Five Questions for CFPB Nominee to Replace Mulvaney

American Banker, March 13, 2018 | Go to article overview

Five Questions for CFPB Nominee to Replace Mulvaney


Byline: Kate Berry

President Trump could nominate a permanent director to lead the Consumer Financial Protection Bureau any day now. The eventual pick will likely encounter heavy scrutiny from senators and, if confirmed, would take the helm of an agency still defined by turmoil nearly seven years after its creation.

Numerous names have emerged as front runners to replace current acting CFPB Director Mick Mulvaney. The two most cited in recent days are National Credit Union Administration Chairman J. Mark McWatters and Jonathan Dever, a Republican Ohio state representative whose Akron, Ohio-based law firm has defended consumers against foreclosure actions.

An immediate question for a new director is whether the agency will continue initiatives launched by Mulvaney, who in just over three months has sought to transform the consumer bureau from the aggressive regulator led by former Director Richard Cordray into a more industry-friendly agency.

Though Republicans only need a simple majority to get a permanent CFPB director confirmed by the Senate, they have virtually no wiggle room because of Sen. John McCain's absence due to medical issues. Republicans may also try to move quickly before Sen. Thad Cochran, R-Miss., leaves on April 1, and any delay could be extended by the slowdown in congressional business as the midterm elections approach.

Some have said the administration may opt for a nominee who could attract both Democratic and Republican support. But any Trump pick to lead the agency would be subjected to public grilling by Democratic senators, particularly Sen. Elizabeth Warren of Massachusetts, the CFPB's original architect.

"The nominee is going to have to walk a fine line to make it through the confirmation process," said Jean Veta, a partner at Covington & Burling LLP.

If any nomination gets stalled or withdrawn, Mulvaney could potentially remain acting head of the CFPB well into 2019.

Here are four questions for the next CFPB nominee:

Do you agree with Mulvaney's recent actions, or would you set another new course?

A key question for the future CFPB director is how he would approach Mulvaney's aggressive dismantling of the bureau's enforcement operations.

In order to even be considered by Democrats, the next CFPB director likely will have to vow to take a fresh look at all of Mulvaney's actions.

Whereas Mulvaney has sharply criticized the agency run by Cordray, Senate Democrats are likely to home in on whether the nominee plans to use the bureau's expansive authority under the Dodd-Frank Act to protect consumers. On the other side of the coin, Republicans who hold the Senate majority likely will want to ensure that a new director shares Mulvaney's concerns that the agency went too far in targeting companies during the Obama era.

"I think the biggest challenge is that Republicans and Democrats hold diametrically opposed views about what the bureau should be doing," Veta said.

Mulvaney recently told state attorneys general that he would cede authority to them and to other federal banking regulators. He also has deftly laid the groundwork for pulling back on the agency's consumer protection priorities by issuing a dozen requests for information on all aspects of the CFPB's processes.

Ben Olson, a partner at Buckley Sandler and a former deputy assistant director in the CFPB's Office of Regulations, said lawmakers may want to rethink the idea of the CFPB giving deference to state attorneys general on interpretation of federal law.

"For any lender or provider who operates on a national basis or in multiple states, the idea of complying with different interpretations of federal law on a state-by-state basis is just unworkable," Olson said.

What is your view of the CFPB's payday lending rule?

High on the list of questions for the CFPB nominee will be how to proceed with the CFPB rule restricting payday lending practices, which has drawn enormous controversy. …

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