Brown to CFPB Director: Planned Reorganization of Supervision, Enforcement, And Fair Lending (SEFL) Undermines Consumer Protection
WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – is demanding that the Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger delay implementing a proposed reorganization of the agency’s Division of Supervision, Enforcement, and Fair Lending (SEFL).Brown in his letter made clear that the agency’s move is inappropriate ahead of an election that could determine a future CFPB Director. Brown urged Director Kraninger to delay any reorganization until at least after the election.
“After seeing details of the SEFL reorganization, I am even more convinced that it is misguided and will weaken the Bureau’s ability to protect consumers from exploitation, abuse, and discrimination in the marketplace. If you insist on going down this ill-advised path, you should at least not move forward with the SEFL reorganization until it is clear that you will continue as Director,” wrote Senator Brown.
Brown recently released a statement blasting the CFPB for the proposed SEFL reorganization.
A copy of the letter appears here and below:
The Honorable Kathleen Kraninger
Consumer Financial Protection Bureau
Dear Director Kraninger:
I write to follow-up on our telephone call on October 19, 2020 and ask you, again, to delay implementing a reorganization of the Consumer Financial Protection Bureau’s Division of Supervision, Enforcement, and Fair Lending (SEFL). A reorganization of this magnitude is inappropriate just weeks before an election that will determine whether you continue as Director past January 20, 2021.
During our call, I voiced my concerns that the SEFL reorganization will weaken the Bureau’s ability to hold financial institutions accountable for violating the law and obtain redress for harmed consumers. In response, you claimed that the SEFL reorganization will provide the Office of Enforcement (Enforcement) with additional technical resources and reporting capabilities. The Bureau documents you provided me, that describe the reorganization, contradict this claim and identify specific areas where Enforcement will be stripped of tools, resources, and authority. According to these documents, the SEFL reorganization:
· Disbands Enforcement’s Policy and Strategy Team (PST), a group of subject matter experts on consumer finance law and markets that provides specialized advice and support to Enforcement attorneys, serves as a liaison between Enforcement and other Bureau offices, and determines Enforcement’s overall priorities and strategy;
· Strips Enforcement of its seat at the table and vote to determine whether potential violations of federal consumer financial law should be resolved through supervisory examinations or through an enforcement action;
· Strips Enforcement of its authority to open new research matters (precursors to investigations) or new investigations of potential violations of federal consumer financial laws;
· Strips Enforcement of its E-Litigation Team, which provides specialized technology expertise and manages electronic data discovery from initial Enforcement investigations through trial; and
· Strips Enforcement of its representation in the “Clearance” process, which will exclude Enforcement from sharing its views and potential concerns with other the Bureau offices regarding proposed rules, regulations, guidance, advisory opinions, or other public Bureau statements.
According to the Bureau’s documents you provided me, the claimed objective of the SEFL reorganization is to allow for “centralization and streamlining” and “establishment of a consistent and unified SEFL approach to policy and strategic planning.” While these objectives may have merit, how they are achieved matters. Here, to the extent the reorganization achieves any desired consistency or efficiency, it is by cutting out Enforcement’s voice and role in critical SEFL decisionmaking processes. It also introduces inefficiency and confusion by taking dedicated Enforcement resources, such as the E-Litigation team, and asking them to do non-Enforcement work and report to a new SEFL-wide office.
Despite your attempts to characterize the SEFL reorganization as supporting Enforcement, it is clear that it will diminish the resources, authority, and ultimately the effectiveness of an office that returned almost $12 billion to more than 29 million consumers under your predecessor. I recognize that, as Bureau Director, you have the authority and discretion to reorganize the SEFL Division—but so does a successor. It is inappropriate to undertake such a major reorganization just weeks before an election that will determine whether you continue on as CFPB Director. You claimed the reorganization would benefit the next Director, but at this point, that is a call that a potential new Director should make, not you.
After seeing details of the SEFL reorganization, I am even more convinced that it is misguided and will weaken the Bureau’s ability to protect consumers from exploitation, abuse, and discrimination in the marketplace. If you insist on going down this ill-advised path, you should at least not move forward with the SEFL reorganization until it is clear that you will continue as Director. In the interim, I ask that Brian Schneider, the Bureau’s Associate Director for the SEFL Division, and Thomas Ward, the Director of Enforcement, provide my staff with a briefing on the reorganization, including any timeline for implementation, next week. Thank you for your attention to this important matter.
 See Appendix A, which contains the following Bureau documents related to the reorganization: (1) SEFL Organizational Review Decisions Information; (2) SEFL Organizational Review Background Information; (3) SEFL Organizational Charts; and (4) SEFL Reorganization FAQs.
 See SEFL Organizational Review Decisions Information at p. 2.
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