States Filling Void Left by CFPB, Public Interest Group Says
States like Pennsylvania and New Jersey have announced new efforts referred to as a “mini-CFPB” to help protect consumers.
State officials can—and have—adopted strict consumer protection regimes now that the CFPB has adopted a more pro-business posture, the U.S. Public Interest Research Group, said, in a new report.
“Given the fact that federal enforcement has weakened, state enforcement of consumer protection laws is as critical as ever,” U.S. PIRG said in the report, “Positioned to Protect,” issued in the wake of the confirmation of Kathy Kraninger to head the CFPB.
While credit union trade groups applauded the confirmation, consumer groups said Kraninger’s vow to continue the policies of Acting Director Mick Mulvaney means that federal consumer protection efforts will be significantly weakened.
“Mick Mulvaney has undercut common-sense policies aimed at protecting the American public from deceptive and predatory lending practices,” said Yana Miles, legislative council at the Center for Responsible Lending. “Kathy Kraninger has publicly stated that she could not identify any of his actions with which [she] disagrees– meaning she will continue an attack on Americans’ economic security.”
Rep. Maxine Waters (D-Calif.), who likely will become chair of the House Financial Services Committee issued a challenge to Kraninger.
“Now that Mulvaney is no longer at the helm, I call on Director Kraninger to put consumers first by rolling back the anti-consumer actions taken by her predecessor and allowing the Consumer Bureau to resume its work of protecting hardworking Americans from unfair, deceptive or abusive practices,” she said, following the confirmation vote.
But in its report, PIRG said that in addition to taking action under state laws, Dodd-Frank gave states the power to enforce federal financial protection laws.
For instance, Pennsylvania and New Jersey have formally announced new efforts referred to as a “mini-CFPB” to help protect consumers.
In Pennsylvania, the consumer protection unit of the state attorney general’s office operates as a scaled-down CFPB, with a focus on mortgage issues, debt collection, payday lending, auto financial and other bank issues.
In New Jersey, Gov. Phil Murphy promised to step up consumer protection efforts and announced in April that the consumer affairs division of the state attorney general’s office would establish a state-level CFPB.
Other states also are increasing their efforts, but not everyone is unhappy about the federal CFPB’s intentions to become more pro-business than it has in the past.
“In the year that Mulvaney headed the BCFP, he made it responsive to consumers rather than to the bureaucrats and busybodies who thought they knew best and wanted to dictate consumers’ financial choices,” said John Berlau, a senior fellow at the free-market Competitive Enterprise Institute.
He added, “We believe Kraninger will continue the Bureau’s new direction of being tough but fair and promoting consumer choice.”
And the head of the association that represents the payday lending industry also said he was pleased that Kraninger was confirmed and that she has said she would continue efforts begun by Mulvaney.
Those efforts include making changes to the CFPB’s strict payday lending rules.
“Since its creation, the Bureau’s agenda has been guided by partisan politics, which has led to harmful, biased rulemaking – notably its rulemaking that led to the Bureau’s seriously flawed small-dollar lending rule,” said Dennis Shaul, CEO of the Community Financial Services Association of America. “CFSA looks forward to working with Ms. Kraninger as the Bureau reconsiders – and hopefully repeals – this harmful rule, and to craft commonsense regulations that appropriately balance consumer protection with access to credit moving forward.”