Mulvaney’s Last Act at the CFPB
Mick Mulvaney, the former acting director of the Consumer Financial Protection Bureau (CFPB), issued a proposed rule change on “No-Action Letters” that has drawn praise from the financial sector and criticism from consumer groups.
A “no-action letter” is a letter from a government regulator to a firm indicating that the regulator has no intention of initiating enforcement or supervisory actions against the firm.
Former CFPB Director Richard Cordray drafted the original policy on “no-action letters,” but it has been considered a failure by many as the CFPB has only issued one letter over the past several years.
“As noted, the Bureau has provided only one No-Action Letter under the 2016 Policy,” the draft proposal states. “The Bureau believes this strongly suggests that both the process required to obtain a No-Action Letter and the relief available under the 2016 Policy have not provided firms with sufficient incentives to seek No-Action Letters from Bureau staff.”
The CFPB has stated that the new policy would have five overarching goals:
- Streamlining the application process;
- Streamlining the Bureau’s processing of applications;
- Expanding the types of statutory and/or regulatory relief available;
- Specifying procedures for an extension where the relief initially provided is of limited duration; and
- Providing for coordination with existing or future programs offered by other regulators designed to facilitate innovation.
In addition, the proposed rule would eliminate the requirement for applicants to share data with the CFPB and remove time limitations from “no-action letters.”
The proposed rule drew praise from the financial sector. The American Bankers Association (ABA) and the Credit Union National Association (CUNA) announced that they had been calling on the CFPB to revisit the rule, and CUNA said that the changes reflect its recommendations to the agency.
The proposed rule also drew criticism, including from Maxine Waters (D-CA-43), the incoming Chair for the House Financial Services Committee. “I am very concerned by the Consumer Bureau proposal, issued in the last days of Mick Mulvaney’s leadership, to significantly loosen its ‘no-action letter’ policy in a way that could let bad actors that abuse consumers off the hook entirely from enforcement action by the agency,” said Waters. “This is yet another step to weaken the Consumer Bureau and curtail its enforcement tools.”
The future of the proposed rule will depend on Kathy Kraninger, the newly confirmed director of the CFPB, who said that she had not been “deeply briefed on the issue.”
Comments on the proposed rule are due within 60 days of being published in the Federal Register.