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Power to the States: Which Came First, the Chicken (CFPB) or the Eggs (AGs)?

At a recent meeting of state attorneys general, Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney reiterated his message, previously reported that his bureau will no longer “push the envelope” on enforcement matters.

At the conclusion of his remarks, Pennsylvania Attorney General Josh Shapiro (D) asked Mulvaney whether this change in enforcement philosophy means that the CFPB will interfere in or otherwise impede the use of state attorney general authority to enforce certain Dodd-Frank provisions, specifically those penalizing conduct which is “unfair, deceptive, or abusive” (UDAAP) in federal court. Mulvaney responded unequivocally that it would not.

While that was a significant development, how this is implemented is of even greater significance. On May 23, following a meeting of senior state attorney general consumer protection prosecutors, there will be a closed-door meeting covering, among other topics, how states can best enforce federal consumer protection laws. Attorneys general have traditionally eschewed the use of federal authority in consumer protection matters, although they have used other federal authorities in antitrust and environmental matters for many years. That forbearance at the state level may be coming to an end.

These developments also signal that while there may be a reduction in enforcement actions by the CFPB, at least some of that slack may be taken up by the states, leading to the possibility that differing interpretations of the same law may emerge in different parts of the country.

Copyright © 2020 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VIII, Number 96


About this Author

Nicholas Gess, Government and regulatory attorney, Morgan Lewis
Of Counsel

Nicholas M. Gess counsels on state and federal government enforcement and regulatory actions and their impact on business. He advises corporate clients on how to achieve results with governmental agencies and how to manage the risks of government action, particularly in the current environment where state enforcement authorities conduct parallel investigations with federal authorities such as the CFPB, DOJ, and FTC.

Charles Horn, financial services attorney, Morgan Lewis

Charles M. Horn is a partner in Morgan Lewis's Investment Management and Securities Industry Practice. Mr. Horn focuses his practice on regulatory and transactional matters, primarily in the areas of banking and financial services. He works on behalf of domestic and global financial institutions of all sizes on regulatory, supervisory, enforcement and compliance matters before all major federal financial institutions regulatory agencies, and leading state financial regulatory agencies.

Timothy Shea, Morgan Lewis, Litigation Attorney
Principal, Of Counsel

Timothy J. Shea counsels clients on the impact of state and federal law enforcement actions on business, advising corporate clients about how to manage the risks of state government action, particularly when it occurs in the context of complex civil litigation, class action law suits, federal criminal inquiries, federal regulatory reviews, and Congressional oversight. He provides counsel to companies facing litigation, regulation, inquiries, and other activities by the states, particularly multistate investigations by State Attorneys General.