Photo of Ashley L. Taylor, Jr.

Ashley specializes in regulatory and enforcement matters involving the state Attorneys General, CFPB and FTC.

President Donald Trump announced this morning that he plans to nominate Kathy Kraninger, associate director of the Office of Management and Budget (“OMB”), to become the new director of the Consumer Financial Protection Bureau (“CFPB”), replacing Mick Mulvaney.

The announcement came as a surprise to many because Kraninger’s name was not among those that had been circulated as possible candidates to head the CFPB and her previous experience did not center on consumer protection and financial regulatory issues. Kraninger, 43, is a Pittsburgh native and graduate of Marquette University and Georgetown Law School. Her primary experience includes serving as the Clerk for the Senate Appropriations subcommittee on Homeland Security, including overseeing the Department of Homeland Security (“DHS”) budget (and the budgets for four other agencies) while at OMB. Kraninger also served as deputy assistant for policy at DHS.

Based on the law that permitted Mulvaney to serve as interim Director, Mulvaney would have otherwise been required to leave his post at the CFPB on or before June 22, 2018, if a permanent director had not been nominated. Kraninger’s nomination, however, triggers a provision in the Federal Vacancies Reform Act that allows Mulvaney to serve until the Senate confirms or rejects the pick. That process is expected to be lengthy, taking months.

The CFPB post has been subject to significant drama since former democratic Director Richard Cordray departed, with Cordray appointing Deputy Director Leandra English to fill his seat. Within hours of Cordray’s resignation announcement, however, Trump appointed Mulvaney under the Federal Vacancies Act to succeed Cordray. English then sued, but the federal district court denied her request for a temporary restraining order and preliminary injunction. The matter remains tied up in litigation on appeal.

A White House spokesperson said Kraninger was selected because “[s]he will bring a fresh perspective and much-needed management experience” to the CFPB, “which has been plagued by excessive spending, dysfunctional operations, and politicized agendas.”

The selection of Kraninger is likely to trigger the latest rounds of fights over the leadership of the CFPB, with trade groups for financial services companies lining up in support while opponents are focusing on her lack of experience in consumer financial protection matters. Troutman Sanders LLP will continue to monitor these developments.

We are pleased to announce that Troutman Sanders attorney Ashley Taylor will be presenting during the National Creditors Bar Association 2018 Spring Conference. Ashley will speak on a panel entitled, “Regulatory and Enforcement Update: Where We Are and Where We May Be Headed and What You Should Be Doing to Prepare,” on May 18 at 8:30 a.m. The conference will take place at the JW Marriot in Austin, Texas. The conference offers great opportunities to network, earn CLE credits, meet vendors and stay current with cutting-edge educational content.

Attendees will:

  • Discuss and learn technological and social media developments within the collection industry and more.
  • Network with attorneys from practices areas such as: Commercial Collections, Bankruptcy, Judgment Enforcement, Auto Loans, Contracts-General, Medical, Replevin, Student Loans, Foreclosure, Insurance Subro and FDCPA Defense.
  • Engage with clients and other Creditor Attorneys.

To register or obtain additional information, visit the NCBA’s Website.

We are pleased to announce that Troutman Sanders attorneys Ethan Ostroff and Ashley Taylor will be presenting during the Credit and Collection News Annual Conference at the Ritz- Carlton in Lake Tahoe, California. Ethan will be providing a “TCPA Update” on April 11 at 3:00 p.m., directly followed by Ashley speaking at 4:00 p.m. on “Legal Issues in Collections.”

CCN is hosting is hosting its 13th Annual Credit and Collection News conference this year. Each year CCN helps attendees gain knowledge on current issues with bringing in speakers that have a hand in our Nation’s top corresponding issues among news. Past speakers have been Senators, Congressman, Governors and Attorney Generals who present their overview knowledge on key issues they are working on daily to be able to deliver to the committees they sit on. Attendees will:

  • Gain valuable tips and advice for Credit and Collection News
  • Discuss and Learn top issues that are happening now
  • Network with highly talented individuals in the legal and legislative department
  • Stay up to date with ongoing Credit and Collection news and what is to be expected in the future

To register or obtain additional information, visit the CCN website.

We are pleased to announce that Troutman Sanders partner Ashley Taylor will participate in a webinar hosted by the American Bar Association on “Abusive Car Loan and Sale Practices: Scope and Potential Remedies to Strengthen Consumer Protections” The event will take place on March 22, 2018 from 1 p.m. – 2:30 p.m. ET.

Today, there are almost 100 million auto loans outstanding totaling more than $1 trillion. In a society where more than 90% of American households have a vehicle, it represents the third largest type of consumer debt, trailing behind only mortgage and student debt. The purpose of the program is to provide an overview of the trending legal issues relating to auto loan and sale practices that heavily impact low- and moderate income consumers, the magnitude of its impact, and how regulators view these trends. We will discuss the pros and cons of certain proposed legal remedies and practices purportedly designed to strengthen consumer protections, especially in the sub-prime marketplace.

Participants:

John W. Van Alst
Director of Working Cars for Working Families Project
National Consumer Law Center

Delvin Davis
Senior Research Analyst, Lead Researcher on Auto/Car Title Lending
Center for Responsible Lending

Ashley L. Taylor, Jr.
Partner, Consumer Financial Services Practice
Troutman Sanders

Shennan Kavanagh
Deputy Chief, Consumer Protection Division
Office of the MA Attorney General

Moderator:

James J. Pierson
Assistant Professor & Coordinator of Accounting
Chatham University

For additional information, or to register, click here.

On February 12, 2018, the Consumer Financial Protection Bureau (“CFPB”) released its strategic plan for 2018 through 2022. The plan, which will take two years to implement, calls for placing new restrictions on the CFPB’s enforcement authority. “The proposed reforms would impose financial discipline, reduce wasteful spending, and ensure appropriate congressional oversight,” according to a statement also released on that date. Mick Mulvaney, acting interim director of the CFPB, stated that the Bureau’s new direction will provide “clarity and certainty to market participants.”

Under the proposal, which also is included in President Trump’s 2019 budget plan, the CFPB would be funded by Congress rather than the Federal Reserve. This change would arguably give lawmakers more oversight and influence over the agency’s priorities – a common complaint from critics of the CFPB. The CFPB’s 2019 budget also would be capped at its 2015 level – $485 million – compared to a projected $630 million this year.

In its strategic plan, the CFPB lays out revised mission and vision statements:

Mission: To regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws and to educate and empower consumers to make better informed financial decisions.

Vision: Free, 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.

The CFPB also lists three long-term strategic goals and objectives that will drive the Bureau’s mission:

Goal 1: Ensure that all consumers have access to markets for consumer financial products and services.
Goal 2: Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive.
Goal 3: Foster operational excellence through efficient and effective processes, governance, and security of resources and information.

Regarding the CFPB’s enforcement goal, the Bureau notes that an important objective of the Dodd-Frank Act is to ensure federal consumer laws are enforced consistently for banks and nonbanks alike. Nonbank entities include “mortgage companies, payday lenders, private education lenders, and larger participants in other markets as defined by rules issued by the Bureau.” According to the CFPB, because “[i]ndustry structure is always changing . . . so too will the number of institutions that fall under the Bureau’s supervisory authority.”

In terms of the CFPB’s rulemaking authority, the plan lists several strategies which are particularly relevant to the financial services industry, including:

  • Conducting empirical assessments to evaluate the effectiveness of significant Bureau rules in achieving the purposes and objectives of the Dodd-Frank Act and the CFPB’s specific goals.
  • Engaging in rulemaking where appropriate to address unwarranted regulatory burdens.
  • Carefully evaluating the potential benefits and costs of contemplated regulations.
  • Promoting practices that benefit consumers, responsible providers, and the economy as a whole.

In addition, the Strategic Plan notes the importance of the CFPB keeping pace with changing technology. “In recent years, evolving technologies have driven rapid change in the consumer financial marketplace,” states the plan. “The swift pace of change can provide benefits, opportunities, and risks to both consumers and institutions. The Bureau must keep pace with the evolution of technology in consumer financial products and services in order to accomplish its strategic goals and objectives.” This is especially important to debt collectors and mortgage servicers who communicate with consumers through electronic means that did not exist when the Fair Debt Collection Practices Act was first approved in 1977.

The 16-page strategic plan deviates considerably from the draft of the report that was released last October prior to Mulvaney assuming leadership of the CFPB. The revised strategic plan echoes Mulvaney’s previous statements that the CFPB would dampen aggressive enforcement and regulatory actions that he viewed as the hallmark of the previous administration. As the report states, the CFPB will now operate “with humility and moderation.”

As we reported earlier this month, Mulvaney has indicated that he will reserve administrative enforcement actions for only the most egregious violations of consumer protection law. Mulvaney has further emphasized his intent to rely on formal rulemaking to provide institutions under the CFPB’s purview with notice of “what the rules are before being charged with breaking them.”

The Bureau already has taken measures to apply Mulvaney’s vision, including the recent dismissal of a four-year-old payday lending lawsuit and the announcement that the CFPB would reconsider a controversial rule affecting the payday and auto-title lending industries.

We will continue to monitor the actions of the CFPB and other regulatory agencies for future developments.

We are pleased to announce that Troutman Sanders partner Ashley Taylor will participate in a webinar hosted by the American Bar Association on “An Inside View – Working with Your Attorney General.” The event will take place on February 13, 2018 from 10:30 a.m. – 12:00 p.m. ET.

Ashley Taylor will interview Attorney General Karl Racine about how multistate investigations work, and why lawsuits and investigations by state Attorneys General are different from private litigation.

For additional information, or to register, click here.

On January 16, the Consumer Financial Protection Bureau announced its intention to reconsider a controversial rule affecting the short-term (payday) and auto-title lending industries.  This reconsideration could signal that a stripped down rule that omits a number of the rule’s more controversial provisions could be in the offing.

The original rule was finalized in October 2017, when Richard Cordray was still the head of the Bureau, and required lenders to determine whether a borrower could afford his or her loan payments while still meeting basic living expenses and other financial obligations.  For short-term or auto-title loans due in a lump sum, lenders must determine whether a borrower can make a full payment of the total loan amount, plus any fees and finance charges, within two weeks or a month.  For loans with a longer term and a balloon payment, lenders must determine whether a borrower can afford the highest total payments.  The rule also includes additional requirements, including a principal-payoff option for certain short-term loans, loan options, and debit attempt cutoff.  The rule officially took effect on January 16, yet the majority of key provisions are not scheduled for implementation until August 19, 2019.

The rule has proved controversial, as consumer advocates fully supported the measure while lenders contended that the rule’s restrictions would result in a number of lenders going out of business and reduced credit options for many borrowers.  Members of Congress have introduced measures to repeal the rule under the Congressional Review Act, a tactic that proved effective with the arbitration rule.

The CFPB’s announcement did not offer any details regarding the scope of its reconsideration or any timeline for changes to the rule.

2017 was a transformative year for the consumer financial services world. As we navigate an unprecedented volume of industry regulation and forthcoming changes from the Trump Administration, Troutman Sanders is uniquely positioned to help its clients find successful resolutions and stay ahead of the compliance curve.

In this report, we share developments on consumer class actions, background screening, bankruptcy, credit reporting and consumer reporting, debt collection, payment processing and cards, mortgage, auto finance, the consumer finance regulatory landscape, cybersecurity and privacy, and the Telephone Consumer Protection Act (“TCPA”).

We hope you find this helpful as you navigate the evolving consumer financial services landscape.

ACCESS THE REPORT HERE

Just shy of one year as the N.C. Attorney General, Josh Stein has reorganized NC DOJ – eliminating one prior Division (the Administrative Division), shifting responsibilities within DOJ, and renaming certain Divisions. Additionally, several recent retirements, new hires and promotions have significantly altered the senior attorneys at the helm of the DOJ’s legal services.

Under the reorganization, the eight Divisions providing legal services at NC DOJ consist of Civil (education; insurance; labor; property control; revenue; and legal services to state agencies); Consumer; Criminal; Environmental; Health and Human Services; Litigation; Medicaid Investigations; and Transportation. The functions of the previous Administrative Division have been shifted to other Divisions.

We are pleased to announce that Troutman Sanders attorneys Ashley Taylor and Tim Butler will participate in a webinar panel discussion hosted by the American Bar Association on “State Attorneys General Series: Enforcement Agencies Confront Class Actions .” The event will take place on December 5, 2017 from 1:00 – 2:30 p.m. ET.

The still vibrant debate about the value of class actions has typically polarized the legal community. One side argues that class actions serve no legitimate purpose, as enriching class-action lawyers is not a legitimate purpose. The other side argues that class actions are essential to the preservation of rights, and that there is no other legal mechanism sufficient to accomplish what class actions accomplish.

This program dives into the debate about the value of class actions with state and federal regulators who work in the trenches to promote class action fairness. These regulators receive your CAFA notices, review your proposed settlements, and sometimes try to torpedo them. This webinar is your chance to hear from them them about their process and what they consider in their review.

For additional information or to register, click here.