Today's Trends in Credit Regulation

CFPB Has Busy First Two Months
By Catherine M. Brennan

With July 21st come and gone, the transfer of consumer financial law enforcement to the Consumer Financial Protection Bureau occurred as expected. As required, the CFPB continues to promulgate rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that will govern “the rules of the game” going forward for all financial institutions subject to its oversight. It’s been a busy summer, with the CFPB putting forth a number of rules that will impact business operations of financial institutions for years to come.

In August, the CFPB issued Bulletin 11-3, which states that the CFPB has adopted a policy on ex parte presentations in rulemaking proceedings in order to promote openness and transparency. The policy generally requires public disclosure of ex parte presentations made to certain CFPB staff concerning a pending rulemaking so that members of the public can be informed of the input the CFPB is receiving. The ex parte policy does not apply before a rule has been proposed, only once the CFPB publishes a proposed rule in the Federal Register or on its website. The policy also applies when the CFPB publishes an interim final rule with a request for comment. The ex parte policy addresses the procedures and deadlines for preparing summaries of ex parte presentations.

The rule applies to communications with so-called “decision-making personnel.” “Decision-making personnel” means any employee of the CFPB who is or may reasonably be expected to be involved in formulating a CFPB rule. So, it’s likely that “decision-making personnel” involves all staffers working on a particular issue for rulemaking. Financial institutions would be wise to treat all personnel with whom they communicate about a particular issue as “decision-making personnel.”

The policy also explains certain circumstances in which public disclosure is not required. For example, questions to CFPB staff about procedural issues – such as how to submit comments or when the comment period closes – do not require disclosure. With certain exceptions, comments by other members of the federal government do not require disclosure.

The CFPB stated that it expects its ex parte policy to ensure the openness and effectiveness of its rulemaking process. Although openness and effectiveness are noteworthy goals, we remain cautious as to whether this policy will have the effect of hampering communications that can help aid in the formulation of rules or policies. Bulletin 11-3 took effect when put forth in August, so financial institutions should be mindful of its impact.

Also this summer, the CFPB adopted an interim final rule relating to investigations in order to describe its procedures for investigations pursuant to Section 1052 of the Dodd-Frank Act. Specifically, Section 1052 and this rule will govern CFPB investigations into whether persons have engaged in conduct that violates any provision of federal consumer financial law.

One aspect of this rule addresses how the CFPB will address “private controversies.” The rule provides that the CFPB will act only in the public interest and will not initiate an investigation or take other enforcement action when the alleged violation is merely a matter of private controversy and does not tend to affect the public interest adversely. In proposing this aspect of the rule, the CFPB noted that the rule is consistent with its mission to protect consumers by investigating potential violations of federal consumer financial law. The rule does not, however, define “private controversies.” However, a reasonable construction of “private controversies” means litigation for a specific individual in a specific matter. The interim final rule took effect July 28, but interested parties have until late September to submit comments.

The CFPB also adopted another interim final rule, effective July 28, that establishes procedures for the conduct of adjudication proceedings pursuant to Section 1053 of the Dodd-Frank Act. Section 1053 authorizes the CFPB to use administrative adjudications to ensure or enforce compliance with (1) the provisions of the Act, (2) the rules prescribed by the CFPB under the Act, and (3) any other federal law or regulation that the CFPB is authorized to enforce.

The rule does not apply to proceedings intended to lead to the formulation of a temporary cease-and-desist order pursuant to Section 1053(c) of the Act, although it would apply to subsequent proceedings initiated by a notice of charges seeking a permanent cease-and-desist order or other relief. Further, the rule does not apply to CFPB investigations, rulemakings, or other proceedings. Like the investigations rule, the comment period for this interim final rule will end in late September.

Finally, the CFPB has tipped its hat as to the kinds of items it will want to investigate and its priorities going forward. As discussed in more detail in Lisa DeLessio’s article in this issue, in early September, the CFPB issued a Notice and Request for Information seeking information on consumer financial products and services currently offered to or used by servicemembers and their families. The CFPB is particularly interested in information on products and services (and associated programs and policies) tailored to the unique financial needs of servicemembers and their families. Comments responsive to this request were due on September 20, thus imposing a tight turnaround time for interested commenters. We expect the CFPB to use the feedback it received in future rulemakings.

So, as the busy summer ends in Washington, D.C., at the CFPB, we have no doubt that the CFPB has stored plenty of acorns to feed it over the long, cold winter ahead. Watch this space for more news about the plans and proposed rules of the CFPB.

Catherine M. Brennan is a partner in the Maryland office of Hudson Cook, LLP. Cathy can be reached at 410-865-5405 or by email at

Article Archive

2024   2023   2022   2021   2020   2019   2018   2017   2016   2015   2014   2013   2012   2011   2010   2009  

Copyright © 2024, LLC. All rights reserved.