Addressing the Mortgage Bankers Association (MBA) 2018 Annual Convention in Washington, DC on October 15, 2018, BCFP Acting Director Mick Mulvaney advised that regulation by enforcement is dead, and that he does not care much for regulation by guidance either. He noted to the members that they have a right to know what the law is.

Acting Director Mulvaney advised that if a party is doing something that is against the law, the BCFP will take action against them. However, he advised the difference between the BCFP now from its approach under the prior Director is that if someone is doing something that complies with the law and the BCFP doesn’t like it, the BCFP will not take action.

With regard to UDAAP, Acting Director Mulvaney stated that he believes the concepts of “unfair” and “deceptive” are well established in the law, but that is not so with regard to the concept of “abusive”. He noted he asked his staff to provide examples of what is abusive that is not also either unfair or deceptive. And he signaled that the BCFP will look to engage in rulemaking on abusive.

As we have reported the MBA and other trade groups recently sent a letter to the BCFB seeking reforms in connection with the BCFP’s loan originator compensation rule. When asked by MBA President and CEO Robert Broeksmit about the letter, Acting Director Mulvaney advised that he knew the letter was received and that it is being reviewed by staff, but that he had not actually seen the letter. Mr. Broeksmit then handed Mr. Mulvaney a copy of the letter, drawing laughs from the audience.

With regard to payday lending, Acting Director Mulvaney advised that it can be really dangerous for people given the high interest rates, but that people want it so it exists. He noted he has told payday lenders they exist because bank regulators forced banks out of the business. But he stated that the OCC has signaled it will allow banks back in, and that the way to fix payday lending is through competition.


On September 21, 2018, the CFPB announced that it will be relocating its southeast regional office from Washington, D.C. to Atlanta, Georgia in late 2019.  In addition to the CFPB’s headquarters, the Bureau currently leases office space in downtown Washington, D.C. that will be surrendered after the southeast regional team is moved to Atlanta.  The plan for a southeast regional office has been in the works since 2016.  Per the CFPB’s February 2016 Strategic Plan, Budget, and Performance Plan and Report, the CFPB planned to coordinate with the General Services Administration “regarding its space needs for personnel at the headquarters location and in the Southeast region.”  The city selection process “took into account factors including the average rental cost in the region, proximity to institutions examined by the Bureau, and ease of travel for examiners.”  The CFPB stated that Atlanta was selected as “the city that best enables the Bureau to fulfill its statutory mission and enhance its collaboration with its regulatory partners, while being as efficient as possible.”  The new office will be housed in a building owned by the General Services Administration.  In addition to reducing costs, the move will align the CFPB with other regulatory agencies with offices in Atlanta such as the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.  The CFPB also has regional offices in New York, Chicago, and San Francisco.

On this week’s podcast, Ballard Spahr attorneys Bo Ranney, Chris Willis, and Reid Herlihy discuss the significant takeaways from the CFPB’s new report—the first edition of Supervisory Highlights issued under Acting Director Mick Mulvaney. Mr. Ranney, former Examiner-in-Charge at the CFPB, and Mr. Willis, who chairs Ballard Spahr’s Consumer Financial Services Litigation Group, discuss the CFPB’s findings regarding debt collection, payday loans, automobile servicing, and small business lending. They also identify potential areas where the CFPB might focus in future examinations and offer recommendations for addressing the operational concerns raised by the report. Mr. Herlihy, a partner in Ballard Spahr’s Mortgage Banking Group, discusses the high-priority, mortgage-related topics identified in the Bureau’s report, lessons the mortgage industry can learn from the Bureau’s findings, and how the CFPB’s approach in this new report differs from its approach under prior leadership.

To listen and subscribe to the podcast, click here.

Earlier this week, the CFPB’s Office of Research released its third “Data Point” report on Americans who are “credit invisible” – that is, those without an established credit history with the three national credit reporting agencies – and who therefore cannot be scored by most traditional credit scoring models.  The report, entitled “The Geography of Credit Invisibility,” focuses on the geographic concentrations of credit invisible consumers, to determine whether there are “credit deserts” in which access to credit is largely absent, leading to consumers in those areas being unable to become “credit visible” by establishing a credit history.

The report makes a number of interesting observations about the incidence of credit invisibility, focusing on adults over the age of 25 (because, according to the report, most Americans succeed in transitioning into credit visibility between the ages of 18 and 25, typically through credit cards or student loans).  Some of those observations are:

  • The report indicates that credit invisible consumers are concentrated in two types of geographies: in core urban areas (as opposed to suburban areas), and in rural or small-town areas.
  • Rural and small-town areas have the highest proportional incidence of credit invisibility, but because of the higher populations in urban areas, about 2/3 of credit invisible adults over age 25 reside in those areas.
  • The report provides data showing that average income level in a neighborhood is correlated with credit invisibility in urban areas, but this link between income and invisibility is absent in rural areas.
  • Because many consumers use credit cards as an “entry” product that makes them credit “visible,” the report presents data about the use of credit cards by consumers in various types of areas, and by income level. In urban and suburban areas, the use of credit cards is higher as an “entry” product, and the use of credit cards increases with income level.  In rural and small-town areas, the use of credit cards is lower, and does not increase significantly with income level.
  • Testing the hypothesis that proximity of traditional banking services may be a factor in credit invisibility, the report then examines data showing the use of credit cards as an “entry” product, sorted by the distance to the nearest bank branch. The report highlights that proximity to a bank branch is somewhat correlated with higher credit card usage as an “entry” product in urban and suburban areas, but there is no such correlation in rural areas.
  • Based on this data, the report observes that “[t]hese results provide little evidence that bank branch proximity is an important factor in explaining why consumers are credit invisible.” In fact, the report goes on to note that branch proximity is not one of the more common reasons why consumers say that they do not have a bank account.  More common reasons provided are not having enough money to put in a bank account, and a distrust of banks.
  • The report also contains data demonstrating a relationship between the availability of high-speed internet service and credit invisibility, showing that areas with less availability of internet service have significantly higher rates of credit invisibility. The report notes that credit cards, a typical “entry” product for credit invisible consumers, are typically marketed and offered online, suggesting a potential causal link between internet access and the ability to obtain a credit card.

The report does not make any policy recommendations about the subject of credit invisibility, and does not present the issue as a fair lending concern – there is no data correlating credit invisibility with any protected status under the Equal Credit Opportunity Act.  What, then, should we make of the report, and its implications for the CFPB’s future activities with respect to making credit more widely available to “invisible” consumers?

My guess is that the report will be used to support efforts to use innovation to increase access to credit for invisible consumers.  A few policy conclusions that could be drawn from the report include the following:

  1. The CFPB should encourage alternative scoring models that enable underwriting decisions to be made with respect to “invisible” consumers, and should refrain from heavy-handed application of the disparate impact theory with respect to such models. (That theory could, theoretically, be used to attack scoring models that approve members of protected classes proportionately less, but the business justification of the model’s ability to predict repayment performance should cause the Bureau to refrain from asserting it in this context).
  2. The report may suggest that models based on consumers’ internet activity may be ineffective in making credit available to consumers in areas with little internet access.
  3. Because the use of mobile devices is not dependent on the kind of high-speed home internet access the report shows to be correlated with higher rates of credit invisibility, this would suggest that the CFPB should encourage financial institutions to make products more available/accessible through mobile devices (using mobile-optimized web pages or mobile apps). This would, optimally, involve providing realistic guidance to financial institutions about how to make disclosures and obtain necessary consents through mobile devices in ways that do not deter consumers because of their cumbersome nature.
  4. The report may suggest that the Bureau’s education efforts with respect to access to credit should be concentrated in core urban and rural/small town areas.
  5. Finally, the report suggests that the problem of credit invisibility could be addressed in urban areas by products tailored to low-income consumers, and this in turn would indicate that the CFPB should encourage financial institutions to offer such products, again without heavy-handed application of “reverse redlining” theories under the Equal Credit Opportunity Act for financing sources who offer such products. This same data point would also support the Bureau’s effort to revise its small-dollar lending rule, to prevent small-dollar loans from being extinguished as an “entry” product for credit visibility.  (The report does not address this at all, since it relies on credit cards as the most common “entry” product to the three national credit reporting agencies.  However, there is credit reporting on small-dollar loans through specialty credit bureaus, and data on these credit interactions could be used to qualify consumers for other credit products).

We certainly hope that the Bureau uses the data in this report to guide its policy decisions in a direction that will make credit more available for “credit invisible” Americans.

The CFPB and its Acting Director are facing a proposed class action lawsuit alleging discrimination against minority and female workers based on allegations of lesser pay and fewer promotions than their white male counterparts. The case is captioned at, Jones et al v. Mulvaney, U.S. District Court, District of Columbia, No. 18-2132.

The Complaint, filed on September 13, 2018, in the D.C. District Court, alleges violations of the 1866 Civil Rights Act, Title VII of the 1964 Civil Rights Act and the 1963 Equal Pay Act. The lawsuit is seeking punitive damages and compensation for lost pay and benefits for minorities and women who have worked as consumer response specialists at the CFPB.

The plaintiffs contend that while the CFPB and Acting Director Mulvaney are tasked with providing justice to American consumers, they have failed in their responsibility to their own employees. The plaintiffs, Ms. Carzanna Jones and Mr. Heynard Paz-Chow, are seeking certification to join in the case a class of racial minority and female employees, both past and present, working in the consumer response division, whom the plaintiffs allege were subjected to the same discrimination and retaliation while working for the CFPB. Ms. Jones is a current employee of the CFPB, and her allegations cover the length of her career at the bureau dating back to 2012. Mr. Paz-Chow is a former employee of the bureau from 2011-2014, and his allegations occurred under the leadership of former CFPB Director Richard Cordray. The consumer response division of the bureau is responsible for investigating consumer complaints and determining whether laws or regulations have been violated.

The pending lawsuit alleges that through an agency-wide pattern and practice of discrimination and retaliation, the CFPB has sought to disparately impact racial minority and female workers despite the continued objections of CFPB employees. Specifically, it is alleged that the CFPB instituted discriminatory policies and procedures in its training, assigning, evaluating, and compensation of minority and female employees. The Complaint also details specific instances of discrimination and retaliation alleged to have been suffered by the individual named plaintiffs including:

  • Denial of training and promotion opportunities
  • Unequal assignment of investigations leading to disproportionate case closings which impact employee evaluations
  • Denial of transfer requests
  • Pay disparities
  • Failure to abide by the requirements of the ADA and FMLA
  • Retaliatory actions after employees complained about inequalities

The allegations in the Complaint stretch back as far as 2011 and address statistical studies and congressional reports that have highlighted equality issues at the CFPB under multiple directors. According to the Complaint, those analyses and investigations have shown deficiencies in the pay and promotion of both racial minorities and female employees in line with the allegations of the Complaint. The Complaint cites to a Congressional Investigation by the U.S. House of Representatives initiated in 2014 and an Office of Inspector General (“OIG”) report from 2015. Both authorities found significant issues with widespread disparities negatively impacting racial minority and female employees with regard to performance ratings, pay, promotion and related areas. During a hearing of the U.S. House of Representatives Financial Services Committee, a CFPB attorney testified that the white males in authority at the bureau gave themselves the best performance evaluations to garner better raises and bonuses.

In June 2018, the CFPB announced that it planned to reconstitute three of its advisory groups, the Consumer Advisory Board (CAB), the Community Bank Advisory Council (CBAC), and the Credit Union Advisory Council (CUAC), and disbanded the three groups.  Last week, the CFPB announced the appointment of new members to those groups.

The CFPB announced 9 new CAB members, 7 new CBAC members, and 7 CUAC members.  All new members will serve a one-year term.  Before their disbandment, each of the advisory groups was much larger, with the CAB having as many as 25 members, the CBAC as many as 19 members, and the CUAC as many as 15 members.  New CAB members previously served a three–year term and new members to the CBAC and CUAC previously served a two-year term.

The CFPB’s announcement has met with considerable criticism from consumer advocates and former CAB members who have asserted that as a result of its reduced membership, the CAB lacks sufficient diversity and depth of perspective.  They have also criticized the CFPB not only for reducing the number of consumer advocates on the CAB from 8 to 2 but also for not including any large financial institutions, major credit card providers, or debt collectors on the new CAB.  Consumer advocates observe that although such sectors “probably have other opportunities for access with the CFPB, one of the most valuable aspects of the recently disbanded CAB was that it provided a forum for fruitful and productive conversations among a variety of stakeholders in consumer finance, which often generated valuable insights for the Bureau and the CAB members.”

The CFPB has announced that the three groups will have meetings on September 27.  According to the agenda published by the CFPB, each group will meet separately in the morning and will participate jointly in afternoon sessions on “Credit Invisibles and Alternative Data: Opportunities to improve credit profiles” and “Utilizing technology to prevent and respond to elder financial abuse.”




The CFPB has filed its opposition brief in the interlocutory appeal of All American Check Cashing to the U.S. Court of Appeals for the Fifth Circuit from the district court’s ruling upholding the CFPB’s constitutionality.

All American Check Cashing and the other appellants sought the interlocutory appeal after the district court denied their motion for judgment on the pleadings in a lawsuit filed by the CFPB that alleges the appellants engaged in abusive, deceptive, and unfair conduct in connection with making certain payday loans, failing to refund overpayments on those loans, and cashing consumers’ checks.  Citing the D.C. Circuit’s en banc PHH decision, the district court rejected the defendants’ argument that the CFPB is unconstitutional based on its single-director-removable-only-for-cause structure.  It subsequently agreed to certify the constitutionality issue for interlocutory appeal to the Fifth Circuit which accepted the appeal.

In its brief, the CFPB makes the following principal arguments:

  • Because Acting Director Mulvaney is removable at will by the President and ratified the CFPB’s decision to bring the lawsuit against the appellants, any constitutional defect that may have existed with the CFPB’s initiation of the lawsuit was cured.  (The CFPB unsuccessfully attempted to use this argument in opposing the Fifth Circuit’s acceptance of the interlocutory appeal and in attempting to persuade Judge Preska that she need not rule on the CFPB’s constitutionality in the RD Legal Funding case.)
  • The CFPB’s structure is constitutional under existing U.S. Supreme Court precedent.
  • If the Fifth Circuit concludes that the CFPB’s structure is unconstitutional, the proper remedy is to strike the for-cause removal provision.

The appellants have been granted an extension of the time to file their reply brief until October 1.  Last month, they filed a petition asking the Fifth Circuit to hear their interlocutory appeal as an initial matter en banc and the petition remains pending.


We have revised the blog to more fully discuss the effect of a waiver on potential UDAAP liability.

The CFPB is proposing significant revisions to its “Policy to Encourage Trial Disclosure Programs” (TDP Policy), which sets forth the Bureau’s standards and procedures for exempting individual companies, on a case-by-case basis, from applicable federal disclosure requirements to allow those companies to test trial disclosures.  The revisions are intended to address the TDP Policy’s numerous shortcomings, which the Bureau acknowledges “failed to effectively encourage trial disclosure programs: The Bureau did not permit a single such program in the nearly five years since the Policy was issued.”  (The CFPB finalized the existing TDP Policy in October 2013.)  Comments on the proposal must be received by October 10, 2018.

The TDP Policy relies on the Bureau’s authority under Dodd-Frank Section 1032(e) to permit providers of consumer financial services and products “to conduct a trial program that is limited in time and scope, subject to specified standards and procedures, for the purpose of providing trial disclosures to consumers.”  The proposal follows Acting Director Mulvaney’s July 2019 appointment of Paul Watkins to serve as Director of the Bureau’s Office of Innovation.  Before joining the CFPB, Mr. Watkins was in charge of fintech initiatives in the Arizona Attorney General’s office and led the state’s successful efforts to create the first “regulatory sandbox” in the United States which allows new financial technologies and products to be tested in a controlled environment with reduced regulatory risk.  In the Bureau’s proposal, the TDP Policy is referred to as “the Bureau’s Disclosure Sandbox.”

As detailed below, the proposal would make several “industry-friendly” changes to the existing TDP Policy.  The changes would streamline the application process and reduce the review timeframe, provide procedures for extensions of successful trial disclosure programs, and provide for coordination by the CFPB with sandbox programs offered by other regulators.

The revised TDP Policy’s description of the protection from liability provided by a waiver is consistent with how the CFPB previously described such protection in connection with the existing Policy.  However, unlike the CFPB’s previous description which was only in the Supplementary Information accompanying the existing TDP Policy, the CFPB is proposing to include the description in the text of the revised Policy.  It would state:

For permitted trial disclosure programs, therefore, the Bureau will, for a defined period, deem a participating company to be in compliance with, or exempt from, identified Federal disclosure requirements.  As a result of this determination by the Bureau, no basis exists under those provisions for a private suit based on the company’s use of the trial disclosure.  The same is true with respect to other Federal and State regulators even if they have enforcement authority or supervisory authority as to the enumerated laws for which the Bureau has rulemaking authority.  There can be no predicate for an enforcement action by such a regulator that is based on a statutory or regulatory provisions waived by the Bureau.  (footnote omitted).

In addition, the proposed TDP policy would provide that, when a waiver is granted, “in the exercise of its discretion, the Bureau will not make supervisory findings or bring a supervisory or enforcement action against the company or companies under its authority to prevent unfair, abusive, or deceptive acts or practices predicated upon its or their use of the trial disclosures during the waiver period, provided the company engages in good faith, substantial, compliance with the terms of the waiver.”  Dodd-Frank Section 1032(e) provides that a covered person that receives a CFPB waiver “shall be deemed to be in compliance with, or may be exempted from, a requirement of a rule or an enumerated consumer law.”

The “enumerated consumer laws” as defined by Dodd-Frank do not include the CFPA and the proposal indicates that the term “rule” as used in Section 1032(e) includes rules implementing an “enumerated consumer law” and rules implementing the CFPA, including rules promulgated by the CFPB under its authority to prevent UDAAPs or “to enable full, accurate and effective disclosure.”  Thus, although section 1032(e) does not provide for immunity from a UDAAP claim asserted by the CFPB based on its general authority under the CFPA, the Bureau has indicated that it will refrain from bringing such claims “in the exercise of its discretion.”  This exercise of discretion fills a gap in the language of section 1032(e) that makes it much more valuable to a company participating in a trial disclosure program.  However, since section 1032(e) does not provide immunity under the CFPA’s UDAAP provisions, there is a risk that such an action could be brought by a state attorney general or regulator using its authority under Dodd-Frank Section 1042 to file civil actions to enforce the provisions of the CFPA.  However, we think a motivated state regulator would be far more likely to invoke its own state UDAP law if it wished to challenge a disclosure made under the CFPB’s TDP.

Among the issues not addressed in the proposal are:

  • What protection, if any, a waiver would give a company from state law liability.  For example, many states have disclosure requirements that incorporate or track federal requirements.  It is not clear if such requirements would be preempted for companies receiving a CFPB waiver.
  • Whether a company whose waiver is revoked would lose its protection from liability retroactively or from the date that the revocation is effective
  • Whether waivers will only be granted in connection with financial products or services that involve technological or other innovations and will not be granted in connection with conventional products or services.  Although the Bureau refers to “facilitating innovation in financial products and services through enabling responsible companies to research informative, cost-effective disclosures in test programs,” the proposal does not expressly indicate whether the CFPB only intends to give waivers in connection with innovative financial products or services.

The proposal would make the following key revisions to the TDP Policy:

  • Bureau assessment of applications for trial disclosure program waivers. The revised TDP Policy would provide that in addition to individual companies, applications can be submitted by a trade association or other group seeking approval to test trial disclosures on a group basis.  It would state that an application could include “the elimination of disclosure requirements, modifications to an existing model form or other disclosures, changed delivery mechanisms, or replacement of a model form or existing disclosure requirements with new disclosures or forms.”  The list of factors considered by the CFPB in assessing an application would be substantially reduced to eliminate factors determined to be redundant or otherwise unnecessary and thereby focus the Bureau’s review on “the quality and persuasiveness of the application, especially the extent to which the trial disclosures are likely to be an improvement over existing disclosures, and the extent to which the testing program mitigates risks to consumers.”  The revised TDP Policy would provide that the Bureau “intends to grant or deny formal, complete applications within 60 days of submission.”
  • Waiver procedures. In addition to allowing the Bureau to revoke a waiver if a company does not follow the terms of a waiver, the revised Policy would allow the Bureau to revoke a waiver if it determines that a disclosure “is causing a material, adverse, impact on consumer understanding.”  It would further provide that the Bureau “intends to require companies to notify the Bureau of material changes in customer service inquiries, complaint patterns, default rates, or other information that should be investigated by the Bureau to determine if the trial disclosures may be causing a material, adverse, impact on consumer understanding.”  The revised TDP Policy would indicate that the Bureau expects “a two-year testing period…to be appropriate in most cases.”
  • Waiver extensions. A new section would be added that sets forth the procedures for requesting the extension of a waiver and the factors the Bureau would consider in deciding whether to grant an extension.  The revised TDP Policy would provide that “upon the presentation of persuasive test result data,” the Bureau expects to grant waiver extensions “for a period at least as long as the period of the original waiver.”  In the proposal’s supplementary information, the CFPB indicates that “to the extent that testers are able to show that trial disclosures succeed in improving upon existing requirements, the Bureau will endeavor to amend disclosure rules accordingly and to permit the use of validated trial disclosures until such amendment is effective.”  The revised TDP Policy would provide that the Bureau anticipates permitting extensions longer than the period of original waiver when it is considering such an amendment.  It would also provide that “during the time period pending a rule amendment,” the Bureau “intends to consider means of making the improved disclosure available to other covered entities.”
  • Coordination with other regulators. A new section would be added that sets forth the Bureau’s plans for coordinating the TDP Policy with “state sandbox programs” (which for purposes of the revised TDP Policy would refer to “a regulatory structure where a participant obtains limited or temporary access to a market in exchange for reduced regulatory barriers to entry or reduced regulatory uncertainty.”  The revised TDP Policy would provide that the Bureau “is interested in entering into agreements with State authorities designed to improve upon existing disclosure requirements by allowing covered persons to test disclosures within the state sandbox.”  It would state further than the Bureau expects in specified circumstances that such covered persons “could receive permission to conduct a trial disclosure program pursuant to the Bureau’s agreement with the State authority, rather than through the process [described in the TDP Policy].”  The proposal would list the features that the Bureau would want such agreements to contain.  (Currently, Arizona is the only state that has enacted a “sandbox.”)

We hope that the CFPB will next be revisiting its no-action letter policy which also has numerous shortcomings that we have criticized.  In its June 2017 report, the Treasury Department recommended that the CFPB change the requirements for no-action letters to make them less onerous by aligning CFPB policy with “the more effective policies of the SEC, CFTC, and FTC,” with specific changes to CFPB requirements to include expanding the scope of the CFPB’s policy beyond new products.



A petition for certiorari was filed in the U.S. Supreme Court late last week by State National Bank of Big Spring (SNB) which, together with two D.C. area non-profit organizations that also joined in the petition, had brought one of the first lawsuits challenging the CFPB’s constitutionality.

Originally filed in 2012 in D.C. federal district court, the complaint alleged that the CFPB’s structure violated the U.S. Constitution’s separation of powers. The district court dismissed for lack of standing but on appeal, the D.C. Circuit held that the plaintiffs did have standing and remanded the case to the district court.  Further proceedings in the case were held in abeyance by the district court pending the outcome of the PHH case in the D.C. Circuit.

Following the D.C. Circuit’s en banc PHH decision that held the CFPB’s structure is constitutional, the district court lifted its abeyance order and, with the parties having agreed that PHH foreclosed the district court from ruling in favor of the plaintiffs on their constitutional challenge, entered judgment against the plaintiffs.  On June 8, 2018, the D.C Circuit entered an order summarily affirming the district court’s judgment.  Citing its en banc PHH decision, the D.C. Circuit order stated that “the merits of the parties’ positions are so clear as to warrant summary action.”

In their petition for certiorari seeking Supreme Court review of the D.C. Circuit’s June 8 order,  SNB and the non-profits urge the Supreme Court to grant the petition “to resolve the conflict” between PHH and the Fifth Circuit’s decision in Collins v. Mnuchin.  In Collins, the Fifth Circuit ruled that the Federal Housing Finance Agency (FHFA) is unconstitutionally structured because it is excessively insulated from Executive Branch oversight.  While stating that it was “mindful” of the D.C. Circuit’s en banc PHH decision, the Fifth Circuit found that “salient distinctions” between the CFPB’s structure and the FHFA’s structure dictated different conclusions as to each agency’s constitutionality.  SNB and the non-profits argue in their petition that “the approaches of the D.C. Circuit and the Fifth Circuit cannot be reconciled.”

We continue to follow two other active cases involving challenges to the CFPB’s constitutionality that could come before the Supreme Court.  In April 2018, the Fifth Circuit agreed to hear All American Check Cashing’s interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality.  In RD Legal Funding, Judge Preska of the Southern District of New York is expected to soon enter a Rule 54(b) judgment against the CFPB so that it can file an appeal with the Second Circuit from her June 21 order in which she ruled that the CFPB’s structure is unconstitutional and struck all of Title X of Dodd-Frank.



Last week the CFPB announced an initiative to create a Global Financial Innovation Network (GFIN) with 11 other financial regulators and related organizations across the globe. The GFIN sprang from a previous proposition by the UK Financial Conduct Authority (FCA) to create a “global sandbox” for innovative financial services firms to be able to test new financial services and products such as artificial intelligence and blockchain based solutions in different financial markets. Feedback provided in response to that proposition indicated a need for more comprehensive collaboration among regulators to expand the innovation activities currently undertaken by financial services regulators around the world.

The GFIN, as described within the Consultation Document announcing its creation, is intended to serve three main functions:

  1. Facilitate information and knowledge sharing among financial services regulators on emerging innovation trends and best practices and to share appropriate regulatory contact information with financial services firms;
  2. Provide a forum for joint policy work and regulatory trials; and
  3. Develop a “global sandbox” for business to consumer (B2C) or business to business (B2B) firms to trial and scale new technologies in multiple jurisdictions.

In the press release announcing the initiative, CFPB Acting Director Mick Mulvaney stated that joining the GFIN “demonstrates the Bureau’s commitment to promoting innovation by coordinating with state, federal and international regulators. We look forward to working closely with other regulatory authorities—whether in the United States or abroad—to facilitate innovation and promote regulatory best practices in consumer financial services.”

The GFIN working group is encouraging responses and feedback from interested parties to 10 questions posed within the Consultation Document by October 14, 2018. Commenters can submit responses to the Bureau’s representative, Paul Watkins in the recently-established Bureau’s Office of Innovation. Responses and input are particularly sought from innovative financial services firms, technology companies and providers, accelerators, academia, consumer groups, financial services regulators, and other entities or individuals interested in helping to develop the GFIN. After October 14 the working group will review feedback and agree on next steps, including a timeline for when to launch the GFIN.