On Aug. 21, 2020, Better Markets and several other public advocacy groups submitted a comment letter on the Consumer Financial Protection Bureau’s proposal to establish an “Advisory Opinions Pilot Program.” As it is proposed, this program would allow industry insiders special access to the Bureau’s rulemaking process, allowing them to weaken consumer protections.
It is a cornerstone of good governance that the rulemaking process should be transparent and fair. That is why the federal agencies have to solicit feedback on new regulations not just from the regulated industry, but from consumer advocates, lawmakers and the general public as well. This ensures that regulators have access to all facts and perspectives when making a new rule, and it allows them to efficiently achieve their goals and promote the public good.
The CFPB’s proposed Advisory Opinions Pilot program would allow well-connected industry insiders to short circuit this process. According to the proposal, the process would begin with a regulated company submitting a request on any issue that falls within the bureau’s jurisdiction. This petitioner would then be allowed to submit factual findings, legal analysis and even a proposed interpretation that would satisfy this request.
While the CFPB maintains the ultimate right to reject a request or issue an alternative interpretation, it cannot help but be influenced by these submissions. Yet at no point in this process will any other party be allowed to give his or her own perspective or contextualize the facts and data submitted by the petitioner. In fact, the bureau clearly states in the proposal that it will implicitly trust the information submitted by the companies it is supposed to be overseeing and will “not normally investigate the underlying facts of the requestor’s situation.”
The CFPB has further indicated that it would like to accept requests from law firms and trade associations on behalf of anonymous petitioners. This would leave both the American people and the bureau itself completely in the dark about what the real impacts of the requested interpretation would be. At a bare minimum, the CFPB must know if the interpretation would affect any ongoing state enforcement actions, license revocations or private litigations. Issuing a favorable interpretation in these cases would amount to the bureau overruling the courts and deciding the matter itself.
For these reasons and many more, the CFPB must abandon this misguided pilot program. The bureau should continue to solicit public comment and actively engage with stakeholders to find areas of its regulatory framework that need improvement. But that process must be fair, transparent and open to all Americans and not just to those with enough connections, legal expertise and funding to exploit a flawed Advisory Opinions Program.
