Could Calls to Freeze Regulatory Agenda Put CFPB’s Debt Collection Rule in Jeopardy?

The scenario where the Consumer Financial Protection Bureau’s release of the final debt collection rule is postponed until after the presidential election in November is becoming more possible by the day, which could threaten the release of the rule altogether, if the Democrats win the White House. A growing number of attorneys general and trade associations are asking the federal government to delay all non-coronavirus rulemakings for up to six months, which, if put into place today, would be 31 days before the presidential election on Nov. 3.

The Independent Community Bankers Association sent a letter this week to seven federal regulators, including the CFPB and the Treasury Department, requesting a 180-day freeze on any rulemaking that dealt with something other than COVID-19. That suspension would include the release of proposed and final rules.

The CFPB has already announced a 30-day extension of the comment period for a Supplemental Notice of Proposed Rulemaking it had issued related to additional disclosures that collectors would need to provide when collecting on time-barred debts. The Bureau had also announced it was planning on releasing the final debt collection rule at some point in 2020.

In its letter, the ICBA referenced the CFPB’s SNPRM on time-barred debt disclosures, but did not mention the proposed debt collection rule.

“The resources required to effectively respond and advocate positions during the rulemaking process have understandably shifted to responding to this crisis,” the ICBA said in its letter. “Community bankers are passionate advocates who often respond to comment requests, directly or in collaboration with ICBA, with thoughtful positions, specific details, and empirical data. But all of this requires time and resources – both of which are substantially strained at this time.”

Meanwhile, a group of Democratic Attorneys General are also calling for an indefinite suspension of rulemaking activities, in a letter sent to the Director of the White House’s Office of Management and Budget.

“The need to prioritize regulations responsive to the COVID-19 pandemic should be self-evident,” the Attorneys General of New Jersey, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Virginia wrote. “While the federal Government is mobilizing, state and local governments across the country have been wholly dedicated to responding to the emergency and combatting the spread of this deadly virus, and daily life in our communities has been upended by the need to maintain social distancing.”

But it remains to be seen if the White House will grant the requests being made. The Office of Information and Regulatory Affairs, an agency within the OMB, has been approving final rules from different agencies during the crisis, including signing off this week on a final rule from the Environmental Protection Agency rolling back auto emission standards.

If a Democrat wins the presidential election in November, he may decide to fire the current Director of the Consumer Financial Protection Bureau and appoint a new head of the agency, who may decide to alter or dispatch the rule altogether.

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