DeFanging the CFPB

During the Obama administration, the CFPB spent considerable time, money, and effort to establish itself as a feared dismantler of traditional methods of doing business by important financial institutions. Despite the 2016 election results, Director Cordray proclaimed his defiance of the new President’s goals to end the culture of dismantling. When Director Cordray left the Bureau to run for governor of Ohio, the President appointed Nick Mulvaney as acting Director. Over the objections of CFPB zealots that Director Cordray had the right to choose his own successor from his staff, court challenges to Mr. Mulvaney’s right to lead the Bureau have been unsuccessful. Mr. Mulvaney proceeded to take a number of actions, on which we have reported, that make the CFPB a less fearsome presence in Washington.

Some of Mr. Mulvaney’s actions have been entertaining (to the extent one can use that term for staid bureaucratic institutions). For example, Mr. Mulvaney has delighted in reminding his fiercest critic, Senator Elizabeth Warren, that she insisted the Director of CFPB should not be subject to Congressional control, so he does not have to respond to her demands. Similarly, despite millions of dollars spent to establish the name and abbreviation for the CFPB as symbolic of the consumer financial cop on the beat, Mr. Mulvaney has announced those should be changed to the actual name in the enabling legislation, the Bureau of Consumer Financial Protection or BCFP.

The greatest recent blow to the Bureau, however, came from Congress. The Bureau’s March 21, 2013 position on dealer reserve that so roiled dealer F&I departments was published in the Congressional Record on December 6, 2017. Both houses of Congress have voted under the Congressional Review Act to invalidate it, first by the Senate on April 18, 2018, and then by the House on May 8, 2018. On May 10, 2018 the resolution was sent to President Trump who is expected to sign it. This is similar to the Congressional Review Act resolution that invalidated the CFPB’s rule on predispute arbitration provisions that sought to invalidate class action waivers.