Trump Administration Regulatory Freeze. What Is The Effect On The CFPB
The Trump Administration circulated a memorandum on January 20, 2017 (the “January 2017 Memo”) to the heads of executive departments and agencies, initiating a regulatory review to be headed by the Director of the Office of Management and Budget (“OMB”).
The January 2017 Memo states in relevant part, “[S]end no regulation to the Office of the Federal Register (the ‘OFR’) until a department or agency head appointed or designated by the President after noon on January 20, 2017, reviews and approves the regulation.” Withdraw final but unpublished regulations: “With respect to regulations that have been sent to the OFR but not published in the Federal Register, immediately withdraw them from the OFR for review and approval.” Delay the effective date of published but not yet effective regulations: “With respect to regulations that have been published in the OFR but have not taken effect, temporarily postpone their effective date for 60 days from the date of this memorandum”. Following the delay, regulations that “raise no substantial questions of law or policy” would be allowed to take effect. For those regulations that do raise such questions, the agency or department “should notify the OMB Director and take further appropriate action in consultation with the OMB Director.” Rulemakings subject to statutory or judicial deadlines are exempt, and the OMB Director has the authority to grant further exemptions for “emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise.”
What is the effect of the January 2017 Memo on the Consumer Financial Protection Bureau (“CFPB”)?
It does not appear that the January 2017 Memo directly applies to the CFPB, which was established as an independent agency by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). However, please note that in the fall, 2016, a panel of the D.C. Circuit concluded, in part, in CFPB v. PHH Corporation, (the “PHH Case”) that the CFPB Director was subject to “at will” removal by the President. This initial decision is currently stayed while the CFPB seeks reconsideration by the full D.C. Circuit, a process that is expected to take months to resolve. The decision in the PHH Case gives a good overview of how the CFPB was set up under the Dodd-Frank Act, where it receives its funding, etc. Our understanding is that the CFPB has not yet reached a conclusion regarding the application of the January 2017 Memo. Of course, the CFPB could choose to comply voluntarily with this new requirement. There have been reports and speculation that Mr. Cordray may step down and a new director will be appointed by the Trump Administration.