On Monday, Acting Director Mick Mulvaney of the Bureau of Consumer Financial Protection Bureau (BCFP or Bureau) made remarks at the Mortgage Bankers Association’s annual conference indicating that the Bureau intends to engage in rulemaking to define the term “abusive” in unfair, deceptive or abusive acts or practices (UDAAP).
Mulvaney mentioned that the terms “unfair” and “deceptive” are well-defined in the law, but that the term “abusive” remains unclear after it was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Mulvaney stated that “regulation by enforcement is done.” Mulvaney acknowledged that he does not have authority to repeal the laws, but he does believe that companies “have a right to know what the law is.”
This is not the first time that Acting Director Mulvaney referenced the end of regulation by enforcement. In a memo sent to Bureau staff in January articulating his intentions for the new direction of the Bureau, Mulvaney stated:
On regulation, it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them. This means more formal rulemaking on which financial institutions can rely, and less regulation by enforcement.
With the announcement of the Bureau’s intent to define “abusive” and the decline in enforcement actions initiated by the Bureau under Mulvaney’s leadership, it appears that the Acting Director remains committed to the intentions he laid out in January.
Legitimate companies want to follow the law. Even when the laws are vague, outdated, and subject to multiple interpretations, legitimate companies put in a good faith effort to comply. Many in the ARM industry can appreicate Mulvaney's commitment to provide clarity before enforcement actions are taken. In addition to benefitting to the Bureau's clarification of "abusive" in UDAAP, the ARM industry is also looking forward to the long-awaited debt collection rules, which -- after several delays -- are currently set for Spring 2019.