Director of CFPB Mick Mulvaney Suggests Bureau Will Engage In Rulemaking to Define Abusive

On Monday, Acting Director Mick Mulvaney of the Bureau of Consumer Financial Protection (BCFP or Bureau) made remarks at the Mortgage Bankers Association's annual conference indicating that the Bureau intends to engage in rulemaking to define the term "abusive" in unfair, deceptive or abusive acts or practices (UDAAP).

Currently, the terms "unfair" and "deceptive" are well-defined under the law, but Mulvaney thinks that the term "abusive" remains unclear after it was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Mulvaney seems to believe that this ambiguity can lead to confusion amongst the lending industry, as well as opportunities for over-aggressive prosecutions, and that "companies have a right to know what the law is".

In a January 2018 All-Hands Memo to the Bureau, Mulvaney stated his position thusly:

"On regulation, it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them. This means more formal rulemaking on which financialinstitutions can rely, and less regulation by enforcement."

This is a clear departure from the Obama-era Director Rob Cordray's philosophy, summed up by this 2017 statement of his ""We wanted to send a message: There's a new cop on the beat... Pushing the envelope is a loaded phrase, but that's absolutely what we did."

What Mulvaney does not explicitly say, but is clear from the record, is that the BCFP under the Trump administration is filing significantly fewer enforcement actions. 35 enforcement actions were filed in 2017, while as of this writing (October 16th) only 8 have been filed in 2018.

It is obvious that any further narrowing of the statutes' interpretation by the BCFP would not lead to more actions, so we can expect this number to fall in the coming years. However, as the federal government takes a step back, it creates greater responsibilities for civil litigators in consumer protection. Through civil litigation and consumer education, bad actors in the financial industry can, and should, still be held liable for their transgressions.