Flexing its Muscles: The CFPB’s Approach to Regulation and Enforcement of Financial Institutions

The Dodd-Frank Wall Street Reform and Consumer Protection Act assigned responsibility for enforcing the act itself as well as 18 other Federal consumer financial laws enumerated in the statute to the Consumer Financial Protection Bureau.  Its mandate is clear:  “Regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws.”  12 U.S.C. § 5491(a).  In practice, that typically boils down to protecting consumers from conduct that the Bureau deems to be unfair, deceptive, or abusive acts or practices (UDAAP).   

In its first five years, the Bureau has taken a muscular approach toward regulation and enforcement.  It has proposed regulations that may have far-reaching impacts on banks and other companies that offer consumer finance products or services, including a ban on mandatory arbitration clauses and restrictions on alternative forms of lending.  The Bureau also has instituted an expansive enforcement program that sometimes runs counter to past agency guidance and settled industry norms, frequently foregoing (or at least preceding) formal notice-and-comment rule-making.

Over the course of this 90-minute presentation, Ryan Scarborough, a Williams & Connolly LLP partner who regularly handles financial services litigation brought by the Bureau and bank regulators, and Rachel Rodman, a Williams & Connolly LLP counsel who formerly worked as an enforcement attorney at the CFPB, share insights gleaned from their litigation experience. They discuss how the Bureau’s approach impacts evolving industry standards and corporate behavior, including the ramifications of a Civil Investigative Demand and threatened enforcement action for banks, consumer finance companies, and their leadership teams. 

Learning Objectives:

1. Understand the CFPB’s broad statutory mandate to regulate the offering and provision of consumer financial products or services, how the CFPB collaborates (and competes) with prudential banking regulators, and how this impacts federally-insured financial institutions
2. Learn the intricacies of the Bureau’s supervisory and investigative processes, the importance of responding effectively to Potential Action and Request for Response (PARR) and Notice and Opportunity to Respond and Advise (NORA) letters, and the resolution/litigation framework
3. Discuss the successes and set-backs attributable to the Bureau’s muscular enforcement approach, including recent consent orders as well as the D.C. Circuit’s recent PHH decision
4. Explore the Bureau’s paradigm-shifting rule-making efforts regarding arbitration, payday lending, and other financial services areas
5. Analyze how the CFPB’s approach to individual accountability compares to the approach announced by the Department of Justice in the September 2015 Yates memo, and the steps that directors and officers can take to minimize their exposure