Industry Talks About Election Impact on Debt Collection Rule, CFPB Enforcement

For the better part of two days, everyone has been trying to figure out what will happen now that Donald Trump has been elected president, and both the House of Representatives and Senate are under Republican control.

Much of the industry’s focus has been on what will happen to and at the Consumer Financial Protection Bureau. Are Richard Cordray’s days numbered, especially now that the president has the legal authority to fire the director for any reason? Will he quit in anticipation of being fired? Will a Republican Congress change the leadership structure of the CFPB to a commission, similar to the Federal Trade Commission and Federal Communications Commission? Will Trump opt to shutter the CFPB entirely?

The industry has been awash in questions and answers will likely not be forthcoming anytime soon. President-elect Trump has revealed little of his transition plan and during the campaign made little mention of potential changes he’d like to make, other than to say he wants to repeal the Dodd-Frank Act, which led to the creation of the CFPB in the first place.

When it comes to the industry’s concerns with the future of the CFPB, it boils down to two primary areas: regulation and enforcement. What does Tuesday’s election results do to the timeline for the CFPB to issue its proposed debt collection rule and what impact will it have on the enforcement activities at the bureau?

“The rule-making process is barely in its infancy,” said Scott Wortman, a partner at the law firm of Warshaw Burstein. “I don’t think the fact that we’re going to have a Republican president is going to have any impact on the timeline of the rule-making process. It is a process that I still think is 12-to-18 months away. We still don’t even have rules; we just have an outline.”

In theory, the CFPB could try to rush out rules before President-elect Trump takes office next January, but none of the lawyers contacted by think that such a feat is possible in the next 11 weeks.

“I don’t think they can do it,” said Thomas Good, the managing partner of the law firm of Barron & Newburger. “They haven’t issued even a proposed rule yet. I don’t see that happening. I do think that everyone was caught by surprise. If they had known Trump was going to win, maybe they would have moved up their calendar, but they didn’t.”

The flip side is that the transition to a new administration, combined with an expected directive for less regulation causes the rule to be delayed or shelved completely. Some industry professionals felt this might be a more likely scenario, but did not necessarily expect the CFPB to tamp down its enforcement activities.

“I think there is a brighter future for our industry, but nothing has changed,” said Joann Needleman, a partner at the law firm of Clark Hill. “You still need to have a compliance management system. You still need to be compliant. Clients are still going to be making demands. That is all the same.”





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