There’s a new sheriff in town at the Consumer Financial Protection Bureau. But don’t call him “sheriff.”
Last week, CFPB Acting Director Mick Mulvaney sent out an all-hands memo that clarified his vision for the Bureau and repudiated his predecessor’s “governing philosophy of pushing the envelope.” Basically, Mulvaney thinks the CFPB has overextended its reach, and he wants to restrict the number of aggressive actions against lenders:
Simply put, we will be reviewing everything that we do, from investigations to lawsuits and everything in between.
When it comes to enforcement, we will be focusing on quantifiable and unavoidable harm to the consumer. If we find that it exists, you can count on us to vigorously pursue the appropriate remedies. If it doesn’t, we won’t go looking for excuses to bring lawsuits.
On regulation, it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them. This means more formal rulemaking on which financial institutions can rely, and less regulation by enforcement.
As we read the memo, one statistic stuck out. In 2016…
Data like that should, and will, guide our actions.
Get ready for a CFPB that makes enforcement decisions based on quantitative analysis at least as much as qualitative analysis of an action’s “potential costs and benefits to consumers and covered persons” as defined by the Dodd–Frank Wall Street Reform and Consumer Protection Act. That means a different calculation of regulatory risk for lenders. To quote Mulvaney: “there is a lot more math in our future.”
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