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Acting Director Mulvaney appears before House Financial Services Committee

Yesterday, Mick Mulvaney made his first appearance as CFPB Acting Director before the House Financial Services Committee to present the Bureau’s Semi-Annual Report to Congress for the period beginning April 1, 2017, and ending September 30, 2017, a period of time when Richard Cordray was still the Director.

In his message preceding the Semi-Annual Report, Acting Director Mulvaney noted the disagreements many members of Congress have with his actions as Acting Director, just as many members of Congress disagreed with Director Cordray’s actions.  His message also included legislative recommendations for changes to the CFPB to address his view that the Bureau lacks accountability to any branch of government.  Noteworthy aspects of Mr. Mulvaney’s testimony to the Committee include:

  • While committee members did not specifically engage in a discussion with Mr. Mulvaney about his recommendations, Republican committee members focused on their concerns surrounding Bureau accountability, both with respect to its spending decisions, and control over the Bureau’s Director.

  • Democratic committee members raised a host of concerns with Mr. Mulvaney’s actions as Acting Director, ranging from questioning his authority to serve as Acting Director, to his efficacy in the role while serving concurrently as the Director of the Office of Management and Budget, to his intentions leading the Bureau.  Acting Director Mulvaney continued to return to his position that one party or the other would have concerns regarding the Director depending upon who is the appointing President, and the solution is to reform the Bureau’s structure  to ensure greater oversight by Congress and the President.

  • There was a fair amount of discussion around the decline in the number of enforcement actions initiated under Acting Director Mulvaney. Democratic Representative Carolyn Maloney stated that under former Directory Cordray, the Bureau brought an average of four enforcement actions per month, while in the first five months of Acting Director Mulvaney’s tenure, no enforcement actions have been brought.  However, in response to Republican Representative Bill Huizenga’s question asking how many enforcement actions were brought under former Director Cordray in his first six months, Acting Director Mulvaney stated there were zero enforcement actions brought.  He also indicated the lack of new enforcement actions so far does not indicate a lack of action on the part of the Bureau; it is continuing to prosecute several enforcement actions and to manage over 100 investigations, some of which are in the “sue or settle” phase.  Acting Director Mulvaney did not say anything about widespread rumors that the CFPB is about to enter into a major consent order with a large bank (other than stating, to correct a committee member citing the rumors, that the Bureau had not announced any enforcement actions on Tuesday).

  • Acting Director Mulvaney indicated the Bureau is continuing to review the final Payday Loan Rule (although he was not asked any questions about the recently filed lawsuit challenging the validity of the rule). He also noted the Bureau’s request for information regarding the Bureau’s adopted regulations and encouraged members to engage with the Bureau in exploring ways to better serve their constituents.

  • When asked about current bank legislative reform, Mr. Mulvaney indicated his support for further negotiations with the Senate to incorporate additional pieces of the Financial CHOICE Act, stating “I know it’s not easy to pass a piece of bipartisan legislation anywhere, let alone in the Senate, and I think they’ve done an excellent job. I don’t think that necessarily needs to be the end of the analysis. To the extent y’all have done really good work to find ways on a bipartisan basis to improve Dodd-Frank, God bless you, and let’s see if we can’t add that to the Senate bill. If not, the Senate bill is a great fallback. But if it can get better, why wouldn’t we accept that as a really good outcome?”  At the end of the hearing, Acting Director Mulvaney reiterated with respect to reform, “I don’t think that we’re in a rush, I don’t think that we have to have a bill by the end of this week from the Senate.  I think we need to go ahead and do it right, because I don’t think you’ll get a chance to do it again for a long time.”

Copyright © by Ballard Spahr LLP

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About this Author

Andrew Toftey, Financial Lawyer, Ballard Spahr
Of Counsel

Andrew Toftey advises financial institutions, financial technology companies, merchant processors and other payment providers on legal and regulatory matters, including commercial and consumer credit and prepaid transactions. He provides experienced, practical guidance on vendor agreements, proprietary network and payment structures and implementation of new payment products and services, including commercial, consumer, HSA, and white label card solutions.

Andrew previously served as senior counsel for U.S. Bank Corporate Payment Systems,...

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