Under new management: CFPB
Credit unions and banks are wondering how new leadership will remold the agency
WITH LEADERSHIP OF THE CONsumer Financial Protection Bureau resolved by a federal court, the financial services industry is eager to find out what interim head Mick Mulvaney plans to do once he gets a handle on the agency.
Mulvaney, who is also the director of the Office of Management and Budget, has pledged to change direction at the CFPB, focusing less on new rules and more on easing access to credit.
He has already instituted a 30-day hiring and policymaking freeze and is reviewing all rules and guidance, as well as pending enforcement actions and investigations. Though he has acknowledged that some final rules like the small-dollar payday lending rule are beyond his authority to change in the short-term, many in the industry believe otherwise and are gearing up to encourage him to change effective dates and reopen old rulemakings.
Following are five key questions now that Mulvaney is solidly in charge:
1) Is Mulvaney going to be a figurehead and leave the day-to-day operations to someone else?
Mulvaney told reporters this week
that he would split his time between CFPB and OMB, working six days a week until President Trump can nominate a permanent successor who is confirmed by the Senate.
But many observers believe he will hand the reins of day-to-day operations to a trusted lieutenant, given the fact that the Trump administration is facing a looming potential government shutdown. Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi canceled a planned meeting with President Trump on Tuesday after the president said on Twitter that a budget deal was unlikely to happen. The two sides have until Dec. 9 to agree to a plan.
2) Is the top management at the CFPB now working on borrowed time?
Just as Secretary of State Rex Tillerson has announced plans to cut his agency by at least 30% and Scott Pruitt, the head of the Environmental Protection Agency, has reassigned scientists and academics at the EPA, so too is Mulvaney expected to take the ax to what he considers a bloated bureaucracy.
No one is expected to be fired on the spot, said one former top CFPB official. More likely, Mulvaney or his lieutenants will sit down with managers and explain that they can keep their jobs if they are on board with the new regime, or be reassigned and stripped of their portfolio of duties.
3) Will the CFPB reopen the payday rule?
Though Mulvaney has said he cannot change rules that have already been finalized, he could change the effective date of a rule or reopen it for public comment. Some expect that will happen with the recently finished small-dollar lending rule, which has a 20-month lead time before it goes into effect.
Mulvaney may also urge lawmakers to repeal the rule, which is expected to upend the payday lending business—but the politics will be tricky.
4) Will the CFPB delay implementation of the Home Mortgage Disclosure Act rules?
The Dodd-frank Act required the mortgage industry to collect and report certain data on every mortgage including the ethnicity, race and sex of potential borrowers. The mortgage industry has spent years modernizing systems to meet a January 2018 deadline for new Home Mortgage Disclosure Act reporting.
That is unlikely to change, but lenders are also concerned about the CFPB’S plans to make the vast majority of HMDA data public, beginning in 2019 (aggregate data is already public, but this would go further). That is one area ripe for change.
5) What’s the plan for the CFPB’S proposals on debt collection?
In 2013, the CFPB began work to fix abuses in the debt collection market after widespread complaints by consumers.
Due to issues in the governing statutes, the CFPB split its plan into two parts: one governing first-party and the other handling third-party debt collectors.
Of the two plans, only the latter has made the light of day and has drawn much criticism. Indeed, since responding to some of that criticism back in June by dropping a provision that would have made third-party debt collectors responsible for the accuracy of information on consumer debts the agency has been mum.
“I was just learning about the powers that I have as acting [CFPB] director — they would frighten most of you,” said OMB Director Mick Mulvaney.