Lenders, Get Ready: a “Mini CFPB” Could Be Heading to Your State Soon
Regular readers of our blog are no doubt aware of this already, but in case you’re new to the consumer lending industry—or just returned from a year-long expedition through the jungles of Borneo—there’s something of a war going on between lawmakers and lenders over the future of the Consumer Financial Protection Bureau.
Every week seems to bring new developments and predictions about the CFPB. We’ve shared perspectives about Republicans’ efforts to dismantle or diminish the agency, the battle over the mandatory arbitration rule, how the Department of Justice and others could take the CFPB’s place if it goes away, and much, much, much more.
But here’s a development right out of the Godzilla franchise or a flagging sitcom desperate for ratings: baby CFPBs!
“States are poised to boost enforcement in areas such as auto finance, student loans, and money laundering amid concerns of a pullback by federal regulators, lawyers told Bloomberg BNA.
Stepped-up state activity, including multi-state actions, could be driven by changes at the Consumer Financial Protection Bureau.
Pennsylvania has already taken a big step in that direction. Attorney General Josh Shapiro in July unveiled a new Consumer Financial Protection Unit to give Pennsylvania consumers more protection and tapped Nicholas Smyth, a CFPB veteran, to head the new office. Establishment of the new Pennsylvania unit—which some have dubbed a ‘mini CFPB’—may signal more activity by other states if the CFPB takes a less prominent role going forward.”
More CFPBs (run by CFPB veterans, no less) are pretty much the opposite of what the agency’s opponents want right now. On top of that, legal pundits believe that these pint-sized versions of the Bureau would focus on an already highly regulated group of lenders: auto finance companies. And in case our tone here indicates otherwise, there’s nothing cute about state regulatory enforcement.
The Bloomberg article includes some great insights from the CFPB’s former deputy enforcement director for litigation, Lucy Morris, who we’ve featured on this blog in recent months. Make sure to read the whole story here—and when you’ve had a chance to to absorb the information, get in touch with us to develop a compliance strategy designed to meet the demands of CFPBs of all sizes.