What can we learn from the CFPB’s Spring 2020 Unified Agenda entries?
The week, Director Kathleen Kraninger of the Consumer Financial Protection Bureau (CFPB) is slated to appear before the Senate Banking Committee and the House Financial Services Committee in connection with the CFPB’s semiannual report. As we go into these hearings, it’s worth reviewing what we know about the CFPB’s current regulatory agenda. As a reminder, the CFPB is the regulator that oversees all of the consumer financial regulations in the marketplace—everything from credit cards to payday loans to mortgages to debt collection to credit reporting. If you have a bank account, a credit card, a student loan, or a mortgage, the CFPB’s rules impact you.
At the end of June, the CFPB, along with all of the other federal agencies, released its rulemaking agenda on the rulemaking that the agency plans to undertake through April 2021. As we at the Consumer Rights Regulatory Engagement and Advocacy Project (CRREA Project) discuss in Decoding the Unified Agenda, everything is in the Unified Agenda—what an agency is working on, what it plans to do next, and when it anticipates taking that next step. Rules are characterized as significant or nonsignificant, the agency contact for the rule is listed (in the CFPB’s case, this is almost always the attorney designated as the team lead on the rulemaking), and the history of the rulemaking project are all laid out.
Looking at an agency’s Unified Agenda also tells the reader something about the agency’s current priorities and rulemaking philosophy. The CFPB, in addition to its agency rule list, issues a blog post, which updates the Unified Agenda to reflect what the CFPB has done between when it submitted its Unified Agenda entries and when the Unified Agenda was released, and a preamble, which the CFPB is unique among agencies in doing twice a year.
The CFPB’s regulatory response to COVID-19
The CFPB seems to have understood its job during the pandemic as completing pre-assigned priorities on time rather than responding flexibly and creatively to the crisis. Comparing the Unified Agenda entries with the blog, the CFPB showed impressive discipline in sticking to its rulemaking schedule, despite COVID-19. (As noted in the blog post, this year the time lag between when the Unified Agenda entries were submitted and when they were published straddled the pre- and post-COVID worlds). The CFPB mostly met its pre-COVID target dates, seldom falling more than a month behind. For example, although the CFPB’s repeal of an Obama-era regulation requiring payday lenders to determine borrowers’ ability to repay loans was widely rumored to be scheduled for issuance in late April, the Unified Agenda set June 2020 as the month for its issuance. In the end, the CFPB released the rule on July 7, shortly after the Supreme Court upheld the constitutionality of the CFPB in Seila Law v. CFPB. Holding tight to a rulemaking schedule requires discipline in the best of times, and the transition to remote work plus the general strains of pandemic life must have made sticking to the calendar even harder this year.
Reviewing the blog post, and the CFPB’s actions, suggests the tunnel vision necessary to maintain that discipline. The blog post’s nod to COVID-related work is a link to a generic supervisory bulletin page. While many items on that page post mid-March 2020 are styled as COVID-related, they read like a grab bag of mostly minor regulatory adjustments. The actions taken show a consistent bent towards favoring flexibility for industry and encouraging faster access to credit, regardless of price or terms, but lacking is a sweeping regulatory adjustment to COVID-19, either favoring consumers or industry.
Moreover, the two congressionally mandated, consumer protective rulemakings, on Property Assessed Clean Energy (PACE) loans and small business lending data collection, both remain in pre-rulemaking status and have not advanced since the Fall 2019 Unified Agenda. Among the very first responses the CFPB took to the pandemic was to suspend the data collection necessary to advance those rulemakings. The small business lending data collection remains slated for the release of an outline of the rule in September, thanks no doubt at least in part to the settlement of the lawsuit brought by the California Reinvestment Coalition and others to force the CFPB to restart that rulemaking. But the only next step listed for the PACE rulemaking is “pursuing quantitative data,” and no further mention of PACE is made in the blog. Apparently then, PACE will have to wait behind other, deregulatory rulemakings, such as the CFPB’s “reconsideration” and limitation of the data points collected under the Home Mortgage Disclosure Act.
I have elsewhere laid out a comprehensive agenda for the CFPB in responding to COVID-19 and argued specifically for the need for action on debt collection, both as a public health matter and as a matter of consumer protection. But the CFPB chose, by in large, to ignore the crisis and proceed with rulemaking as if hundreds or thousands of people weren’t dying every day. For those pushing the Trump administration’s deregulatory agenda, this tunnel vision was surely a victory. For the rest of us, it was at best a missed opportunity.
The CFPB’s regulatory philosophy
What is most striking—and most useful to advocates—is what is revealed about the current agency’s rulemaking philosophy. Partway through the CFPB’s blog post announcing the Unified Agenda comes the tell: “[W]e have continued to move forward with our other regulatory work, prioritizing activities intended to protect the stability of the financial sector and enhance its recovery…” Consumer protection is an “as well” afterthought, but not the central mission of this CFPB. The preamble expands on this, explaining, “If the Bureau has discretion, the Bureau will focus on preventing consumer harm by maximizing informed consumer choice, and by reducing unwarranted regulatory burden which can adversely affect competition and consumers’ access to financial products and services.”
Regardless of what one thinks of this approach to the CFPB’s mission, this nonetheless provides a roadmap for advocates: Focus your arguments on competition, access, and choice. Draw attention to places where market practices result in consumers’ lacking adequate information to make decisions or where competition fails. This framework makes revisiting payday lending hard, but suggests fruitful engagement in debt collection and mortgage servicing where consumer choice is irrelevant as consumers have no choice over their debt collectors or mortgage servicers. Arguments about stability in the financial markets are likely to carry more weight than petitions for equity or consumer protection against mainstream financial practices. Access will trump protection at this CFPB, so what are the arguments about how the proposals on the table will affect access or impose costs on business interests? Are there places where streamlining regulations results in consumer benefits? Now is the time to focus on those areas.
Effective regulatory advocacy requires sustained engagement, year after year, and meeting the agencies on their own terms. Within the current CFPB agenda, there are places for advocates to advance racial and economic justice, if they focus on the arguments the agency is open to hearing. In Working with Cost-Benefit Analysis, we at CRREA Project lay out some strategies for doing this. We highlight the importance of quantifying what you can, whether through surveys or case file reviews, and situating problems in the broader context. And, while commenting on proposals is always important, and our How to Comment one-page checklist should help with commenting, meetings with staff, engagement with Congress on oversight, including in connection with the upcoming hearings, letters to the CFPB, press attention, and even litigation remain important tools for advocates.
This was originally posted by the American Constitutional Society.