NYDFS Announces Enforcement Ramp Up in Wake of CFPB About-Face
Maria Vullo, Superintendent of the New York Department of Financial Services (NYDFS), issued a press release on January 25th vowing 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.” Her statement comes mere hours after a memo written by Acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney was leaked explaining a new agenda for the consumer watchdog.
Mulvaney expressed a desire to work not only with consumers, but also financial service providers. His memo included a promise not to “push the envelope” regarding enforcement against the industry. Mulvaney’s new policy stands in stark contrast to former CFPB Director Richard Cordray’s approach of regulating the industries through aggressive enforcement actions.
A collection of Democratic state attorneys general have pledged their resources in recent weeks by filling any gap in consumer financial protection created from a changing of the guard at the CFPB. Vullo’s comments mirror an effort by this group of state AGs to challenge Mulvaney’s position as acting director of the agency.
The battle for consumer finance regulatory supremacy has already begun to play out in courts. This week the U.S. Department of Justice intervened in a case brought by the Massachusetts attorney general against a student loan company arguing enforcement was actually under federal jurisdiction. Preemption of state AG actions may grow more common as the turf war brews between the competing regulatory interests.
New York is no stranger to controversy when it comes to financial services regulation. A federal judge recently dismissed a lawsuit by NYDFS as speculative after the state agency challenged the FinTech charter system proposed by the Office of the Comptroller of the Currency. Vullo had previously stated that her goal was to make New York the financial regulatory measuring stick for America.
