CFPB embraces free-market approach in new strategic plan

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WASHINGTON — Continuing to pull back the reins on the aggressive approach taken under former Director Richard Cordray, the Consumer Financial Protection Bureau unveiled a new strategic plan Monday that values consumer choice over heavy-handed enforcement.

The new strategic plan, which lays out a vision for this fiscal year through 2022, sets out a more free-market approach for the agency, prioritizing things like making sure consumers can benefit from financial products rather than penalizing firms.

The plan, which is consistent with other policies outlined by acting Director Mick Mulvaney, sets three main goals: making sure consumers have access to financial services; enforcing financial laws fairly and transparently; and operating efficiently with a “security of resources and information.”

"Consumer protection begins with ensuring that all consumers have access to markets for consumer financial products and services. Access is enhanced where markets are transparent, competitive, and innovative and where providers can adapt to changing consumer demand," the agency said in the strategic plan.

Previously, the CFPB had four goals focused on preventing financial harm; informing the public of its data-driven decisions on policymaking; maximizing the agency’s impact; and aiming to “empower” consumers’ financial lives.

Most significant is the apparent lack of an enforcement focus that had characterized the previous strategic plan under Cordray. The change is largely in response to past criticism that the CFPB was so heavy-handed in overseeing the financial industry that it was making decisions for consumers.

“Some would say the prior CFPB strategy was paternalistic in protecting consumers from making bad decisions,” said Lucy Morris, a partner at Hudson Cook’s Washington office and former deputy enforcement director at the CFPB.

The CFPB’s new strategy seems to say “they will not substitute the government for consumers. Consumers can make their own fully informed decisions,” Morris added.

The strategic plan also reiterates a new agency objective stated by Mulvaney that the bureau will not exceed its statutory responsibility. The CFPB’s new strategy brings the agency more in line with its statute under the Dodd-Frank Act, but goes "no further,” he wrote in a letter within the strategic plan.

“Indeed, this should be an ironclad promise for any federal agency; pushing the envelope in pursuit of other objectives ignores the will of the American people, as established in law by their representatives in Congress and the White House,” Mulvaney said in the letter.

As part of the first goal, to enable consumer access to financial services, the CFPB said it will now reduce “unnecessary” or “burdensome” regulations. Previously, the CFPB’s strategic plan, which had applied to the period between 2013 and 2017, had included a prominent objective to “create, adopt, and administer” regulations.

According to a staff memo Friday that previewed some of the plan's contents, the CFPB is also changing the four ways in which it will achieve its vision and mission, with equal treatment for both consumers and firms under review. The memo laid out those four priorities as follows:

  • Seeking the counsel of others and making decisions after carefully considering the evidence.
  • Equally protecting the legal rights of all.
  • Confidently doing what is right.
  • Acting with humility and moderation.

The change in leadership at the agency is already producing swift results at the CFPB as staff revamp the agency to be more in line with what the GOP has long favored in curtailing the bureau’s previous use of powers. Mulvaney is seeking public comment on several changes to the agency’s enforcement strategy and tightened the CFPB’s funding since taking helm in November.

But critics argue the CFPB changes will ultimately defang the agency from protecting consumers. Mulvaney’s actions could also create greater challenges for a permanent Senate-confirmed director. Mulvaney, who is also the Office of Management and Budget Director, is only filling the CFPB role temporarily.

“This Administration should swiftly nominate someone who will have full bipartisan support in the Senate and will protect consumers instead of special interests,” Senate Banking ranking member Sen. Sherrod Brown, D-Ohio, said in an emailed statement after the CFPB’s latest changes. “In the meantime, Mr. Mulvaney must take steps to ensure that consumer laws are enforced.”

But Mulvaney has insisted that the agency is not abandoning its mission to protect consumers.

“We will protect consumers. There is no question about that,” said Mulvaney during an interview on CBS’ “Face the Nation” on Sunday. “The priorities have not changed since I took over.”

Morris, who worked at the CFPB when staff drew up the initial 2013-17 strategy, said staff during that time had “spent a lot of time” working on the agency’s mission and vision.

“Remember that the bureau was created out of the financial crisis and we all felt that we had a mandate to do everything we could to protect consumers from a similar thing occurring,” she said. “Many would argue that the bureau overcorrected and this administration is trying to bring things back to a balance. We’ll have to see how they execute on that.”

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Enforcement Enforcement actions Policymaking Mick Mulvaney Sherrod Brown CFPB House Financial Services Committee