By Jeff Bater
Enforcement activity by the Consumer Financial Protection Bureau tailed off sharply in the second quarter, with no crackdowns against a bank.
The first three months of the year marked the second-busiest quarter in CFPB history, signaling 2017 could turn out to be very active for the bureau. But the second quarter saw fewer CFPB actions than any quarter in 2015 or 2016.
Gerry Sachs, of counsel at Paul Hastings LLP in Washington, said he thinks the bureau pushed a lot of enforcement actions to resolution just after the election.
“As a result, there’s a lull in investigations,” he told Bloomberg BNA. “I would suspect that in the second quarter, what they have been doing is initiating investigations for later in the year.”
Last year, CFPB enforcement activity picked up in the latter half. The bureau took 16 actions during the first six months, while there were 26 crackdowns announced July through December.
“What you can’t see is their decision-making on opening investigations,” Ronald L. Rubin, a former CFPB enforcement attorney and now a writer whose pieces focus on the bureau, told Bloomberg BNA. “You don’t know what is or isn’t in the pipeline.”
Lately, the agency’s actions have been for rather small sums. At the end of the second quarter, it announced cracking down on credit repair companies for allegedly charging illegal fees and misleading customers. The affected parties agreed to pay around $2 million to settle the charges.
“Many of those are nuisance settlements,” Rubin said. “When you see a settlement in the neighborhood of $1 million, you should remember that the defendant would have paid his lawyers that much to fight and win.”
The level of enforcement against banks is far less aggressive than in the past, according to a tracking of the bureau’s activity. The agency brought 188 enforcement actions since it began enforcement activity in 2012. Of those 188 actions, 37 of them — or 19.7 percent — have concerned banks, while 151— or roughly 80 percent — involved nonbanks.
Yet in the first six months of the year, only one enforcement action was taken against a bank. The bureau announced in January it was suing TCF National Bank for allegedly tricking consumers into costly overdraft services.
A notable enforcement action in the second quarter was an April lawsuit against Ocwen Financial Corp., a mortgage servicer, for allegedly making widespread errors and illegally foreclosing. The CFPB said Ocwen botched basic functions like sending accurate monthly statements, crediting payments and handling taxes and insurance from escrow accounts.
But the company has pressed back on the CFPB over the suit, challenging whether the bureau is unconstitutional.
“The targets are pushing back now,” Rubin said. “They’re not caving. The bureau used to be judge, jury, and executioner. People thought it was impossible to fight them. Since the PHH decision, the first thing any defendant does is challenge the bureau’s constitutionality.”
PHH is a New Jersey mortgage company that challenged a $109 million disgorgement order by CFPB Director Richard Cordray in 2015. PHH sought review and a federal court panel ruled in its favor last October.
To contact the reporter on this story: Jeff Bater in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Bloomberg Law's CFPB Enforcement Tracker is available to subscribers at: https://www.bloomberglaw.com/product/bankfinance/page/enforcement_tracker_cfpb
Bloomberg Law's CFPB Enforcement Analytics is availalbe to subcribers at: https://www.bloomberglaw.com/product/bankfinance/secondary_page/enforcement_analytics_cfpb
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)