Fireworks over DC

We win favorable settlement in our lawsuit over Trump CFPB's illegal "Task Farce"

This week, we favorably settled our lawsuit over the Trump CFPB's creation of an illegal "TaskForce on Federal Consumer Financial Law." We called it a dangerous "Task Farce" from the get-go. We're happy that the Biden CFPB has returned the Consumer Bureau to its one job: protecting consumers. Cue fireworks! 

Cover photo of "DC Fireworks" by Stan Mouser via Flickr. Some Rights Reserved. 

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Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

This week, we favorably settled our lawsuit over the Trump Consumer Financial Protection Bureau (CFPB)'s creation of an illegal "TaskForce on Federal Consumer Financial Law." We called it a dangerous "Task Farce" from the get-go. We're happy that the Biden CFPB has returned the Consumer Bureau to its one job: protecting consumers.

The lawsuit was brought by the public interest law firm DemocracyForward.org on behalf of U.S. PIRG, the National Association of Consumer Advocates and Professor Kathleen Engel, an eminent scholar of consumer financial law who was interviewed, yet rejected for a seat on the "Taskforce." Instead, Trump's then-CFPB Director Kathy Kraninger stacked it with 5 representatives of the financial services industry, and no one else, as we explained in our coalition news release announcing the settlement earlier this week. The release goes on to say:

"We filed suit against the CFPB and Director Kathy Kraninger to hold them accountable for violating the Federal Advisory Committee Act. The agency failed to explain why the Taskforce was necessary, stacked it with only industry representatives, withheld its records, and kept the public out of its meetings.

"Each day, the thousands of people working within federal and state governments craft careful regulations that take into account the need to protect consumers without unduly restricting their options or hampering the financial and related industries. They use thoughtful research and analysis, not secretive deliberations and industry talking points, to perform their work. The [Biden] CFPB’s acknowledgment of the illegality of the Taskforce sends an important message that the agency is putting the rights of the consumer first. We commend the (Biden) CFPB for taking action on behalf of consumers and look forward to their continued efforts to protect American families.”

Kraninger announced the TaskForce in October 2019 and appointed its one-sided membership in early January 2020, in violation of the Federal Advisory Committee Act, which requires numerous conditions, ignored by Kraninger, before setting up up a federal advisory committee. So, we sued in June 2020. The Task Farce carried out its secretive, illegal actions during the pandemic year of 2020 and filed its final two-part report and recommendations in early January of this year. A federal court denied the Trump administration’s attempt to dismiss the lawsuit in February 2021. In August, we and other plaintiffs filed a motion for summary judgment urging the court to order all necessary relief to remedy the harms caused by the Taskforce and uphold the law. Then, the Biden CFPB agreed to our proposed settlement  terms. You can learn more about the case here.

Among other important settlement terms, those two final report volumes will be branded on their cover pages with a prominent warning label disclaimer in a bold red font and add a new page "i" with the heading: “Disclaimer – Federal Advisory Committee Act Violations." I call it a "Seal of Disapproval."

Our concerns that the stacked findings of the Task Farce would be misused are real. At a Senate Banking Committee hearing in July on extending the Military Lending Act's 36% usury ceiling to veterans and all consumers, at least two industry witnesses and at least one Senator tried to rely on the TaskForce report's claims, which, of course, did not represent the views of the CFPB before Trump and are belied by both the bi-partisan Military Lending Act and the success against predatory lending of strong rate caps enacted by 18 red, blue and purple states and the District of Columbia

From one witness's prepared remarks: "I urge Congress to read more about interest rate caps before making any decision on them: "A particularly good place to begin is the 2021 Report of the CFPB’s Taskforce on Federal Consumer Financial Law." From another industry witness's prepared testimony: "The Federal Reserve, a Consumer Financial Protection Bureau (CFPB) taskforce, banks, non-bank lenders, and credit unions all say the same thing: Interest rate caps at 36% or below are unworkable for reputable lending institutions and harm the people these caps are intended to protect."

When leading consumer, civil rights, faith, labor, community and other groups worked to establish the CFPB after the financial collapse of 2008 brought on by reckless lending practices, we knew we'd have to fight to keep it. Indeed,not only did the banks, payday lenders, debt collectors, credit bureaus and others spend millions to try to stop it from becoming law, they've since spent many more millions to try to slow it, gut it, weaken it or kill it. We prevented the Trump administration's acting director Mick Mulvaney and director Kathy Kraninger from achieving a variety of efforts to gut it. It was critical to stop this attempt to let industry insiders inside the Bureau write a one-sided report with the purported imprimatur of the Bureau.

We're ready for the next special interest attack on the only federal financial agency with just one job, protecting consumers. But we're also excited and looking forward to working with the Biden CFPB and its new director, Rohit Chopra. As a prominent industry-side blog noted of the lawsuit settlement: "...it clearly will allow the CFPB’s current leadership to ignore the Taskforce’s recommendations when exercising the CFPB’s authorities."

We'll ignore the Task Farce's recommendations, too. And we won't reduce our vigilance against special interest attacks on the CFPB.

Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.