California Attorney General Xavier Becerra has joined a multistate comment letter opposing the Consumer Financial Protection Bureau’s (CFPB) proposal to revise its policy offering companies binding exemptions from oversight and consumer protection laws. The proposal would grant the CFPB additional authority to offer product- and industry-wide exemptions from CFPB-administered statutes and regulations.
“By offering companies a free pass to evade the law, CFPB Director Kraninger puts American consumers and the entire U.S. financial system at significant risk with this proposal,” said Attorney General Becerra. “We urge the CFPB to withdraw this irresponsible proposal and do its job to protect consumers and ensure the fairness of markets.”
The CFPB was created with the goal of ensuring that markets for consumer financial products and services are fair, transparent, and competitive. Since 2016, entities regulated by the CFPB, after meeting specific criteria and on rare occasion, could apply for a non-binding no-action letter (NAL), stating that the CFPB did not intend to bring an enforcement action. In its proposal, the CFPB would revise its policy by expanding its discretion and broadening the scope and process for entities applying for immunity from CFPB enforcement. The Attorneys General point out in their letter a number of significant issues with the CFPB’s proposal. If enacted, it would result in a binding and indefinite pass from CFPB oversight, with limited CFPB authority for modification. In addition, the proposal would create a so-called “sandbox”, or safe harbor for a particular entity or industry from enforcement actions by any state and federal authorities. The Attorneys General point out that the CFPB lacks authority to grant such broad exemption.
In the letter, the Attorneys General assert the proposal would dramatically expand the effect and scope of NAL relief while simultaneously depriving the CFPB of the time and information needed to make decisions with significant policy and legal ramifications.
Joining Attorney General Becerra in the comment letter are the Attorneys General of Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin; and the District of Columbia.
Attorney General Becerra has stood firm in protecting independent CFPB oversight and challenging rollbacks that endanger consumer protections. In the last week, he issued a statement denouncing the CFPB’s rollback of the Payday Lending Rule. Additionally, in November 2018, he joined a bipartisan coalition criticizing former CFPB Acting Director Mick Mulvaney’s failure to protect military service members under the Military Lending Act. In June 2018, he called on the Trump Administration to preserve the CFPB’s public consumer complaint database.
A copy of the letter can be found here.
This article was released by the California Attorney General’s Office.