CFPB Legal Landscape

Today’s podcast episode is a repurposing of part one of our December 16 highly-attended and praised webinar consisting of Alan Kaplinsky’s exclusive interview of David Silberman, who held several senior positions at the CFPB for almost 10 years under both Democratic and Republican administrations. Part two of our December 16 webinar, featuring Ballard Spahr partners John Culhane and Joseph Schuster, is to be released on January 9. They focus their attention on the impact of the election on the CFPB’s regulations (final and proposed). Our December 16 webinar is the first part of our three-part intensive look at this transitional period for the CFPB. The goal of our three-part series is to help us predict what is in store for the CFPB during the next four years.

As a former senior leader at the CFPB during the only other transition of the CFPB from a Democratic to a Republican administration led by former President Trump, Mr. Silberman has special insight about what is likely to happen to the CFPB during Trump 2.0.

While nobody yet knows who Trump will nominate as the next CFPB director, Mr. Silberman makes the point that, of potentially greater importance, at least initially, is who Trump selects as the acting director. If what happened in Trump 1.0 is any indication, the acting director may end up serving for a lengthy period of time just like Mick Mulvaney served as acting director for a lengthy period of time before Kathy Kraninger was nominated by Trump, confirmed by the Senate and sworn-in as director. Under the Vacancy Reform Act, the acting director must be either a current senior officer of the CFPB or someone who has already been confirmed by the Senate for a different position.

Among other things, Mr. Silberman addressed the following topics during his interview:

1.               What were some of the first steps that Mr. Mulvaney took when he became acting director and will they be replicated by a new acting director?

2.               How will a new acting director deal with the many lawsuits brought by trade groups challenging CFPB final rules issued by Director Chopra?  Will there be a distinction made between final rules in which district courts have ruled on motions for preliminary injunction and those where courts have not so ruled. Will there be distinctions made between final rules where courts have granted or denied injunctive relief?  Finally, will there be distinctions made between final rules mandated by Dodd-Frank and so-called discretionary rules?

3.               Which final rules are still subject to being overridden by the Congressional Review Act and what are the odds of that happening with respect to any of such rules?

4.               How will the new acting director deal with proposed rules as of January 20?

5.               How will the new acting director deal with CFPB enforcement investigations and lawsuits initiated by Chopra, including those which arguably “push the envelope” with respect to the CFPB’s jurisdiction?

6.               Will the new acting director agree with many industry pundits that the CFPB has been unlawfully funded by the Federal Reserve Board since September, 2022 in light of the language in the Dodd-Frank Act which permits funding of the CFPB only out of “combined earnings of the Federal Reserve Banks” and the fact that there have been no such combined earnings since September 2022 and the likelihood that no such combined earnings are anticipated in the near future.  Does this impact actions taken by the CFPB since September 2022?

7.               What role, if any, will the White House play in directing or influencing CFPB policy?  What impact, if any, might the Department of Government Efficiency (DOGE) have on the CFPB?

8.               Do you expect the new acting director to initiate any rulemakings other than those required by Dodd-Frank?

9.               Will the new acting director be more supportive of innovation than Chopra and, if so, how will that be reflected?

Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion.