New York Regulator Vows to Step In Where CFPB Won’t Tread

By Lydia Beyoud

The head of New York State’s financial regulator criticized efforts by the Trump administration to scale back the Consumer Financial Protection Bureau and said her agency stands ready to fill any “regulatory voids.”

“I am disappointed by the new administration’s sudden policy shift, which is clearly intended to undermine necessary national financial services regulation and enforcement,” New York Department of Financial Services Superintendent Maria Vullo said in a Jan. 25 statement posted to the agency’s site.

“DFS remains committed to its mission to safeguard the financial services industry and protect New York consumers, and will continue to lead and take action to fill the increasing number of regulatory voids created by the federal government,” Vullo added.

Her statement is the latest sign that some state financial services regulators and enforcement authorities intend to pick up the slack wherever they feel the CFPB pulls back under the leadership of acting Director Mick Mulvavey, who was appointed by President Donald Trump in November.

Mulvaney sent an internal memo to CFPB staff on Jan. 23 informing them that he was implementing a significant pullback in enforcement cases. The agency would pivot from investigating companies for potential prepaid card and payday lending violations, and instead focus on debt collection, and only in cases where there is “quantifiable and unavoidable harm to the consumer,” according to the staff memo.

But payday lenders, mortgage servicing companies and other financial companies are unlikely to escape state-level scrutiny in states like Maryland, Massachusetts, Oregon, Pennsylvania, or Washington, along with New York.

“State attorneys general have express statutory authority to enforce federal consumer protection laws, as well as the consumer protection laws of our respective states,” a group of 17 state attorneys general wrote in a Dec. 12 letter to the president. “We will continue to enforce those laws vigorously regardless of changes to CFPB’s leadership or agenda.“

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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