Consumer advocates are scrambling to get their hands on the CFPB.
Just weeks after Joe Biden was declared the winner of the 2020 presidential race – and in some cases even before that – advocates have started posting lists of policies they want to overthrow when the Biden administration takes over. ‘an agency they say has been way too friendly to the companies it is supposed to regulate.
“President Trump made it clear from the start that he did not believe in protecting financial consumers and that the CFPB should be sterilized,” one such group, Better Markets, said in a report released ahead of the day. elections.
The group went on to say, “The CFPB needs new leadership and a complete reorientation towards why it was created: to protect consumers.
From payday loans to the dismantling of the agency’s controversial consumer finance law task force, the groups are calling for changes that could affect the regulatory regime for credit unions.
There is no doubt that President Trump has slowed down the regulatory process for rule-making at CFPB, an agency established under the Obama administration. Then-manager Richard Cordray began issuing rules and taking enforcement action to help consumers.
But critics said Cordray was bossy.
Credit union groups called on the CFPB to use its power to exempt certain types of institutions, such as credit unions, from CFPB rules. And they asked the agency to give the NCUA oversight power over the largest credit unions. Dodd-Frank gave this power to the CFPB.
However, the CFPB never made these changes, and CUNA lobbyists said the agency was unlikely to institute them into a reinvigorated CFPB in the Biden administration.
The incoming administration has telegraphed its intention to restore Cordray’s strict regulatory regime by appointing an agency transition team that has supported this program. For example, Leandra English, who was Deputy Director of Cordray, leads the CFPB transition team.
Also on the team is William Bynum, CEO of the $ 352.3 million Hope Credit Union in Jackson, Mississippi, which supported Cordray’s payday loan regulation.
The reinstatement of this regulation was at the top of the list of several groups who want tighter financial regulations. The Cordray Rule, among others, contained an underwriting requirement that a borrower had to demonstrate their ability to repay a loan before it was approved.
Bynum approved of this rule.
“With today’s payday loan rule, the Office of Consumer Financial Protection has taken the bold and necessary steps to protect the incomes of hard-working people from high-cost, low-value loan abuse. “said Bynum when posting The Cordray Rule. “The rule’s requirement to determine a borrower’s repayment capacity will end the debt trap and save consumers millions of dollars in abusive fees. For people living in the Deep South, the rule represents a major victory for consumers where state protections are all too often too short. “
Trump relaxed that rule and removed the requirement that borrowers demonstrate their ability to repay a loan before it is disbursed. It also exempted an iteration of a loan modeled on the NCUA’s Alternative Lending Model, but did not exempt a second PAL model, future iterations of the loan model, or other payday loans offered by the NCUA. credit unions.
Giving a high priority to reinstating Cordray’s Rule, groups have said the regulation helps regulate predatory lenders.
“The Payday Rule’s mandatory underwriting provisions were widely supported because it prevented predatory lenders from trapping consumers in debt,” one group, Accountable.US, said in posting a list of regulatory measures it wants the CFPB is attacking.
Another group has sued the CFPB in an attempt to reinstate the Cordray payday rule. The National Association for Latino Community Asset Builders filed a lawsuit in federal court earlier this year arguing that the Trump rule was passed through an illegal regulatory process and the Dodd-Frank Act.
Consumer groups are also keeping their eyes on the Trump administration’s debt collection rule. The rule prohibited debt collectors from making a collection phone call for a particular debt more than seven times in a seven-day period or within seven days of a phone conversation with the debtor. It states that a consumer can restrict the type of media used by a debt collector to contact a person and allows the use of new communication technologies, such as email and SMS, for debt collection.
The rule only applied to third party debt collectors; although credit unions are not third party collectors, they hire companies that are.
“The CFPB debt collection rule allows debt collectors to harass consumers,” Accountable.US said, listing the rule as one of the key regulatory measures it wants “a new administration to deal with.” .
The Biden administration should ask the CFPB, under new leadership, to immediately begin work on a new debt collection rule that places strict bans on excessive email communications, including limiting the number of text messages and emails that can be sent. sent to consumers, ”the group said.
Better Markets agreed, saying the CFPB debt collection rules “leave too much leeway for debt collectors to continue engaging in abusive tactics.”
And advocates have targeted a task force that CFPB director Kathleen Kraninger has created to explore the full spectrum of consumer credit law. Critics said she tasked the task force with anti-regulation lawyers and called for its abolition or reorganization. The National Association of Consumer Advocates and the United States Public Interest Research Group have gone so far as to file a complaint against the agency, claiming that Kraninger failed to comply with federal laws governing the organization of such groups.
On the flip side, the Tories are warning the Biden administration to be cautious.
“While deregulation goes against the DNA of many Democratic politicians, the reality is that the regulatory process has been corrupt for decades, and a centrist or center-left agenda is very much in keeping with the will to repair the mistakes of previous administrations, “Omar Al-Ubaydli, principal researcher affiliated with the Mercatus Center at George Mason University, said. “One way to reach out to disgruntled Trump supporters, both locally and in government, would be to recognize that Trump’s desire to deregulate was laudable.
And in a new report, the Congressional Research Service warned that if the past is any indication, the Trump administration may not be done with its rule-making. Biden will not take office until January 20, 2021.
“In recent months of recent administrations, federal agencies have often stepped up the pace of their regulatory activities,” CRS warned, adding that “this phenomenon is often referred to as midnight regulation.”
In the report, CRS said that because it can be difficult to change or eliminate rules that have been finalized, an incumbent president can ensure a legacy by making rules at the last minute.
If a rule has been finalized, a new administration would have to go through a new rule-making process, including soliciting public comments on any changes it wishes to make. If a rule has not been finalized, it is much easier to derail a rule.
Additionally, Congress can pass a law to revoke a rule or, in certain circumstances, use a federal law known as the Congressional Review Act to revoke a rule.