California Lawmaker Explores Creating a “State CFPB”
California Assemblywoman Monique Limon told reporters earlier this week that she is exploring how that state can strengthen consumer protection in financial services. Limon suggested that California could either create a State-level Consumer Financial Protection Bureau (CFPB) or increase the enforcement budget of existing state agencies.
Limon chairs the Assembly Banking and Finance Committee, giving her broad leeway over the Committee’s agenda. “We are working to really rethink what a state CFPB would do,” said Limon. “We see the presence of predatory lending products in auto loans, payday loans, cash-advance and small-business loans.”
Earlier in the week, Limon held a press conference with Richard Cordray, former director of the CFPB, to drum up support for more consumer protection. Cordray argued that states need to ramp up enforcement if the CFPB is pulling back.
“If, at the federal level, they are pulling back, a large and important state like California can make an important difference here,” said Cordray. “If the system is not preventing massive problems and exploitation, even the people that are most careful can be hurt.”
Although the CFPB did see a 54 percent decline in enforcement last year, from 37 enforcement actions in 2017 to 17 in 2018, states saw a nearly identical decline, from 70 enforcement actions in 2017 to 32 in 2018.
California now joins a chorus of other states that have announced plans to create “mini-CFPBs.” Several have already begun poaching talent from the federal CFPB to boost their efforts. In January, the New York poached Chris D’Angelo, the third highest ranking official at the federal CFPB. Also, just last year, Pennsylvania recruited Nicolas Smyth, one of the first staff members at the CFPB, to lead the state’s newly created consumer financial protection unit.