On September 30, the U.S. Senate confirmed Commissioner Rohit Chopra of the Federal Trade Commission as the new Director of the Consumer Financial Protection Bureau (CFPB). Director Chopra is expected to usher in a regime of dramatically increased enforcement and creative, expansive regulation. Many financial institutions will have questions and concerns about the CFPB, how it will affect their businesses and operations, and how to productively engage with this exceptionally powerful and opaque regulator. It is now more important than ever to closely follow the work of the CFPB as new leadership seeks to aggressively employ all of the agency’s tools in service of the American consumer.
We write to remind clients of Sidley’s capabilities in all facets of the CFPB’s jurisdiction, including enforcement, supervision, and regulation.
In-Depth Enforcement Experience: Sidley is uniquely situated to help clients navigate CFPB enforcement matters. We count among our partners Thomas Ward, the most recent CFPB Enforcement Director, who served under both Republican and Democratic administrations, and who is the only Enforcement Director to have also served as a Deputy Assistant Attorney General at the U.S. Department of Justice leading Consumer Protection branch matters, a key CFPB partner for criminal referrals arising from consumer financial cases and investigations. During his tenure at the CFPB, Tom oversaw the setting of the CFPB’s enforcement priorities for both the end of the Trump administration and the beginning of the Biden administration, which priorities can be expected to guide the CFPB’s Office of Enforcement in the years to come. He also commissioned a comprehensive effort to centralize the Office of Enforcement’s investigative, litigation, and negotiation processes and best practices; the critical thinking about each of the statutes and regulations that the CFPB enforces, including the Consumer Financial Protection Act’s expansive UDAAP authority; and the CFPB’s scholarship detailing how to determine and pursue remedies, penalties, redress, and injunctive relief. The result was a centralized and comprehensive roadmap of Enforcement’s best practices and an invaluable guide for all Enforcement matters from inception to resolution. Tom also helped lead the first restatement of the CFPB’s essential Responsible Business Conduct bulletin, which may allow companies to mitigate or obviate enforcement matters altogether.
Sidley can help clients effectively navigate all stages of the CFPB enforcement process, including responding to Civil Investigation Demands (CIDs), representing current and former employees in investigational hearings, drafting responses to Notice and Opportunity to Respond and Advise (NORA) letters, negotiating appropriate resolutions, litigating enforcement actions in federal court or administrative proceedings, and handling all post settlement matters.
Proactive Approaches to Supervision and Compliance Management: The CFPB’s Office of Supervision has broad authority to examine banks with assets of over $10 billion, nonbank mortgage originators and servicers, payday lenders, private student lenders of all sizes, and larger participants in the areas of consumer reporting, consumer debt collection, student loan servicing, international money transfer, and automobile financing. We work with clients to identify and address potential compliance gaps and program enhancements in order to mitigate the effect of supervisory actions. Our assistance includes conducting mock CFPB examinations, directing comprehensive risk assessments and institution wide audit assessments, monitoring the flow of information during the exam process, crafting appropriate responses to notice of Potential Action and Request for Response (PARR) letters and Reports of Examination, and addressing any items that require corrective action.
Expansive Regulatory Capabilities: We assist clients with new and innovative products and services that do not fit neatly into existing regulations, the development of policies and programs in connection with enterprise wide compliance, vendor management, and best practices for consumer products and services. In addition, we provide guidance interpreting rule amendments, legislative and regulatory proposals, and comment letters. We engage regularly with CFPB staff in the Division of Research, Markets, and Regulations to understand the effect of new and existing rules. We also communicate on a confidential basis with CFPB staff to seek guidance with respect to particular products or services.
Results-Driven Transactional Advice: Applying our extensive knowledge of CFPB activity, we help clients gauge the risk of exposure to supervisory and enforcement measures associated with all manner of transactions. For example, we assess the business and reputational consequences associated with acquisitions of loan portfolios and institutions subject to the CFPB’s jurisdiction. Harnessing our global network of resources, we provide tailored advice on structuring transactions and investments that achieve our clients’ strategic business objectives.
Representation in State Attorneys General Actions: State attorneys general, as well as state financial regulators, will also be active in consumer financial enforcement both on their own and in partnering with the CFPB. While the New York State Department of Financial Services and the California Department of Financial Protection and Innovation will be leaders in consumer financial protection, all states are aggressively pursuing actions, including in partnership with the CFPB and multistate law enforcement groups. Consumer financial services providers need to be aware of, and in compliance with, state consumer financial laws in addition to federal consumer financial laws. We represent businesses in all facets of state consumer financial enforcement matters and in matters carried out jointly with the CFPB.