New leadership at Consumer Financial Protection Bureau signals rollback of oppressive rules, LeClairRyan attorney Jay Spruill advises

RICHMOND (February 15, 2018) — Recent moves by the federal Consumer Financial Protection Bureau (CFPB) could signal a friendlier approach to businesses, according to Jay Spruill, a partner in LeClairRyan’s Richmond office and leader of the national law firm’s Marketplace Funding Team.

“The CFPB is reconsidering existing rules and policies put in place under the previous director, Richard Cordray, with an eye toward rolling back burdensome rules and aggressive enforcement policies,” he writes in a recent firm blog post. Such a move led by interim director Mick Mulvaney could spur more innovation among financial services businesses.

One example is the CFPB’s January 16 announcement of a rulemaking process to reconsider the so-called “Payday Loan Rule.” That new regulation — which was scheduled to take effect August 19, 2019 — would have imposed new restrictions on payday, vehicle title and certain installment loans, explains Spruill, who represents banks, finance companies and other financial institutions in connection with regulatory and commercial matters affecting their business.

“The Payday Loan Rule has been heavily criticized by the small loan industry which says the rule will restrict consumers’ access to credit,” Spruill notes in the blog, CFPB Signals Retreat from Aggressive Regulation. The post appears in Marketplace Shift, which focuses on the impact of legal and regulatory developments on financial innovation. The CFPB’s reconsideration process could result in the unwinding of the rule before it becomes effective, he adds.

Another signal was broadcast on January 17th, when the CFPB announced it will publish a series of Requests for Information (RFI) in the Federal Register seeking comments on such CFPB activities as the use of Civil Investigative Demands (CIDs). “Industry advocates criticized the aggressive use of CIDs by the Cordray-led CFPB, and several courts refused to enforce such CIDs for failing to describe the conduct investigated and the consumer financial laws implicated,” Spruill writes in the blog. “The RFI suggests that Mulvaney is looking to rein in the CFPB’s expansive use of CIDs and pursue a more restrained enforcement approach.”

Based on the CFPB’s apparent new approach, businesses may wish to stay alert for changes that could make providing financial products and services easier from a regulatory standpoint,says Spruill.

But a rear-guard action by an Obama-era appointee has forced Spruill to temper his optimism.

“These announcements come while Mulvaney’s authority to lead the CFPB on an interim basis is being challenged in court by Leandra English, the CFPB’s current deputy director who worked alongside Cordray,” writes Spruill. “English claims she is the rightful interim acting director of the CFPB. Still, Mulvaney is showing that the pending court action will not slow down his efforts to take the CFPB in a different direction.”

The full column is available at:

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