Mulvaney Disbands All Advisory Boards; Wants to Start Fresh

Yesterday the Bureau of Consumer Financial Protection (BCFP or Bureau) announced it would disband all three of its formal advisory boards, including the Consumer Advisory Board (CAB). American Banker reported that CAB members were told about the development by Anthony Welcher, the BCFP’s new policy advisor for external affairs, during a conference call. The article quoted Welcher:

"We've decided we're going to start the advisory groups with new membership, to bring in these new perspectives and new dialogue. We want more diverse voices and we want to bring people in from larger-scale organizations, larger-scale opportunities in the communities to hear about processes we may be going through."

American Banker also reported that members of all three advisory boards, including the CAB, the Community Bank Advisory Board and the Credit Union Advisory Board received an email stating that they were terminated and would not be allowed to re-apply to a newly constituted future board.

The Bureau indicated that the decision was based in part on a need to reduce expenses, and in part on the comments received in response to its Request for Information about External Engagements. The comment period closed just about a week ago, and produced the following 13 submissions (with links to the full comments):

Consumer Group Comments

Appleseed
Cities for Financial Empowerment Fund
Consumer Action
Consumers Research
National Council of Asian Pacific Americans
Public Citizen

A few highlights:

Consumers Research urged the Bureau to hold more hearings about more topics (such as FinTech or cryptocurrencies, and the effects of the Durbin Amendment), with more diverse panels, in more rural or economically diverse regions. They also suggested the establishment of a bipartisan Commission on Consumer Finance to study the impact of consumer financial regulation post Dodd Frank.

Appleseed submitted comments similar to Consumers Research, and also suggested the Bureau should retain the CFPB complaint tool with public access to data; retain the “Tell Your Story” platform and promote it more widely; and expand small group meetings with expanded time for public to speak

Public Citizen added, “Though we recognize the value that industry representatives can bring to the CAB and its advisory mission, we recommend that a majority of the CAB be composed of individual consumers, consumer advocates, scholars, or others whose work focuses on protecting consumers. As a body charged with advising the CFPB on its consumer protection functions, the CAB should be led by and consist of members whose work is focused on consumer protection. Further, the CFPB already sustains two industry-based advisory boards related to community banks and credit unions.”

Industry Group Comments

Consumer Bankers Association
Credit Union Advisory Council
International Bancshares Corporation
National Reverse Mortgage Lenders Association (NRMLA)
Receivables Management Association (RMA)

Highlights:

RMA said that the Bureau’s engagement efforts have been one of the demonstrated strengths of the Bureau since its creation. The group shared that the CFPB, including senior staff, has been consistently available for meetings and speaking engagements. Nonetheless they noted some shortcomings, such as: the lack of ability to meet with the Director, and have him speak at conferences.

“Director Cordray refused numerous and repeated invitations to speak at annual conferences of non-depository participants during his entire tenure despite these participants being one of the industries he frequently cited for criticism. This aversion to speaking at conferences did not extend to the conferences held by consumer groups, originating creditors, academia, and some groups with which the Bureau had no involvement.”

RMA noted that Acting Director Mulvaney has shown an interest in engaging in direct dialogue with all industries on an even footing, calling it “a positive sign that the era of perceived hostility to the receivables industry, by our regulator, has come to an end.”

The group also noted the imbalance in representation and access between industry and consumer advocacy groups, as well as the lack of ongoing two-way dialogue, and cumbersome process for speaker requests, with the Bureau frequently not committing until just days prior to a conference.

International Bancshares said,

“While banks appreciate the Bureau's efforts to have its personnel attend bank industry conferences and meetings, too often, the Bureau's personnel do not appear to be candid nor responsive to questions from industry participants. Oftentimes, the Bureau's personnel will simply read from prepared speeches and not give responsive answers to questions, or simply state they need to go back to Washington and confer with their legal department. The Bureau should view these events as an opportunity to receive constructive and meaningful input from its stakeholders, the financial institutions that are required to implement the regulations that it promulgates. Also, Bureau hasn’t done enough to solicit input from community and regional banks, even though there has been a Community Bank Advisory Council.”

NRMLA comments emphasize suggestions for changes to provide more outreach that is focused on reverse mortgages, more leadership on the CAB from the ranks of for-profit lenders, as well as CAB and Bureau staff performing other types of external outreach besides BCFP sponsored field hearings, town hall meetings and roundtables.

Academic Group Comments

The Financial Regulation and Consumer Protection Scholars – a group of 40 law professors from a range of insititutions – said the Bureau should continue outreach and engagement efforts as they have been; the process has produced a balanced, responsive and inclusive approach. The group noted that, under the new Director, CAB members were no longer informed of which CFPB staff would be participating or listening to CAB conference calls. To the extent this new practice made CAB members feel they were being “watched,” Mr. Mulvaney had created yet another impediment to the effectiveness of the CAB.

The Mercatus Center said that the Academic Research Council has not fulfilled its purpose. The group expressed concern that minutes from the meetings are brief and vague, and that the Council could not provide an independent voice when under the control of the Office of Research. It also suggested that the Council should develop a plan to update the 1972 report of the National Commission on Consumer Finance.

Worth mentioning is another American Banker article which highlights the challenge of too many commenting deadlines. Author Rachel Witkowski notes that both industry groups and consumer advocates are struggling to respond to the deluge of RFIs from the BCFP. Some have limited resources; others say the timeframe is simply too short to gather input and gain approval from a large organization. As a result, groups are being selective in what issues they respond to and questions have been raised over whether the Bureau will get a complete picture on important matters.

insideARM Perspective

Thirteen responses is a pretty small number -- although there is a decent balance here between industry and consumer group input. I will echo the issue of commenting deadline overload raised by American Banker's Witkowski. Industry groups (and, no doubt, consumer groups alike) are very interested in the opportunity to provide comment. However it is indeed a challenge for industry volunteers to manage their full time day jobs, in addition to giving the proper amount of time to gather input, draft, discuss, revise, and finalize thoughtful responses to one request after another, for several months.

On behalf of the Consumer Relations Consortium (CRC) I will say that I don't think we've ever been turned down for a meeting, and we did typically have the opportunity to direct the conversation, which has been greatly appreciated. Though I will also say that CFPB staff generally asks a lot more questions than they answer. We have also noted the ever-expanding debt collection rulemaking deadline, with target dates moving by weeks or months at a time; never being an accurate representation of next steps.