Banking and Finance Law Daily Consumer advocacy groups allege CFPB advisory taskforce is unlawful
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Wednesday, June 17, 2020

Consumer advocacy groups allege CFPB advisory taskforce is unlawful

By Colleen M. Svelnis, J.D.

A complaint filed by consumer advocacy groups claims that the CFPB’s Taskforce on Federal Consumer Financial Law violates the Federal Advisory Committee Act and is "unlawfully chartered."

Consumer advocacy groups National Association of Consumer Advocates (NACA) and U.S. Public Interest Research Group (PIRG) along with consumer law expert Professor Kathleen Engel have filed a complaint in the U.S. District Court for the District of Massachusetts against the Consumer Financial Protection Bureau and Director Kathy Kraninger for unlawfully creating and operating the Taskforce on Federal Consumer Financial Law in violation of the Federal Advisory Committee Act. The complaint is seeking declaratory and injunctive relief, asking for the Taskforce to halt its operations and to stop the CFPB from relying on its work. According to a U.S. PIRG release, the Taskforce, in violation of federal law, is stacked with industry-aligned members, excludes consumer advocates, does not serve a public interest, and has conducted its work behind closed doors (National Association of Consumer Advocates v. Kraninger, June 16).

"The Federal Consumer Financial Law Taskforce is the latest effort by a Trump appointee to outsource policymaking to private interests while excluding other voices," said Democracy Forward Executive Director Anne Harkavy. "We’ve stopped them before, and we’re asking the court to stop them here. In the midst of an economic downturn, the CFPB should not be excluding consumer advocates from key policymaking conversations about how to protect American families."

The Federal Advisory Committee Act was designed to prevent special interest groups from exerting undue influence over the Executive Branch. It requires advisory groups that provide recommendations or advice to federal agencies to have balanced membership, be in the public’s interest, and operate transparently.

Taskforce on Federal Consumer Financial Law. The CFPB set up the Taskforce "to examine ways to harmonize and modernize federal consumer financial laws." The taskforce is asked to examine the legal and regulatory environment that both consumers and financial service providers face and report its findings and make recommendations to Director Kraninger. The Taskforce has been asked to produce new research and legal analysis of consumer financial laws in the United States. Taskforce members are appointed for a term of one year, and are expected to submit to Kraninger recommendations intended to improve and reinforce consumer financial laws and regulations. The taskforce also intends to produce research and analysis of U.S. financial laws.

"It distresses me that political appointees at the CFPB are willing to defy the law in order to push their deregulatory agenda and undermine the agency’s mission of protecting American families," stated Engel, according to the U.S. PIRG release. The advocacy groups allege that the Taskforce is made up of members who have championed deregulation and exclusively represent the interests of the financial industry. U.S. PIRG’s release states that Taskforce Chair Todd Zywicki has called the CFPB "a tragic failure" and a "menace."

Allegations in complaint. According to the complaint, the Taskforce is unlawfully chartered and the Bureau has "failed to explain why the Taskforce is necessary and not duplicative of existing CFPB expertise." The complaint states that under the FACA, meetings are required to be open to the public and that Taskforce meetings have been held in private. The groups are asking the court to declare the "creation and administration" of the Taskforce is unlawful because it violates the FACA, and its implementing regulations, as well as the Administrative Procedure Act. The complaint asks the court to set aside the Taskforce’s charter and the appointments of the Taskforce members, enjoin them from meeting, or otherwise conducting Taskforce business, and to release all materials prepared for the Taskforce. The complaint also asks the court to enjoin the CFPB and Kraninger from relying on and using any of the Taskforce’s recommendations.

Companies: Democracy Forward; National Association of Consumer Advocates; U.S. Public Interest Research Group

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