Just two weeks before the inauguration of President-elect Biden, and the launch of a new executive administration, the Consumer Financial Protection Bureau (CFPB or Bureau) Taskforce on Federal Consumer Financial Law (Taskforce) issued a nearly 900-page report making extensive recommendations for legislative and regulatory reform, enactment, and adoption of new initiatives. The Taskforce comprised five appointed members with more than 150 combined years of economic, legal and regulatory experience in federal consumer financial law. In January 2020, now out-going CFPB Director Kathy Kraninger charged the Taskforce with:
- "provid[ing] an objective and independent evaluation, in the form of one consensus report to the Director, of the Bureau's current regulatory framework;"
- "examin[ing] the existing legal and regulatory environment facing consumers and financial services providers;" and
- "report[ing] its recommendations for ways to improve and strengthen consumer financial laws and regulations."1
The Taskforce conducted research and interviews, held meetings, and completed drafting its Report with the assistance of Bureau staff by its January 2021 deadline, despite challenges imposed by the COVID-19 state of emergency. To fulfill its charter, the Taskforce issued a nearly 800-page Volume I divided into three sections. In Volume II, it made numerous targeted recommendations in the form of statutory repeal, amendment or enactment; regulation repeal, amendment or enactment; further study; or CFPB or other federal agency restructure, reassignment of jurisdiction, or reinforcement of obligations that should be undertaken. Links to Volume I and Volume II of the Report are included here: [https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-1_2021-01.pdf; https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-2_2021-01.pdf].
This update provides a broad overview of Volumes I and II of the Taskforce Report. We anticipate publishing more detailed analyses of the Report's specific recommendations for legislative and regulatory reform, as well as drafting blog-posts and hosting webinars and podcasts devoted to emerging areas of federal consumer financial law, throughout 2021.
Taskforce Report Volume I provides summaries, analysis and helpful practice aids.
In Volume I of the Report, the Taskforce has authored a long treatise explaining nearly everything about consumer financial products, services and federal government regulation of them. It traces the history of federal consumer financial law since 1968, and explains how financial products and services work, as well as incentives for them. It highlights strengths and weaknesses of the current statutes and state and federal regulatory regimes. In large measure it provides all the data, research, background information, analysis, and justification for specific recommendations for changes, refinements, and new initiatives that are set forth in Volume II.
The Taskforce organized Volume I into three sections. Section 1 provides "[a] historical and economic overview of consumer finance"; Section 2 summarizes "[t]he framework of consumer financial protection: consumer protection; competition; innovation; and inclusion;" and Section 3 chronicles "[m]odernizing the regulatory framework and expanding consumer empowerment."2 The three Sections are divided into thirteen chapters.
While a description of each chapter is beyond the scope of this update, each is well-organized and provides a general background or historical discussion, a summary of current laws and regulatory tools along with an analysis of their effectiveness, and suggestions for modernization or conclusions that form the grounds for the Taskforce's recommendations as set forth in Volume II. Most of the chapters contain supporting documents, lists and charts that are included as Appendices.
For example, Chapter 13 is entitled "The regulatory framework of federal consumer financial protection law and opportunities for modernization."3 It provides the detailed backstory for the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which resulted in the formation of the CFPB with its vast powers to adopt, repeal, amend and enforce federal consumer financial laws and regulations. Among other things, this chapter summarizes the Bureau's broad rulemaking powers and discusses the eighteen federal consumer financial laws over which the CFPB has oversight and regulatory authority.4 And perhaps most helpful for regulated entities and practitioners in this area, it includes a two-page summary chart of "Federal Financial Regulators and Who They Supervise" as its Appendix A,5 as well as a one-page chart delineating "Regulatory Jurisdiction by Agency and Type of Regulation" as its Appendix B.6
Taskforce Report Volume II provides recommendations for changes and reform.
Volume II of the Report contains the Taskforce's specific recommendations for changes to federal consumer financial law and regulation in nineteen topical chapters, organized alphabetically.7 In each recommendations chapter, the Taskforce has included a discussion identifying the challenges and problems facing the CFPB and market participants (both consumers and financial products and services providers)—whether that be the current regulatory environment, perceived market inefficiencies, or structural issues leading to problems capable of being remediated.
Some chapters are very targeted and include a relatively small number of specific recommendations that appear readily digestible. For example, the chapter addressing "Bureau reorganization" contains only two specific recommendations, one of which proposes that the CFPB move from a "tools-based" structure focused on the laws and regulations over which it has jurisdiction, to a "market-based" structure organized around the products and services most commonly used by consumers.8 Other chapters such as "Alternative data,"9 "Consumer empowerment,"10 "Deposit accounts,"11 "Electronic signature and documents requirements,"12 "Emergency authority,"13 "Fintech regulation,"14 "Privacy,"15 and "Small dollar credit"16 provide several pages of introductory support for discrete recommendations that may include Bureau action in the areas of rulemaking or enforcement, further investigation, or coordination with other federal or state regulators. Given the limited scope of recommendations in these chapters, each on a stand-alone basis appears manageable for an agency the size of the CFPB to consider and act on where it deems appropriate.
Each of the remaining chapters would provide a much larger task for CFPB or federal government review and consideration due to the scope of issues identified and number of recommendations. Each of these chapters would require comprehensive, time-consuming action plans. For example, the chapter on "Consumer credit reporting" spends five single-spaced pages identifying issues and problems organized into sub-headings such as "Rulemaking and interpretive issues," Research issues," "Security freezes," and "Legislation," before making the case for seven recommendations.17 Implementing the recommendations would require comprehensive CFPB rulemaking and legislative action by a Congress that, following the Georgia Senate runoff elections, will now be under full Democratic control.18
The chapter on "Disclosures" is another area where the Taskforce has identified numerous issues and problems, devoting nearly eight pages to discussing its rationale for seven specific recommendations for the Bureau including revising disclosure requirements or commentary under Regulations B and Z of the FCRA.19 Other chapters that will require more comprehensive review and consideration by the CFPB and other federal regulators before taking action include "Cost-Benefit and Bureau activities analysis,"20 "Enforcement,"21 "Equal access to credit,"22 "Financial inclusion,"23 "Regulatory principles,"24 and "Supervision."25
But a larger question is whether the Taskforce Report will be reduced to gathering dust on a shelf by the incoming Biden administration and its newly-announced Director, or whether it will be given the full consideration desired by the Taskforce. Only time will tell. But if the new administration gives the Report the due time and deliberation that went into its research and drafting, the CFPB and its staff will certainly have a lot on its plate during 2021.
1. Bureau of Consumer Financial Protection, January 2021 Taskforce on Federal Consumer Financial Law Report (Report), Volume I at 4 ("Message from the Taskforce").
3. Id. at 731.
4. Id. at 737-40.
5. Id. at 795-96.
6. Id. at 797.
7. Id., Volume II at 5 ("Introduction").
8. Id. at 12.
9. Id. at 6-9.
10. Id. at 27-30.
11. Id. at 36-37.
12. Id. at 47-50.
13. Id. at 51-53.
14. Id. at 81-83.
15. Id. at 84-85.
16. Id. at 92-94.
17. Id. at 20-26.
18. For example, the Taskforce recommendations request that the CFPB "engage in rulemaking to clarify the role of the CRAs [Credit Reporting Agencies] and furnishers with respect to disputes under the" Fair Credit Reporting Act (FCRA), "to codify as appropriate the [Federal Trade Commission's] interpretations of the FCRA," and "to update and revise the FCRA's summary of consumer rights, notice to furnishers of information to CRAs, and notice to users of consumer reports." Id. at 26 (Recommendation numbers 15-17). This would be no small task given comprehensive rulemaking requirements under the Administrative Procedures Act. The Taskforce further requests that "Congress adopt class action damages limitations for FCRA, to bring the FCRA civil liability provision in line with similar laws"-a very unlikely priority for the incoming Biden Administration and a Congress that will now be controlled by Democrats. Id. (Recommendation number 21).
19. Id. at 38-46.
20. Id. at 31-35.
21. Id. at 54-60.
22. Id. at 61-72.
23. Id. at 73-80.
24. Id. at 88-91.
25. Id. at 95-99.
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