The ARM, debt collection industry and other media have had a lot to say about the future of the CFPB under Trump’s administration, both before and after the inauguration. In this blog, The National List has compiled some of these forecasts and comments with links to the complete article. But first…
A Brief History of the CFPB
The CFPB was created as part of the 2010 Democratic-sponsored Dodd-Frank financial reforms, with the intent of serving as a watchdog to halt abusive and predatory practices of banks, credit-card companies and others. It has taken numerous actions to tamp down on credit practices of banks, auto lenders and others. The Dodd-Frank Act Wall Street Reform and Consumer Protection Act gives the CFPB jurisdiction over regulating consumers’ rights to access their financial records and provides consumers that access to their financial account information. The CFPB is specifically seeking information on consumer choice, security and consumer control related to their financial records through the RFI.
What will happen to the CFPB under Trump? Since the day it was created, Republicans have talked about dismantling or defanging the Consumer Financial Protection Bureau (CFPB). On the campaign trail, Trump said he would work to repeal the Dodd-Frank law. His specific views on dismantling the CFPB are unknown, but he’s made little secret about his distaste for Elizabeth Warren, its creator. With the surprise election of Donald Trump as the next president, and continued Republican control of Congress, the GOP will certainly have that chance. It won’t be easy, however. Changing the CFPB’s policy-based statute, unlike Obamacare … is subject to a 60-vote filibuster in the Senate. That’s the main hurdle. But there will be plenty of ways to chip away at the bureau’s power via legislative maneuvering.
Barney Frank, one half of the architect behind the Dodd-Frank Wall Street Reform and Consumer Protection Act that led to the creation of the CFPB, shared his thoughts on President-elect Trump’s campaign promise to repeal the legislation. Frank said it’s impossible to discern at this point what Trump intends to do, because he has at various times talked about both cracking down on Wall Street and wiping out existing regulations for banks and investment firms. “There’s a certain incoherence in his approach,” Frank said in a telephone interview. “I don’t know. … I don’t think he does. How can I know more than he does about his intentions?” Frank, the former chairman of the House Financial Services Committee, suggested that it’s possible after Trump has had time to examine Dodd-Frank in more detail, he might recognize the value of its various consumer protections.
On October 11, 2016, the Court of Appeals ruled that the CFPB’s single director structure was unconstitutional. The CFPB is seeking a rehearing. Since the outcome of the November 8th elections, speculation on the potential removal of CFPB Director Richard Cordray by President-elect Trump has been rampant. Additionally, debt collection rulemaking may be slowed and influenced by a different Director. Republicans want to make sweeping changes to the Dodd-Frank Act that created the CFPB. Democrats would like to preserve the CFPB as it presently exists. Making significant changes or successfully getting a new CFPB director confirmed will not be an easy task. Reducing consumer protections is not a popular platform.
The first clear sign that the Trump administration intends to dismiss Consumer Financial Protection Bureau Director Richard Cordray, occurred when Trump interviewed former Rep. Randy Neugebauer, R-Texas, for the CFPB spot, according to a report by Huffington Post. Exactly how Trump intends to get rid of Cordray is unclear. Under the Dodd-Frank Act, Cordray can only be fired “for cause,” and some speculate that the Trump administration is already building a case against the CFPB chief. “There’s no doubt in my mind that Trump is going to fire Cordray because he wants to put in his people, but it’s not going to be that simple,” said Joann Needleman, an attorney at Clark Hill PLC. “They are going to have a battle on their hands.” “If Trump fires Cordray for cause, then it will get very interesting to see whatever trumped up cause the president comes up with,” said Adam Levitin, a law professor at Georgetown University, who has defended the bureau.
As Republicans geared up to try to dump former Ohio attorney general Richard Cordray from his post at the federal consumer finance watchdog agency, influential Senate Democrats sent Cordray a message of support and another message to then-incoming President Trump, who “seems poised to oust Cordray quickly, although a legal challenge could follow.” “Do not tell Richard Cordray he’s fired,” Sen. Chuck Schumer, Senate Democratic leader, said during a conference call.
Does Trump have the power to fire Cordray? President Trump seems to believe he does. Others disagree. For an excellent explanation of the pros and cons, read the whole article.
“Yesterday, Politico published a letter sent by Donald Trump’s Assistant and Chief of Staff Reince Preibus to the heads of executive departments and agencies putting a hold on new regulations. [A list of the primary directives in the memo is included.] “There has been speculation about whether this memo was sent to the CFPB, and whether it applies to independent agencies… It is unclear exactly what effect this may have on debt collection rulemaking, however one can’t help imagining in will slow the process further, as the matter of CFPB leadership shakes out….The Trump administration has also issued a hiring freeze. InsideARM is not aware of whether the hiring freeze has specifically affected the Debt Collection Program Manager position.”
“Within days of being sworn in, President Donald Trump has already pledged to cut business regulations by 75%. One way he is likely to fulfill that promise, at least in part, is by defanging a legacy of the 2008 financial crisis: the Consumer Financial Protection Bureau. That could mean the functional end to the consumer watchdog, which has been responsible for returning roughly $11.8 billion to some 29 million consumers since its inception in 2011, according to data from the bureau.”
These seven excerpts are just a small sample of the dozens of issues related to the CFPB and its actions that are being discussed in the media. We focused on those that directly referenced President Trump and his influence on current and up-coming changes. We encourage you to stay informed about all aspects of the CFPB and how it is affecting the economy, our industry and our jobs.
Marti Lythgoe, Editor, The National List of Attorneys