CFPB’s Strategic Plan Reflects New Path

Photo by jesse orrico on Unsplash

Last week, the CFPB issued its Strategic Plan for Fiscal Years 2018-2022.  The Plan reflects Acting Director Mick Mulvaney’s vision for the CFPB and reflects a contrasting vision to what was reflected in the prior draft which was circulated in October prior to Cordray’s resignation.  Here are the key points:

·        No More Pushing the Envelope. In a nutshell, the CFPB’s strategy is now to “fulfill the Bureau’s statutory responsibilities, but go no further.”

·        A New Vision.  The prior draft emphasized transparency in pricing. The new strategy emphasizes a free market economy.  Specifically, “[f]ree, innovative, competitive, and transparent consumer finance markets where the rights of all parties are protected by the rule of law and where consumers are free to choose the products and services that best fit their individual needs.”

·        A Departure from Paternalism.  One needs to look no further than the strategic goals listed under the draft plan and the final plan to understand that the paternalistic approach the CFPB formerly took as to consumers is gone. 

o   The Draft Plan. Under the draft plan (Cordray’s), four goals were set forth:

§  “prevent financial harm to consumers while promoting good practices that work for consumers, responsible providers, and the economy as a whole”;

§  “empower consumers to make informed financial choices to reach their own life goals and enhance their own financial well-being”;

§  “inform the public, policy makers, and the CFPB’s own policy-making with market intelligence and data-driven analysis of consumer financial markets and consumer behavior”; and

§  “advance the CFPB’s performance by maximizing resource productivity.” 

o   The Final Plan. Significantly, the Plan in its final form omits any reference to prevention of harm and the use of data driven information to inform policy.  Instead, the three goals presented confirm the Bureau’s new path: one that does not push the envelope and encourages access to financial products.  The three goals set forth are:

§  “ensure that all consumers have access to markets for consumer financial products and services”;

§  “implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive”; and

§  “foster operational excellence through efficient and effective processes, governance, and security for resources and information.” 

Our Take Aways:

·        It’s interesting to note that Mulvaney is only the acting director.  Rather than maintaining the status quo until a permanent replacement is named, Mulvaney has chosen to change the direction of the Bureau and submit a revised Strategic Plan which makes wholesale changes to the draft plan.

·        While the Final Plan de-emphasizes the CFPB’s enforcement powers, it does make clear the CFPB will “[f]ocus supervision and enforcement resources on institutions and their product lines that pose the greatest risk to consumers based on the nature of the product, field and market intelligence, and the size of the institution and product line.”

·        The Final Plan’s third goal, fostering operational excellence, appears to be a jab at Cordray’s administration and a nod in favor of Cordray’s critics.  As explained further, in order to “foster accountability, the Bureau will monitor and conduct periodic evaluations of operations to ensure effective management of resources and risk” including maintaining a responsive cybersecurity program and maintaining a diverse and inclusive workforce.

·        Finally, the Plan is silent as to Mulvaney’s intentions as to existing enforcement actions and rules which are in progress or future rulemaking by the Bureau.