CFPB to Withdraw 67 Guidance Documents in Trump Pullback (1)

The Consumer Financial Protection Bureau plans to rescind nearly 70 guidance documents issued over 14 years, including several that expanded the scope of its public consumer complaint database, according to a regulatory filing.

Many of the guidance documents, interpretive rules, advisory opinions, and policy statements adopted in previous administrations are inconsistent with statutory text and imposed “compliance burdens” without providing an opportunity for notice and comment, acting CFPB Director Russell Vought wrote in a Federal Register notice posted Friday.

“Even where the guidance might advance a permissible interpretation of the relevant statute or regulation, or afforded the public an opportunity to weigh in, it is the Bureau’s current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased,” Vought said in the filing, which is set for official publication May 12.

Former CFPB Director Rohit Chopra in particular made widespread use of guidance documents during the Biden administration, drawing pushback from Republicans and legal challenges from industry groups.

The guidance documents Vought targeted stretch back to 2011. They include guidance for industry to comply with laws and CFPB regulations on debt collection, remittance, mortgage, credit reporting, and whistleblower protections, as well as an interpretive rule applying some credit card protections to buy now, pay later products that Vought had previously said the CFPB would revoke.

Vought on April 11 ordered CFPB units to review all previous guidance material and propose items that could be withdrawn, according to the Federal Register notice.

Also included in the rescinded guidance are documents allowing for the public reporting of credit card and other complaints, as well as narratives about complaints, on the CFPB’s public database. Removing that guidance has the potential to significantly reduce the amount of information on the agency’s complaint database.

The CFPB under Vought has changed its enforcement policy to focus on potential violations of the Military Lending Act and other service member protections. But a 2021 interpretive rule allowing the CFPB to examine companies for violations of service members’ rights is among the guidance documents set for withdrawal.

The CFPB didn’t immediately respond to a request for comment.

Chopra Targeted

The 67 rescinded guidance documents on Vought’s list include three issued by former Director Kathy Kraninger, who led the CFPB during President Donald Trump’s first term. But the majority—more than 40—were issued by Chopra.

The Biden-era CFPB director at the time said the guidance documents were intended to blunt industry complaints that the agency was regulating through enforcement.

“The way in which an agency addresses that is to try and offer much more transparency about how we would think about exercising our authorities,” Chopra said in a July 2022 interview with Bloomberg Law.

Toward the end of Chopra’s term, CFPB officials released a compendium of agency guidance documents they said state attorneys general and other local and state enforcement agencies could rely on when enforcing laws.

Nearly all of those guidance documents were targeted for rescission in the CFPB’s Federal Register notice.

Banks, which long criticized the CFPB’s use of guidance documents, applauded Vought’s move.

“While banks welcome guidance that helps them understand and comply with the law, too often in the past the CFPB has characterized something as guidance that is actually a rule Congress requires to go through the notice-and-comment process,” American Bankers Association President and CEO Rob Nichols said in a statement.

But banks may miss some of the certainty that the guidance documents provided, particularly the longstanding interpretations of federal law, said Christine Hines, the National Association of Consumer Advocates’ senior policy director.

And just because the CFPB says the guidance documents are withdrawn doesn’t mean courts have to agree, she said.

That’s particularly true following last year’s US Supreme Court decision in Loper Bright Industries v. Raimondo, which eliminated a decades-old legal doctrine that deferred to federal regulators to interpret unclear laws.

“Courts can still look at the CFPB guidance and decide whether they agree with that,” Hines said.

Possible Return

One guidance document that’s still on the books is an industry-friendly 2016 interpretive rule providing a safe harbor from a federal debt collection law for mortgage servicers that follow other collection requirements in the Real Estate Settlement Procedures Act and the CFPB’s mortgage servicing rules.

The CFPB is still reviewing the other guidance documents listed for withdrawal and some might be revived, Vought said.

But companies won’t have to comply with any of the listed guidance in the meantime and the CFPB will “deprioritize” enforcement, the notice said.

“Where guidance is not per se unlawful, the Bureau nonetheless determines that guidance should be withdrawn and that it should be reissued only if the guidance is necessary and only if it reduces compliance burdens,” Vought said in the notice.

But Vought’s move shows the Trump administration is in a “deeply ideological deregulatory project without regard to the impact to consumers or to industry,” said Jonathan Joshua, a financial regulations specialist at Joshua Law Firm LLC.

“This goes so much further than any of Rohit Chopra’s so-called ‘regulation by enforcement,’ and clarifies that many of those complaining about regulation by enforcement were actually complaining about any regulation, regardless of how enacted,” he said.