Yesterday we covered the ARM industry's contributions to the Bureau of Consumer Financial Protection (BCFP or Bureau) Request For Information (RFI) regarding its rulemaking process. This article highlights the contribution by the recently fired Consumer Advisory Board (CAB).
Prior to their release from service, the CAB Chair and Vice Chair created a survey to solicit input from members regarding the four RFIs they felt were most relevant for the group, including:
- Bureau Public Reporting Practices of Consumer Complaint Information
- Bureau External Engagements
- Bureau Rulemaking Process
- Bureau's Adopted Regulations and New Rulemaking Authority
The survey garnered 39 responses, or 71% of all current and former CAB members, representing the following fields:
While the group's submission covered four topics, I'm just going to cover the rulemaking input for now.
The first theme addressed the concept of whether Bureau rules should be subject to Congressional approval. The overwhelming majority (nearly 87%) said they should not. The following CAB member comments represent minority and additional viewpoints:
"Additional safeguards would help ensure that the Bureau’s rulemaking activity is consistent with Congressional intent. The Bureau is empowered to make rules with regard to Federal consumer financial law. This authority enables the Bureau to protect consumers across the financial marketplace, but it is a broad and vague mandate. Additional safeguards, up to and including Congressional review of major CFPB rules, would help the Bureau to exercise its properly delegated authority."
"CFPB should use rulemaking in some areas where it has instead used enforcement to convey policy. It should also avoid retroactive enforcement on standards that were unclear, due to lack of rulemaking and guidance, unless the company involved is engaging in willful mistreatment of customers."
The next theme covered methods the Bureau uses to obtain data and analyses for use in developing proposed rules. In this case, respondents were able to choose multiple answers (i.e. check all that apply). The overwhelming majority selected all answers:
- The CFPB should issuea a call for data to members of industry, academia and consumer groups (89.74%)
- The CFPB should take proactive steps to encourage stakeholders to engage in research or provide data on issues that are the subject of a rulemaking, such as providing resources for research or making industry data confidential (74.36%).
- The CFPB should conduct its own research on issues that are the subject of rulemaking (89.74%).
Additional input included:
"With the nation’s largest financial institutions each holding a significant market share that can now be accurately represented in frequently updated, financial institution-specific, polling methods, there’s no justification for not using this method to understand how new rules may affect outcomes (on a financial institution-specific basis). The results simply offer too much value to ignore."
"The CFPB should increase coordination with other agencies on research and policy, to accelerate joint learning and policy thinking."
"Collect data from community-based organizations."
"The CFPB should have all research that it uses peer reviewed and subject to information quality standards. In addition, they should survey and interview actual consumers of financial products."
"The complaint database is also a great resource for obtaining data from the real world."
"The CFPB should get OMB approval for requiring data production from 10 or more regulated entities when appropriate. As someone who works extensively with data, there are real problems with voluntarily produced data—one does not know if it is reliable, exactly what the data report, and how good the quality of the data is. The idea that the CFPB would rely on data provided voluntarily by regulated entities or consumer groups is troublesome. Academics rarely have original, hand-collected data, and when they do, they aren’t going to share it until they’ve worked it over themselves first."
"Any data used in a rulemaking should be made public and not be given confidential status."
"The CFPB's data on certain topics have been questionable in my mind, especially as it relates to sample size. It would be helpful for the Bureau to partner with academics and industry expers in conjunctino with the Bureau's research activities."
"The CFPB should maximize its use of data (whether public or not) held by other government agencies."
The final theme covered CAB members' impressions of how seriously their input, and the input of a broad range of stakeholders, is considered by the Bureau director and senior staff.
As it related to the input of CAB members:
- 64.1% agreed that their input was seriously considered
- 15.4% somewhat agreed
- 5.1% somewhat disagreed
- 2.6% disagreed
- 12.8% had no opinion
As it related to the input of a broad range of stakeholders:
- 71.8% agreed that stakeholder input was seriously considered
- 12.8% somewhat agreed
- 7.7% somewhat disagreed
- 2.6% disagreed
- 5.1% had no opinion
The following additional comments were offered:
"My experience with the rulemaking process is that the Director and senior staff, prior to December 2017, seriously considered and invited CAB feedback. Based on very limited experience with the new Director, I do not know if CAB feedback is sought out and seriously considered."
"Just to be clear, I am responding to these questions based on my experience with the CAB when Director Cordray headed the Bureau. We have not met in person since Mick Mulvaney was appointed to lead the Bureau. My experience since Mulvaney took over has been different. Long-scheduled meetings have been canceled, changed, or shortened, which has had the effect of decreasing the ability of CAB members to engage productively with the Bureau."
"It used to do so before the current administration moved in and made/is making every effort to shut down the CFPB."
"I’m very concerned that the opportunity to give constructive feedback is changing under the new leadership."
"I feel that the rulemaking process could be more transparent and collaborative with the CAB and other regulators."
"I’m a new member and can’t say the process has been transparent to me."
"The CAB was often the last to learn anything under Director Cordray, which meant that by the time the CAB could give feedback on a proposed rule, the train had already basically left the station."
"The answers above are based on rulemaking prior to the current Administration. I hope it continues."
"Certainly that is how the CAB operated during my 5 years of service before the new CFPB director."
"The CAB has engaged productively in the CFPB rulemaking process. We bring a unique perspective. For example, when the Bureau was going through the small dollar loan rulemaking, a CAB committee that include payday lending, financial institution, fintech, and consumer advocacy perspectives engaged together in offering feedback through the pre-rule process as well as through the public comment process. Though the CAB group did not arrive at consensus, having diverse perspectives led to a rich dialogue and beneficial feedback."
"The CFPB has been far more open to meeting with stakeholders of all stripes, including both industry and advocates, than other financial regulatory agencies, and to creating opportunities for stakeholders with differing perspectives to meet with the Bureau together. It was truly refreshing."
"Though this has changed since the change in administration."
As it relates to the RFI regarding adopted regulations and new rulemaking authority, the CAB survey did not include questions about debt collection (it covered adopted regulations only).
Ironically (or not), this RFI submission would the last official input provided to the Bureau by this body.