CFPB reform roadblock: Too many commenting deadlines

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WASHINGTON — The Consumer Financial Protection Bureau's unprecedented move to seek public input on almost every function of the bureau was a boon for reform advocates. But actually collecting comments has proved challenging.

The finance industry and consumer advocates are struggling to respond to the dozen requests for information — known as RFIs — that the agency issued at a feverish pace during acting Director Mick Mulvaney first few months at the agency.

As the comment period is closing for many of these requests, responders say they have had to be selective in what issues they take up, and in many cases, organizations must deliberate before determining what position to take in a response. The time crunch has prompted questions over whether the CFPB will get the full story on key areas like enforcement and rulemaking.

“It was not a bad idea to seek comments on all the bureau’s functions, but it was all done so quickly, and one on top of another, that it made it really difficult to respond,” said Lucy Morris, a partner at Hudson Cook’s Washington office and former deputy enforcement director at the CFPB.

Consumer advocates, meanwhile, argue that the accelerated commenting schedule seems designed to benefit bigger lobbying operations with the capacity to craft and articulate a position quickly.

“The RFI process is particularly disturbing because the rapid-fire issuance, broad scope and short timeline for responses gives a procedural advantage to industry, who has a tremendous amount of resources to devote to responding to them when compared to individual consumers and consumer advocacy organizations,” said Linda Jun, senior policy counsel at American for Financial Reform and a former legal services attorney.

But financial industry insiders counter that it is actually much harder for an entire organization to sign off on one comment letter than for an individual consumer to submit a letter. There are also concerns about what the CFPB would be able to accomplish based on these RFIs with Mulvaney’s limited time as an acting director and whether an incoming permanent director would carry the torch.

“Are you willing to take time for employees to draft a comment, review it and shop around internally at the institution if you don’t know whether there will be any result from it,” said Richard Horn, founder of Garris Horn PLLC in Tucson, Ariz., and a former CFPB special counsel and special adviser. “Some might have wondered if the juice is worth the squeeze, particularly for the smaller and midsize institutions.”

The overall struggle in responding quickly is proving a concern for even Mulvaney, who said recently he was disappointed by the number of responses to some of his requests for comment.

“I’ve been a little surprised at the lack of participation in a couple of areas,” Mulvaney said during an annual conference for the National Association of Realtors in Washington May 15.

Mulvaney noted that one request received just six comments and only one of those comments pertained to the correct issue.

“We do take this seriously . . . we’re not checking the box just because I already know what I want to do,” Mulvaney said. “I need information from you folks, I need information from consumers, I need information from everybody who has a dog in the fight to send us the information in response to these requests.”

Still, both industry and consumer advocates say they have to be selective in which issues they take up partly due to the time crunch.

“We did submit a comment on the enforcement process and it’s a heavy lift. It takes time,” said Morris.

But there are also concerns to the requests for information about the CFPB’s enforcement process because some banks are worried that saying too much in a comment letter could reveal to the public that they are under investigation.

“In contrast, I suspect there will be more comments on the rulemaking RFIs that are more about the policymaking process," said Benjamin Olson, a partner in the Washington office of Buckley Sandler and a former CFPB official. Commenters, he added, will “rightly view the RFIs related to rulemaking as an opportunity to encourage the bureau to re-examine the regulations issued following the passage of the Dodd-Frank Act.”

Comments are due this week on two different RFIs, one related to the CFPB's consumer complaint database and another on its rulemaking processes. Meanwhile, comments are due June 19 on the CFPB's adopted regulations and June 25 on inherited regulations.

In some cases, both consumer and industry advocates said the requests were too broad, which might make it difficult for the agency to implement change as well as force the bureau to do a follow-up RFI with more specific questions.

“I don’t think there’s anything wrong with an assessment of bureau's functions, but then the question is, what’s next,” Morris said. “This isn’t the end of the process. It might be for some things, but the next step for others would be to put out a more specific notice of proposed rulemaking.”

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