PHILADELPHIA – The federal Consumer Financial Protection Bureau will become less Draconian and more complaint-based, its new stewards say, and there will likely be a decline in its investigations, but an attorney who focuses on the CFPB said the mission of the agency - and his firm - will continue.

“The CFPB is not disappearing,” Ballard Spahr attorney Alan S. Kaplinsky told the Pennsylvania Record. “While the number of enforcement investigations will likely decline, we will still help our clients who are being supervised and examined by them. The decline in enforcement actions will be offset by more enforcement activity by state attorneys general and banking departments.”

Ballard Spahr, like a number of other firms, has a CFPB practice, handling cases involving investigations by the consumer protection agency.

Mick Mulvaney, a Republican White House budget director, took over the reins of the CFPB as acting director late last year after appointment by President Donald Trump. Former director Richard Cordray, a Democrat who had served as the first director of the consumer protection agency starting in 2012, announced his resignation on Nov. 15, 2017, sparking a dispute over who would succeed him.

Cordray has since announced candidacy for the governor of Ohio.

Republicans had been critical of Cordray’s CFPB leadership, saying that in targeting companies for investigation, the agency exhibited too much power. Also debated was whether the director could be fired by the President.

Created by the 2010 Dodd-Frank Law, the consumer agency was also disliked by Republicans because its authority was intended to be independent of the White House and Congress.

In a New York Times report, Mulvaney was quoted as saying an irresponsible “multiyear civil investigative demand” (request for records and information) by the CFPB, could cause a company to close its doors and lay off employees.  

One of Cordray's biggest project was to ban clauses that prevented consumers from filing class action lawsuits against companies in the financial services industry.

However, Congress foiled the CFPB's plan, striking down its proposed order. Cordray resigned shortly after.

Mulvaney said the new direction would analyze more carefully which companies should be targeted for enforcement actions and take a more “complaint-driven” approach, shifting focus to debt collecting and away from areas for example such as payday lending practices.

“Mulvaney is simply trying to create a fair balance between protecting consumers while considering business interests,” Kaplinsky said. 

“Cordray focused exclusively on protecting consumers and paid lip service to considering business interests. Mulvaney will administer the consumer protection statutes as written and unlike Cordray, not look for ways to expand the CFPB or to push the envelope.”

Kaplinsky added it remains unclear whether the CFPB will drop its lawsuits in progress as a result of the new focus.

“That question is difficult to answer,” he said. 

“I believe the CFPB will drop certain lawsuits and investigations. That has already occurred. However, I don’t believe they will drop all pending investigations in lawsuits. They are in the process now of looking at all pending matters.”

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