In seven short years, the Consumer Financial Protection Bureau (CFPB) has managed to court controversy across the political spectrum. Under the leadership of former Director Richard Cordray, the bureau (for better or worse) tested the limits of its jurisdiction and enforcement power in a wide range of areas, including the Home Mortgage Disclosure Act and Equal Credit Opportunity Act, student loan servicing, and let’s not forget the since-disavowed arbitration rule. Enter new Acting Director Mick Mulvaney, who, along with the rest of the Trump administration, is sending the clearest of signals that he does not intend to “push the envelope” at the CFPB. In short, the CFPB’s mission has turned inward—instead of policing the markets, it’s policing itself and the regulatory state, and with about the same degree of fervor.
Dodd-Frank gives the CFPB nearly unfettered power. Unlike nearly every other executive agency, CFPB is led by a single Director that serves a 5-year term (staggered to avoid presidential election drama) and is removable by the President only “for cause”—a standard which requires some showing of “inefficiency, neglect of duty, or malfeasance in office.” Moreover, this agency’s funding is appropriated directly from the Federal Reserve, circumventing Congress and its prized “power of the purse.” In other words, without having to fear removal or lack of funds, the Director can do what he or she darn-well pleases.
There have been repeated efforts by the republican advocacy groups to hobble this agency, but now, thanks to the D.C. Circuit, the CFPB is not going away anytime soon. Recently, in PHH Corp. v. CFPB, the en banc D.C. Circuit upheld the expansive power of the CFPB’s Director. While the relevant precedent is that the President has to have some power over those who discharge the duties of the office over which he or she presides, the D.C. Circuit saw no constitutional problem and upheld the bureau’s for-cause removal restriction.
Still, the Court did not award the CFPB an unmitigated victory. The actual issue in this case arose from the CFPB’s embrace of a novel interpretation of a provision of the Real Estate Settlement Procedures Act of 1974 (RESPA) in an underlying administrative proceeding, which the Court reversed without discussion. The Court’s slap on the hand emphasized that significant policy changes need to follow notice-and-comment procedures, and must be open to public input, to the same extent as any other agency. Dear Colleague letters just won’t cut it anymore. The (in)famous Chevron doctrine deference to agencies’ interpretations of statutes within its administrative authority has limits; it’s no blank check to rewrite an established rule.
Since PHH decided not to appeal, the CFPB has emerged victorious (albeit with a warning). On paper, the bureau still wields an enormous amount of power and an ambitious Director still has the unilateral authority to enact sweeping change.
But what happens now that one of the CFPB’s biggest critics is steering the ship? Apparently, the ship changes course. Since Acting Director Mulvaney took office, the CFPB amended its mission statement to put the identification of “outdated, unnecessary, or unduly burdensome regulations…” at the top of its list (the TRID “black hole,” for example). The CFPB has issued nine—yes, nine—separate “requests for information” soliciting public feedback on every aspect of its charter, presumably laying the groundwork for significant rollbacks. In January, the CFPB dropped an enforcement action against certain payday lenders, and announced its intent to consider a rollback of the Obama administration’s assertive payday lending regulations. The CFPB just settled an enforcement action for a record $1 billion, but that’s about the only glimpse of the old CFPB we’ve seen in a while. Reports are that the bureau has not been particularly fired up about continuing its investigation into the Equifax data breach, and under Mulvaney’s leadership, disapproved of Cordray’s arbitration rule. Just a few weeks ago, Mulvaney proposed that Congress exercise stricter oversight of the CFPB. He made the same request shortly after before Congress, and when pressed on his bureau’s reticent enforcement, he defended himself by noting that, hey, at least he hadn’t “burnt the place down.”
Now that the dust has (mostly) settled in the D.C. Circuit, the interesting question is no longer what the CFPB can do—but what it wants to do.