Today's Headlines

    Missouri Supreme Court Rules in Key Case

    AFSA Staff

    On Dec. 5, the Missouri Supreme Court issued an opinion in a case in which AFSA was involved. AFSA submitted an amicus brief in Jeff Reed v. The Reilly Company, LLC, a case that arose out of a contract dispute between Mr. Reed and his former employer, The Reilly Company. One of the issues before the Court, and the central issue for AFSA members is whether entities regulated by the Missouri Division of Finance are exempt from liability under the Missouri Merchandising Practices Act (MMPA). The amicus argued that they are exempt.

    Over the last several years, AFSA members have seen the plaintiffs’ bar use the MMPA as a weapon against consumer finance companies to discourage collections and obtain debt forgiveness. Settling these cases is expensive for finance companies. In addition, financial services companies are faced with difficult choices when determining how -- or whether -- to pursue collections from Missouri consumers in default and how to market their products to consumers in Missouri without inadvertently creating potential exposure under the MMPA.

    The court did not rule on the MMPA interpretation question. However, while this case was on appeal, the Missouri Southern District Court heard a case called Meyers v. Kendrick. In that case, the court held that there was no private right of action under the MMPA against industries regulated by the Missouri Division of Finance. In doing so, the court rejected the circular reading of the MMPA that had been successfully advanced against AFSA members.

    Meyers articulates a clear “bright line” exemption to the MMPA for regulated industries like AFSA members. For that reason, it seemed very likely that Meyers would either be appealed or taken by the Missouri Supreme Court of its own accord. But, surprisingly, it was not. Meyers is now binding precedent and it should effectively end MMPA claims against AFSA members.

    Mulvaney Moving to Make Changes at Bureau

    AFSA Staff

    On November 28, U.S. District Court Judge Timothy Kelly, a Trump appointee, denied Consumer Financial Protection Bureau (CFPB) Deputy Director Leandra English's request for a temporary restraining order preventing President Donald Trump's appointment of OMB Director Mick Mulvaney as the CFPB Acting Director.

    The next step is for the judge to rule on the merits of English's claim pursuing an outright declaratory judgment that she has the authority to serve as Acting Director of the bureau. On Tuesday, Judge Kelly said that he would hear motions on the case on December 22. There is no timetable for rulings following the hearing.

    English filed a motion for a preliminary injunction by Wednesday, Dec. 6, and any amicus briefs to support her must be filed by Friday, Dec. 8. A response from Mulvaney is due on Dec. 18, as are any amicus briefs in support. English’s reply to Mulvaney’s motion will be due Dec. 20, followed by the hearing on the 22nd.

    In the interim, Mulvaney has begun examining a variety of lawsuits and announced a freeze on hiring, enforcement actions, and policymaking so as to appropriately look at each case. He also halted the bureau’s collection of data from consumers, citing serious security risks, an issue that has been raised frequently by both industry and proponents of the CFPB database alike. Mulvaney also endorsed a congressional effort to rollback the bureau’s small-dollar lending rule.

    President Donald Trump has also appointed Brian Johnson, a former top staffer for the House Financial Services Committee, to manage the day-to-day operations at the bureau. 

    GAO Declares CFPB Indirect Auto Guidance a Rule Subject to Congressional Review Act

    AFSA Staff

    On Dec. 5, the Government Accountability Office issued an opinion declaring the Consumer Financial Protection Bureau's (CFPB) March 2013 guidance on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act (Bulletin 2013-02) a general statement of policy and a rule for the purposes of the Congressional Review Act (CRA). The ruling was in response to a March 2017 letter from Senator Pat Toomey (R-PA) requesting a review of the guidance.

    The CRA requires all federal agencies to submit each rule to Congress and to the Comptroller General before it can take effect. In response to the GAO's decision, the CFPB's acting director could rescind the bulletin or policy, leaving the door open for future directors to pursue it again. Alternatively, the acting director could submit the rule to Congress for review. Under the CRA, Congress may pass a resolution of disapproval overturning a rule within 60 legislative days after receipt using a simple majority vote.

    AFSA has long advocated against the CFPB's flawed auto finance guidance and will continue to be at the forefront of this issue through outreach to both the CFPB and Members of Congress.

    Cordray Announces Run for Ohio Governor

    AFSA Staff

    Former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray announced on Tuesday that he would run for Ohio governor. The announcement comes just two weeks after leaving the bureau. Cordray, a Democrat, announced the run in a diner in his hometown of Grove City.

    Cordray’s candidacy has been long expected and he announced it by citing his experience facing challenges in Washington. “Being a voice for regular folks wasn’t easy,” Corday said. “Congress, big banks and then the new administration tried to protect their powerful interests. But we didn’t back down.”

    Sen. Elizabeth Warren (D-Mass.) also appears in Cordray’s announcement video, praising him for his work at the bureau. Republicans and critics of the CFPB have cited Cordray’s use of the bureau to boost his political profile. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) asked the Government Accountability Office to review whether Cordray violated laws barring him from campaigning while in office. He was cleared in October.

    The Ohio’s Governor race is crowded, particularly on the Democratic ticket, with five other candidates in addition to Cordray. There are currently three Republicans, including former US representative and Senator Mike DeWine, Rep. Jim Renacci (OH-16) and Mary Taylor, a former Ohio representative and state auditor.

    Bipartisan Bank-Relief Bill Wins Approval from Senate Panel

    Bloomber, Elizabeth Dexheimer (December 5, 2017)

    The Senate Banking Committee on Tuesday advanced bipartisan legislation that would revise many areas of the 2010 Dodd-Frank Act.

    The bill, sponsored by Senator Mike Crapo, the Idaho Republican who leads the banking panel, has backing from several Democrats and would primarily provide relief to small and regional banks. It would also free midsize lenders from the strictest post-crisis oversight and cut compliance costs.

    Tuesday’s vote moves the bill to the full Senate, where it will need to gain approval before it can be merged with a measure from the U.S. House. Representative Jeb Hensarling, the Texas Republican who leads the Financial Services Committee, has won House passage of his CHOICE Act legislation that goes far beyond Crapo’s in making changes to Dodd-Frank, like gutting the Consumer Financial Protection Bureau and repealing Volcker Rule trading restrictions. Democrats who signed onto Crapo’s bill would be unlikely to agree with Hensarling’s plan, which passed the House in a party-line vote.

    Where are the markets and economy headed?

    Ron Insana, Senior Analyst at CNBC will be joining us at AFSA’s inaugural Law & Compliance Symposium, January 29-31 at the Omni San Diego.

    Insana is a contributor to CNBC and MSNBC, where he discusses the most pressing economic and market issues of the day. He also delivers The Market Scoreboard Report to radio stations around the country. Insana has written for Money magazine and USA Today, and has hosted two nationally-syndicated radio programs. 

    In addition to his work as a business journalist, Insana was the CEO of Insana Capital Partners, from 2006-2008, which, at its peak, managed the Insana Capital Partners "Legends Fund."

    Don't miss the opportunity to hear from Insana and all of the industry thought-leaders speaking at the Symposium, as they bring insights to the top legal and regulatory issues facing the financial services industry.

    The early bird registration rate ends on Sunday, December 10! Register TODAY!