Congress Demands Answers About CFPB Authority For Recent Policymaking

• Published date: 27 September 2022
• Subject Matter: Finance and Banking, Financial Services
• Law Firm: Brownstein Hyatt Farber Schreck, LLP
• Author: Brownstein Hyatt Farber Schreck, LLP

This week, two House Republican Committee Ranking Members, Reps. Patrick McHenry (R-NC) from the House Financial Services Committee and James Comer (R-KY) from the House Oversight and Reform Committee, sent a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra seeking feedback on several recent CFPB actions.

The letter makes reference to the recent Supreme Court decision in West Virginia v. EPA that the members of Congress believe clarified the limitations of certain agency actions. In this case, the court confirmed that agency authority must be traceable to a clear delegation from Congress, and that attempts to expand delegated power through obscure provisions in enabling legislation is not enough, even though it might be textually plausible. There has been a lot of discussion arguing that this decision is a step forward to curb agency overreach and remind Congress of its legislative power and responsibilities.

Justice Gorsuch's concurrence points out that going forward, courts must look to the legislative provisions on which the agency seeks to rely with a view to their place in the overall statutory scheme. He further argues that oblique or elliptical language will not supply a clear statement and agencies may not "seek to hide elephants in mouseholes, or rely on gap-filler provisions."

In their letter, the members of Congress point out that Article I, Section 1 of the United States Constitution vests "all legislative powers" in Congress. The letter states that,

"The clear delegation of authority contemplated by the Court is not limited to just rulemaking but extends to other agency actions. Actions that are intended to avoid transparency and accountability. Since becoming Director of the Consumer Financial Protection Bureau, you have undertaken a number of so-called 'initiatives' that circumvent not only Congressional intent, but the Administrative Procedure Act (APA)."

The list of CFPB actions in question outlined by the members includes:

• An interpretive rule expanding the authority of states to enforce the Consumer Financial Protection Act of 2010 beyond what was intended by Congress;
• An advisory opinion expanding Equal Credit Opportunity (Regulation B); as well as making revocations or unfavorable changes to the terms of existing credit arrangements;
• An advisory opinion narrowly interpreting the Fair Credit Reporting Act with respect to name-only matching procedures and
• An interpretive rule limiting the Fair Credit...