State regulators have “significant concerns” about a Consumer Financial Protection Bureau task force that is charged with looking at federal consumer protection laws, wondering why they are being left out of the discussion and worried that their state laws are possibly going to be pre-empted.
The Conference of State Bank Supervisors sent the CFPB a letter, in the form of a comment on a Request for Information that the Bureau published seeking input on the task force’s agenda and direction. The letter raised the CSBS’s concerns whether the task force will be able to “objectively assess and make informed recommendations” regarding the symbiotic relationship that is supposed to exist between the states and the federal government.
The letter also questioned the timing of the RFI and comment period, noting that the coronavirus pandemic has likely led to less public attention and response and intimating that the CFPB should be focused on its response to the pandemic and protecting consumers.
Rather than address any of the specific questions posed by the CFPB in the RFI, the CSBS used its letter to read between the lines and infer that the Bureau is looking to pre-empt state consumer protection laws, which would reduce the compliance burden for financial services organizations, especially those that operate in multiple states, but would also reduce the oversight of the industry, especially those whose actions can give it a bad reputation.
“States are a critical partner for the Bureau in enforcing federal consumer protection laws,” the regulators wrote in their letter. “They also handle a significant portion of consumer complaints regarding the functionality of the consumer finance market. However, former state regulators are not represented on the Taskforce. The lack of representation on the Taskforce, coupled with the inclusion of outcome-oriented questions focused on expanding preemption of state authority raises serious questions regarding the objectivity and mission of the Taskforce.”