What CFPB Guidance Means For New York

May 26, 2022 at 7:00 am 1 comment

Last week the CFPB issued an interpretive ruling clarifying the power that state regulators and attorneys general have to enforce provisions of the Consumer Financial Protection Act (CFPA) against both state and federally chartered institutions.  It could have important implications for those of us living in states such as New York with an aggressive enforcement approach to consumer protections. 

12 USC § 5552 is one of the most important provisions of the CFPA.  Prior to the Act, federal bank regulators, most notably the OCC, had aggressively preempted state law which they argued interfered with the federal bank charter.  NCUA was pulled in a similar direction but has never interpreted preemption as aggressively as its banking counterparts.  This section, entitled “Preservation of enforcement powers of States” was designed to reverse this trend.  Most importantly, for our purposes, it gives states the authority to bring legal actions against both state and federally chartered institutions for violations of regulations enforced by the CFPB.

The law hasn’t been amended in more than a decade and regulators such as New York’s Superintendent Adrienne Harris, who helped promulgate the initial regulations are certainly aware of this provision.  So why the need for this interpretation?  First, it underscores that the CFPB is encouraging states to take a more active role in enforcement.  (The problem is that those of us who live in the states most likely to be inspired by this encouragement don’t feel that additional encouragement is necessary.) 

The most important aspect of this guidance is that it explains that states not only have the authority to enforce specific regulations but that they also have the authority to utilize the CFPB’s unfair, deceptive, or abusive acts or practices (UDAAP) powers as part of their enforcement efforts [see section 1036(a)(1)(B)].  This is a big deal.  New York’s DFS does not currently have UDAP powers as a matter of state law.  The CFPB just clarified that it has this more flexible enforcement tool when it comes to enforcing key federal consumer protections. 

Entry filed under: Compliance, Legal Watch, New York State, Regulatory. Tags: , , , , , .

What The Zelle Is Going On Here? NCUA to Credit Unions:  Explore Distributed Ledger Technology, But Be Very, Very Careful

1 Comment Add your own

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 785 other followers

Archives


%d bloggers like this: