CUNA Chimes in as Biden Expected to Reinvigorate CFPB Enforcement & Supervision

The CFPB is going to return to a strict regulatory regime once President-elect Joe Biden takes office, consumer advocates and credit union lobbyists predicted in recent days.

And in large part, that means undoing many of the rules and guidance policies put in place by former Acting Director Mick Mulvaney and now-Director Kathy Kraninger. Much of that effort could be accomplished through the regulatory process and would not require legislation.

For credit unions, that could mean changes from a resumption in rulemaking governing overdrafts to re-adopting a strict payday lending rule.

Biden will be able to appoint a new acting director at the CFPB immediately upon taking office and then nominate someone to go through the Senate confirmation process.

“The acting and then new director should set about aggressively reviving the bureau though new supervision and enforcement actions as well as revisiting important consumer regulations such as requiring payday lenders to underwrite loans only to consumers who have an ability to repay them,” Aaron Klein, policy director at the Brooking Institution’s Center on Regulation and Markets, said.

A consumer advocate agreed.

“Eliminating abuses in the financial services sector, including housing discrimination, harmful overdraft fees and debt trap loans are necessary to help close the persistent racial wealth gap and must be top priorities no matter who wins the election,” Mike Calhoun, president of the Center for Responsible Lending, an affiliate of the Self-Help Credit Union, said.

CUNA lobbyists last week outlined what that might entail. They said the CFPB is almost certain to resume examinations under the Military Lending Act. The Trump Administration has argued that the agency does not have the legislative authority to conduct such examinations, but Democrats have argued the agency does.

The lobbyists also predicted that the agency is very likely to resume the rulemaking process governing overdraft policies at financial institutions. That process has stalled during the Trump Administration.

Democrats almost uniformly have condemned the CFPB for loosening the rules governing payday loans. CUNA officials and others said it is likely that the Obama Administration rule, which required financial institutions to determine whether a borrower has the ability to repay a loan before it is disbursed, will be re-adopted.

They also said it is likely the agency will tighten its enforcement of its power to govern Unfair, Deceptive, and Abusive Acts or Practices.

CUNA predicted that a Biden Administration will not transfer supervisory authority of large credit unions from the CFPB to the NCUA. Credit union trade groups have argued that the NCUA should have supervisory powers over all credit unions.

And one public interest group, Better Markets, said a new CFPB should abolish or reconstitute the agency’s controversial Task Force on Consumer Financial Law. Critics of the task force have alleged that Kraninger filled the group with people who oppose the agency’s mission. They have gone so far as to file suit challenging whether the agency followed administrative law in forming the group.

“The task force should be dismantled, or at the very least, repurposed to ensure its goals are consistent with the CFPB’s mission of protecting financial consumers,” Better Markets said in a recent report. “Furthermore, it must be reconstituted to ensure it is composed of members and leaders who have not built their reputations on tearing down the CFPB.”