On January 9th, Michael Guerrero, Partner in Ballard Spahr’s Consumer Financial Services Group, presented at a program titled “Has the CFPB Offered Simpler Rules of the Road? Successes and Challenges with the CFPB’s Rulemaking and Non-Rulemaking Efforts During the Biden Administration”.

Panelists discussed the CFPB’s rulemaking and non-rulemaking guidance after Director Rohit Chopra’s June 2022 blog post titled “Rethinking the Approach to Regulations” in which he shared the CFPB’s aspiration to more clearly communicate the CFPB’s regulatory expectations in simple and straight-forward terms. With Director Chopra’s arrival at the Bureau, the agency has issued a flurry of rulemaking and non-rulemaking guidance. Some of the guidance has been successfully challenged including the expansion of the UDAAP manual to include discrimination. The panel also addressed future challenges to rulemaking efforts that loom over the CFPB as the U.S. Supreme Court will address Chevron deference in an upcoming case and the constitutionality of the CFPB’s funding mechanism.

Michael explored how it can be challenging for companies to navigate all of the guidance issued by the CFPB, which can be found in advisory opinions, compliance circulars, supervisory guidance, amicus briefs, reports, enforcement actions, blogs, letters, and rulemaking. Companies without significant resources are sometimes forced to view many of these items as “de-facto regulations,” even though there is often no ability to provide meaningful comment, because they might not have resources to challenge these positions. This is particularly problematic when the informal guidance is at odds with existing regulations, as we have argued is the case in connection with recent adverse action guidance.

Michael pointed out how notwithstanding the Government Accountability Office calling on the CFPB to clarify the application of its regulations to earned wage access (EWA) products and the CFPB’s then acting General Counsel acknowledging confusion regarding the application of Regulation Z to certain EWA products, the CFPB continues to issue guidance in an obscure manner—in this instance by publicizing a letter of approval to the California DFPI on its approach to regulating such products (which is one of the most stringent approaches adopted by any state in the country).

Looking forward into 2024, we expect the CFPB to continue this aggressive and less-then-clear approach to guidance. We also expect the CFPB to attempt to issue as many final rules as possible before the 2024 election in an effort to stave off potential Congressional Review Act challenges.