WASHINGTON (Legal Newsline) - Federal offices are looking very different under President Donald Trump, and one industry group has suggestions on how to reform an often-controversial consumer protection agency.
The American Financial Services Association has contended its members are subject to confusing rules imposed by the Consumer Financial Protection Bureau, which was created in 2011 to address issues that sparked a financial crisis years earlier.
Since its inception, critics have complained the CFPB has gone above and beyond what it was intended to do - sometimes harming the very consumers it is supposed to protect.
That's why AFSA has submitted suggestions to the CFPB as it waits for its next director. Rohit Chopra served that post under President Joe Biden and, for the moment, still heads it.
Thanks to a long court fight during Trump's first term, the CFPB director can be removed at any time, for any reason. The Wall Street Journal reports Chopra is angling to keep his job.
Either way, change is needed, AFSA says. No. 1 on its list is the way CFPB creates new rules for the financial services industry.
"Consumers need credit, not confusion," AFSA wrote. "Credit terms should be easy to understand, and the CFPB's rules should be, too.
"Unfortunately, the CFPB's policies are so confusing and unclear that they risk hindering millions of consumers' access to credit in a time when most Americans face more than a $700 increase in their monthly bills for such basic goods and services as gas and groceries."
Like other Biden agencies, the CFPB went through the rulemaking process to implement nationwide changes for businesses without needing approval from Congress. One such rule capped late charges on credit card payments at $8, leading to a court injunction against it.
House Financial Services Committee chair Andy Barr claims the CFPB has gone "rogue," and AFSA has warned that new rules targeting "risky" loans does not include a description of what those would be.
A 2023 policy statement on abusive acts or practices is "so vague and unwieldy, it is impossible to implement," AFSA wrote.
Fine print and complex language, some of which is required by law, can be seen as abusive, AFSA says. So can pop-ups, drop-down boxes and a product subject to customer complaints.
Even "being a large company" can be abusive, AFSA said.
"Because the Policy Statement on Abusive Acts or Practices is impossible to implement, the CFPB should rescind," AFSA wrote. "Decades of law, regulation and jurisprudence already provide all the authority the Bureau and other regulators need to prevent abusive acts."
Sometimes the CFPB skirts rulemaking requirements by posting policy changes on its blog. That needs to stop, AFSA said.
And the CFPB shouldn't allow states to enforce the federal Consumer Financial Protection Act. In Philadelphia, Mariner Finance faces a CFPA lawsuit from a group of state attorneys general over allegedly illegal add-on products.
The judge in that case will determine if state officials can sue under a law intended for use by a federal agency. The CFPB should step in and say no, AFSA says.
"Allowing states to act beyond the express enforcement authority granted to them usurps the role of the CFPB and is a clear act of government overreach," AFSA wrote. "The CFPB should issue a new interpretative rule, with an opportunity for notice and comment, describing the limitations that the Dodd-Frank Act put on states' ability to enforce the CFPA."
The letter also complains the CFPB urges judges to adopt changes proposed in its friend-of-the-court briefs, while suggesting the CFPB get more serious about following proper rulemaking procedure under federal law.
Other proposed changes can be read here.