FTC, Fed Experience Renewed Roles in Consumer Financial Enforcement as CFPB Adjusts Priorities
With Mick Mulvaney temporarily at the helm, the Consumer Financial Protection Bureau (CFPB) is undergoing a massive overhaul to its policy priorities. Over the past few weeks, the Bureau has reopened consideration on the recently-passed Small Dollar Rule, scaled back enforcement actions, and issued a series of requests for information regarding nearly every aspect of the agency’s operations.
As the CFPB conducts its massive policy overhaul, issues remain in the financial sector that demand regulatory attention. Some states, like New York, have announced their intention to “safeguard the financial services industry” and “continue to lead and take action to fill the increasing number of regulatory voids created by the federal government.” The state of Massachusetts recently sued Equifax for the credit bureau’s massive breach last spring that exposed data for almost 150 million consumers. Despite these examples, states have limited reach beyond their own borders, and many major financial problems impact consumers all over America.
Two federal agencies have also stepped up to use their regulatory authority to punish financial fraud and negligence within the industry- the Federal Trade Commission (FTC) and the Federal Reserve. Much of the CFPB’s enforcement activity and regulatory oversight were born in the FTC, including the Bureau’s power to prosecute unfair and deceptive acts and practices (UDAAP). While the FTC transferred much of its consumer financial enforcement authority to the CFPB, it still retains some power to investigate and bring suit for certain financial misbehaviors.
Senator Mark Warner (D- VA) has asked the FTC to investigate the cybersecurity protocols for major credit bureaus like Equifax. Along with Senator Elizabeth Warren (D- MA), Warner has even proposed legislation creating an office at the FTC to supervise data security at credit reporting agencies.
Wells Fargo, the embattled bank with numerous fines over the past few years for a number of egregious behaviors, continues to find itself in the news for its fraudulent activities. As one of her last actions as Chair of the Federal Reserve, Janet Yellen ordered that the bank replace 4 board members and limit the financial institution’s growth until better controls are instituted.
While other federal agencies are not reaching quite as far as the CFPB’s enforcement priorities under former director Richard Cordray, the efforts by the FTC and the Federal Reserve signal at least some egregious examples will not escape punishment as the CFPB reorganizes under the new administration.