resist a presidential order to vacate his office. Neither assumption is correct. If the Executive Branch determines that the statute restricting the CFPB Director’s removal is unconstitutional, the President can remove Mr. Cordray before the D.C. Circuit resolves the appeal and before any judgment becomes final.

First, the President has the authority to remove the CFPB Director absent a court decision and, therefore, before the PHH litigation runs its course. This authority follows logically from the principle that the Executive Branch may assess the constitutionality of a statute, and then act on its assessment without preexisting judicial imprimatur. * * *

* * *

Second, in prior scenarios where the President has exercised the removal power, the officer has been unable to resist the order, but rather vacated his office and then challenged the legality of the removal through a personal lawsuit. * * *

Will the CFPB Issue the Arbitration Rule Soon?

That's one of the questions addressed by the Wall Street Journal in an article headlined Financial Regulators Scramble to Complete Postcrisis Rules. (behind paywall). Excerpt:

“This type of ’midnight rulemaking’ is neither conducive to sound policy nor consistent with principles of democratic accountability,” Texas Rep. Jeb Hensarling, chairman of the House Financial Services Committee, told SEC Chairman Mary Jo White at a Nov. 15 hearing.

* * *

Regulators deny they are rushing to finish initiatives ahead of the transfer of power and say they are merely working through their normal process to finish rules that were targeted for completion this year.

* * *

After rules are published, it can be time-consuming for future administrations to try to unravel them. They have to follow the Administrative Procedure Act, which requires an extensive public-comment process, and changes may be subject to legal challenge. Republican lawmakers are now talking about dusting off the little-used Congressional Review Act, which would allow them to try to uproot any regulation completed after May 2016 if they can get a majority vote in each chamber on the question before mid-2017.

At the Consumer Financial Protection Bureau, Richard Cordray, the agency’s director, has instructed staff to continue moving ahead with rulemaking at its current rapid pace,according to people familiar with the situation. That means the CFPB will try to complete its major pending rules, particularly the proposal to restrict arbitration clauses in consumer financial contracts.

* * *

[T]he CFPB may run out of time to complete rules designed to rein in the high interest, small-dollar payday lenders that cater to about 12 million Americans.

 

LA Times's David Lazarus on the Threat the CFPB Faces in December

by Jeff Sovern

The column is titled The future isn't bright for highly successful consumer watchdog. Excerpt:

A stopgap government funding bill passed in September will expire Dec. 9. It’s widely expected that conservative members of Congress will include language in follow-up funding legislation that would change how the bureau operates and the scope of its authority over financial institutions.

* * *

The business community says the CFPB has too much power. Most consumers would probably counter that if businesses kept their noses clean, there’d be no need for such an agency.

“Dodd-Frank and specifically the bureau have been incredibly cost-effective,” said Sally Greenberg, executive director of the National Consumers League. “They have delivered billions of dollars wrongfully taken from consumers.”

President Obama could veto such a bill while he remains in office. But obviously that isn't going to happen to bills passed after January 20.

CFPB Petitions DC Circuit for Rehearing En Banc of PHH Case Holding CFPB Structure Unconstitutional

PHH was the case that held that the CFPB's structure is unconstitutional and that the remedy was to provide that the CFPB director could be fired without cause.   The petition is here.  It describes that case as "what may be the most important separation-of-powers case in a generation." National Law Journal coverage (behind paywall) here.  Excerpt:

Trump will be powerless on Jan. 20, when he takes office, to remove Cordray without cause. The challenge to the panel ruling could run for months, if not more than a year. Until then, the panel decision’s ruling against the CFPB cannot be enforced.