The CFPB announced that, in coming weeks, it plans to publish in the Federal Register a series of Requests for Information (RFIs) seeking comment on its enforcement, supervisory, rulemaking, market monitoring, and educational activities.

Describing its plans as “a call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers,” the CFPB stated that the RFIs are intended to provide “an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.”

The CFPB also announced that its first RFI will seek comment on Civil Investigative Demands (CIDs), and the comments received will be used to evaluate current CID processes and procedures and determine whether any changes are needed.

According to Mick Mulvaney, President Trump’s appointee as Acting Director, the RFIs are part of the CFPB’s efforts “under new leadership…to critically examine its policies and practices to ensure they align with the Bureau’s statutory mandate.”  Mr. Mulvaney also stated that “[m]uch can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process.”


Leandra English has filed an emergency motion with the U.S. Court of Appeals for the D. C. Circuit requesting expedited briefing and oral argument in her appeal from the district court’s denial of her preliminary injunction motion in her action seeking a declaration that she, and not Mick Mulvaney, is the lawful CFPB Acting Director.

Ms. English argues that even without the “special circumstances” presented by her case, her appeal is entitled to expedited consideration because she is appealing from the denial of a preliminary injunction.  In support, Ms. English cites to 28 U.S.C. section 1657(a) which requires a federal court to “expedite the consideration of any action…for temporary or preliminary injunctive relief,” and to D.C. Circuit Rule 47.2(a), which directs the clerk of the court, in an action seeking such relief, to ” prepare an expedited schedule for briefing and argument” after docketing the appeal.

Ms. English also points to language in 28 U.S.C. section 1657(a) requiring expedited review when “good cause is shown” and asserts that, pursuant to the D.C. Circuit’s Handbook of Practice and Internal Procedures, “good cause” exists where a delay in hearing an appeal will cause irreparable injury and the decision under review is subject to “substantial challenge,” or if the public has “an unusual interest in prompt disposition.”

According to Ms. English, there is an “urgent public need for clarity” as to who is the lawful Acting Director because “doubt over who is the legitimate Acting Director hurts the public by casting a pall over the validity of the agency’s actions, since actions taken by an illegally appointed Director may themselves be unlawful.”  She also claims that as a result of the freeze imposed by Mr. Mulvaney on significant CFPB actions, “the public is deprived of the protections and guidelines that Congress intended the CFPB to provide.”

Ms. English also argues that the district court’s ruling is subject to substantial challenge, as proven by the “bevy of amicus briefs filed below” in her support.  She claims that she has suffered irreparable injury by virtue of “the usurpation of her statutorily-conferred position at the fore of a major federal agency” and that such injury “will continue every day that Mr. Mulvaney claims to hold the office of Acting Director.”  She further claims that a finding that her injury does not qualify as irreparable harm “would also have the pernicious result of rewarding and encouraging illegal temporary appointments.”

Ms. English proposes the following briefing schedule:

  • Appellant’s opening brief: January 30, 2018
  • Amicus briefs supporting appellant: February 6, 2018
  • Appellees’ brief: February 13, 2018
  • Amicus briefs supporting appellees: February 20, 2018
  • Appellant’s reply brief: February 22, 2018



Despite the CFPB’s change in position after Mick Mulvaney’s appointment regarding the need for Nationwide Biweekly Administration to post a bond to stay execution of the $7.9 million judgment obtained by the CFPB, the CFPB has opposed Nationwide’s motion to alter, amend, or vacate the judgment.

In its action against Nationwide, another related company, and the companies’ individual owner, the CFPB alleged that the defendants engaged in abusive and deceptive acts or practices in violation of the CFPA UDAAP prohibition by making false representations regarding the costs of a biweekly mortgage payment program and the savings consumers could achieve through the program.  A California federal district court refused to award restitution sought by the CFPB but did award the CFPB approximately $7.9 in civil money penalties.

Although it had initially filed a response opposing the defendants’ motion to stay execution of the judgment without posting a bond, the CFPB filed a notice following Mr. Mulvaney’s appointment as Acting Director stating that it was withdrawing its response and took “no position on whether the court should require a bond pending the disposition of the defendants’ anticipated post-trial motions.”

In its opposition to the defendants’ post-trial motion to alter, amend, or vacate the judgment, the CFPB rejected the defendants’ argument that the CFPB was required to establish rules interpreting what constitutes deceptive acts or practices before bringing an enforcement action.  The CFPB stated that “nothing the CFPA mandates that the Bureau engage in rulemaking prior to commencing a lawsuit against entities engaged in violations of Federal consumer financial law.”  It also rejected the defendants’ argument that the deception standard in the CFPA is unconstitutionally vague, asserting that the defendants “cannot credibly argue that they were not on notice that the CFPA prohibited deceptive and abusive acts or practices in connection with the sale or offering of consumer financial  products or services like [the defendants’ biweekly payment program].”

Also rejected by the CFPB was the defendants’ argument that they were entitled to relief from the judgment based on their current inability to pay.  The CFPB  stated that the court “appropriately imposed a $7.93 million penalty commensurate with the size of the business as it was during the lawful conduct.”

It seems likely that, in deciding to defend its judgment, the CFPB deemed the case one that involved garden-variety deception claims rather than one in which the CFPB had taken aggressive positions regarding its jurisdiction or in its theory of liability.  The CFPB’s approach also appears to be consistent with statements made by Mr. Mulvaney that he planned to review pending CFPB litigation on a case-by-case basis.




The CFPB announced today that it intends to engage in a rulemaking process to reconsider, pursuant to the Administrative Procedure Act, its final rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans (the “Payday Rule”).  The announcement fully accords with our expectation that the Payday Rule will never see the light of day in its current form.

If it were to go into effect, the Payday Rule would largely eliminate the availability of payday loans to the public.  In this regard, the Payday Rule reflected former CFPB Director Cordray’s hostility to payday lending and his failure to seriously consider how consumers who rely upon the product would be impacted by its elimination.  It was adopted on a crash basis shortly before Director Cordray’s resignation and largely disregarded over 1,000,000 comments from consumers articulating the critical benefits of payday loans.

To our mind, it was inevitable that Director Cordray’s successor would wish to re-evaluate the costs and benefits of the Payday Rule.  We think it highly likely that, at the end of the day, the new Director (whether Mick Mulvaney in an acting capacity or the as-yet-to-be-appointed permanent successor to former Director Cordray) will repeal the Payday Rule while he or she considers other options that can preserve the product and limit the potential for consumer injury.

Today’s announcement is good news for the millions of consumers who rely upon payday and title loans to meet their financial needs (and, of course, to the payday and title lending industries).

On January 12, 2018, the U.S. Supreme Court agreed to hear the Lucia case in which Raymond J. Lucia is challenging how the SEC appoints administrative law judges (“ALJs”). He argues that ALJs are “inferior officers” who must be appointed by the President, the courts, or a department head in accordance with the Constitution’s appointments clause. Lucia filed a petition for certiorari with the Supreme Court after the D.C. Circuit rejected his argument. A circuit split was created when the 10th Circuit reached the opposite conclusion in another case making a similar appointments clause challenge. The Supreme Court’s decision in Lucia may impact numerous past and pending ALJ decisions, including cases involving the CFPB, most notably the PHH case. We’ve discussed the potential impact of Lucia and the related 10th Circuit case before and will continue to follow them closely.

According to a Wall Street Journal article, the Treasury Department expects to make recommendations in early 2018 for changing Community Reinvestment Act regulations.

The article quotes a Treasury spokesperson who is reported to have said that CRA modernization is needed to align the statute’s goals and ensure that banks’ investments better support community needs.  The spokesperson is reported to also have said that Treasury has solicited input from consumer advocates, trade associations, financial institutions, legal scholars, think tanks, civil rights groups, and community development financial institutions, and plans to work with the OCC, FDIC, and Federal Reserve in developing the recommendations.

In discussing changes Treasury might propose, the article notes that Comptroller Otting has “floated the idea” that “community development loans” for CRA purposes be expanded to include more small business loans, and that the American Bankers Association has suggested expanding such loans to include infrastructure lending and other activities that do not solely benefit the poor.

In November 2017, the OCC issued a framework for evaluating applications from banks with less than satisfactory CRA ratings.  OCC regulations implementing the CRA provide that the OCC must consider a bank’s CRA rating when reviewing the bank’s application for branch establishment, branch relocation, main or home office relocation, a Bank Merger Act filing involving two insured depository institutions, conversion from a state to a federal charter, and conversion between federal charters.

The CFPB has published a final rule in the Federal Register to adjust for inflation the civil penalties within its jurisdiction.  The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990 which, pursuant to a 2015 amendment, required federal agencies to adjust the civil penalties within their jurisdiction by July 1, 2016 and by January 15 every year thereafter.

The civil penalties adjusted by the CFPB are the Tier 1-3 penalties set forth in Section 1055 of Dodd-Frank, as well as the civil penalties in the Interstate Land Sales Full Disclosure Act, Real Estate Settlement Procedures Act, SAFE Act, and Truth in Lending Act.  (To obtain the new penalty amounts, the CFPB multiplied each penalty amount by the “cost-of-living adjustment” multiplier and rounded to the nearest dollar.  The multiplier used, which is determined by OMB, was 1.02041.)  The new penalty amounts apply to civil penalties assessed after January 15, 2018.


Earlier today, Leandra English filed a notice of appeal with the D.C. District Court. She is appealing the Court’s denial of her preliminary injunction motion through which she sought to block Mick Mulvaney from serving as the CFPB’s Acting Director. The notice of appeal indicates that she is seeking expedited review by the D.C. Circuit. While the appeal is no surprise, it indicates that this case is far from over.

A New York federal district court dismissed the counterclaims of the defendants in a CFPB enforcement action claiming that, pursuant to the Equal Access to Justice Act (EAJA), they were entitled to fees and expenses incurred.

The CFPB’s complaint alleged that the defendants created and operated an illegal debt collection scheme.  In their answers, the defendants asserted that the CFPB’s investigation and lawsuit were unjustified and in violation of the EAJA and counterclaimed for their “fees, costs, and other further relief.”

The EAJA provides, that subject to any statutory exceptions, a court shall award to “a prevailing party” other than the United States “fees and other expenses” other than non-attorney fees and expenses awarded under the EAJA that such party incurred in a civil action (other than a tort case) brought by the United States “unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.”

The court dismissed the defendants’ counterclaims as procedurally improper because the defendants could not be considered “prevailing parties.”  According to the court, the counterclaims were “premature fee requests” and under the EAJA, “the proper vehicle for a fee request is an application showing eligibility after a party has prevailed—not as a counterclaim within an answer.” (emphasis included)

A party entitled to an award under this provision of the EAJA must be an individual with a net worth that did not exceed $2 million at the time the civil action was filed, or an owner of an unincorporated business, or any partnership, corporation, association, unit of local government, or organization, with a net worth that did not exceed $7 million at the time the civil action was filed, and which did not have more than 500 employees at the time the civil action was filed.  However, a 501(c)(3) tax-exempt organization or a cooperative association as defined in the Agricultural Marketing Act may be a party regardless of its net worth.

Yesterday, U.S. District Court Judge Timothy J. Kelly denied Leandra English’s motion for a preliminary injunction in a 46-page opinion. English had sought to block President Trump’s appointment of Mick Mulvaney to serve as the CFPB’s Acting Director. The Court denied that request and held that English failed to satisfy  any of the four elements of her preliminary injunction claim.

The Court found that English was unlikely to ultimately succeed on the merits of her claim. It held that the Vacancies Reform Act (“VRA”) gave President Trump the right to appoint a CFPB Acting Director and that the Dodd-Frank Act did not displace the President’s VRA authority. In reaching that conclusion, the Court relied on language in Dodd-Frank providing that all federal laws relating to federal employees or officers – such as the VRA – apply to the CFPB “except as otherwise provided expressly by law.” It found that Dodd-Frank’s reference to the Deputy Director’s service as the Acting Director in the Director’s “absence or unavailability” did not constitute an “express” provision of law overriding the VRA.

English had argued, under the canon of statutory construction that specific statutes trump general ones, that the Dodd-Frank provision was more specific than the VRA, and thus controlled. The Court soundly rejected this argument, finding that the VRA’s reference to “vacancies” was more specific to this situation than Dodd-Frank’s reference to the Director’s “absence or unavailability.”

The Court also rejected English’s argument that a different result was required because Dodd-Frank used the word “shall” in reference to the Deputy Director’s service as Acting Director. It relied on the commonsense notion that, while the word “shall” is generally mandatory, it is not necessarily unqualified. The court recognized that this very notion is embedded in Dodd-Frank itself. Dodd-Frank says that the Director “shall serve as the head of the [CFPB].” If “shall” were unqualified in that context, then the provision stating that the President “may” remove the Director for cause would be meaningless (and the statute nonsensical).

Further, relying on the doctrine of constitutional avoidance, the Court rejected English’s position because it would create serious constitutional problems. “Under English’s reading, the CFPB Director has unchecked authority to decide who will inherit the potent regulatory and enforcement powers of that office, as well as the privilege of insulation from direct presidential control, in the event he resigns. Such authority appears to lack any precedent, even among other independent agencies.”

If the CFPB Director had that much control over his successor, it would severely diminish the President’s control over Executive officers and thus his constitutional duty to “take care that the laws be faithfully executed,” the Court held. It also acknowledged that a panel of the D.C. Circuit has already found that the CFPB’s structure is unconstitutional. It held that English’s reading of the statutes would only exacerbate those problems.

English had equal difficulty convincing the Court that she would suffer irreparable harm if an injunction were not issued. The only harm she proffered was the intangible harm she would suffer from being unable to perform the duties of the Acting Director. The Court declined to adopt the reasoning of the only authority supporting the proposition that such harm was irreparable harm — an unpublished district court decision from 1983 involving the termination of officers of an agency that would automatically cease to exist under its implementing statute thus precluding their later reinstatement. The Court found that English “utterly failed to describe any [irreparable] harm.”

On the third and final elements of English’s claim – balance of the equities and public interest – the Court found her claim equally wanting. English said that the need for clarity meant that an injunction should issue. The Court held that, “There is little question that there is a public interest in clarity here, but it is hard to see how granting English an injunction would bring any more of it. . . . The President has designated Mulvaney the CFPB’s acting Director, the CFPB has recognized him as the acting Director, and it is operating with him as the acting Director. Granting English an injunction . . . would only serve to muddy the waters.”

Finding that English failed to meet her burden on even one element of her preliminary injunction claim, the Court denied her motion. The Court’s decision does not ultimately resolve the merits of the case and English will doubtless file an appeal with the D.C. Circuit. Because of the cloud that the ongoing litigation casts on the legality of any of Mulvaney’s actions, President Trump should appoint a permanent Director without delay.