On November 7, 2019, the George Mason University Antonin Scalia Law School hosted an event with Brian Johnson, the CFPB’s Deputy Director, to discuss the agency, its rulemaking process, innovation programs, and goals for the near future.
Deputy Director Johnson began the discussion by acknowledging that the CFPB’s scope of authority is not well-defined given its relatively recent creation. However, he and Director Kathy Kraninger believe that the CFPB’s mission should be guided by an objective definition of consumer protection, which Deputy Director Johnson describes as having three components: (1) to arm consumers with information to make informed decisions; (2) to police conduct by market actors; and (3) to avoid undermining market activity by reducing government involvement in the designs, features, and products available on the market.
On rulemaking, Deputy Director Johnson emphasized the importance of utilizing a robust cost-benefit analysis to evaluate the economic impact of proposed regulations. Rather than acting as a stumbling block, as some have suggested, he believes that this analysis promotes positive outcomes when implementing rules. Thus, his stated preference is to have more economists at the CFPB working in the supervisory and enforcement contexts to provide such analyses as part of the rulemaking process.
On the creation of the Office of Innovation, Deputy Director Johnson expressed optimism that the programs offered will provide regulatory clarity to participants, which will result in effective guidance and better outcomes for both innovators and consumers. He strongly encouraged state agencies and regulators to join the American Consumer Financial Innovation Network (ACFIN), especially those that are skeptical of the CFPB’s motives under its current leadership. He also indicated that he is hopeful that the coordination between the CFPB and state agencies contemplated by ACFIN would provide greater assurance to companies obtaining no-action letters from the CFPB that the letters will be recognized by state agencies so that programs that are the subject of no-action letters can operate without raising alarms with state attorneys general.
When asked about the status of existing enforcement actions opened under former Director Richard Cordray, Deputy Director Johnson stated that the CFPB is still reviewing such actions to determine whether they involve issues where there are gaps in or uncertainty exists as to the relevant rules and regulatory guidance. His hope is that the CFPB will develop a body of agency common law that will ultimately provide clarity and consistency to consumers and the industry alike.