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CFPB Changes Direction In Enforcement Action; Mulvaney Names Senior Advisor

A new filing by the CFPB in its action against Nationwide Biweekly Administration Inc. may be an indicator of the enforcement philosophy of Mick Mulvaney, President Trump’s designee as CFPB Acting Director, and how that philosophy may impact future CFPB enforcement activity.  In addition to a 30-day freeze on all regulatory action, CFPB hiring, and payments from the civil penalty fund, Mr. Mulvaney is reported to have put a 30-day hold on new enforcement cases.  Mr. Mulvaney is also reported to have named Brian Johnson as a senior adviser to him at the CFPB.   Mr. Johnson is Senior Counsel to the House Financial Services Committee and was a member of President Trump’s transition team.

In the CFPB’s action against Nationwide, another related company, and the companies’ individual owner, the CFPB alleged that the defendants engaged in abusive and deceptive acts or practices in violation of the CFPA UDAAP prohibition by making false representations regarding the costs of a biweekly mortgage payment program and the savings consumers could achieve through the program.  A California federal district court refused to award restitution sought by the CFPB but did award the CFPB approximately $7.9 in civil money penalties.  (However, the court rejected the CFPB’s request for an award against each defendant and imposed only a single penalty for which the defendants would be jointly and severally liable.)

On November 27, the CFPB had filed a response opposing a motion filed by the defendants to stay execution of the $7.9 million judgment without posting a bond.  The defendants had offered alternate security in the form of an agreement not to sell Nationwide’s commercial real property or the individual owner’s residence pending the disposition of anticipated post-trial motions and appeal.  Two days later, on November 29, the CFPB filed a notice withdrawing its response and stating that the CFPB “takes no position as to whether the Court should require Defendants in this matter to post a bond as a condition of staying the monetary judgment pending the disposition of Defendants’ anticipated post-trial motions.”  An attorney for the defendants is reported to have stated that the change in the CFPB’s position was in response to a letter she had sent to Mr. Mulvaney informing him of the CFPB’s November 27 filing.

Copyright © by Ballard Spahr LLP

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About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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