by Jeff Sovern
KRANINGER PROMISES CLARITY — Our Victoria Guida: “Consumer Financial Protection Bureau Director Kathy Kraninger said … her agency will soon provide more clarity on what constitutes an ‘abusive practice’ by sellers of financial products, tackling an issue that has dogged policymakers since the financial crisis. …
More broadly, Kraninger told the audience of bankers that she has been meeting a lot with industry to learn about what policies should be refined next. “You are really helping drive the agenda” on where to make policies more efficient, she said.”
The CFPB could provide the "clarity" by adopting a rule, issuing guidance, or perhaps in some other form. For example, the FTC explained how it interpreted deception and unfairness in policy statements in the 1980s. But if the Bureau employs a form other than a rule, it may collide with its own guidance on guidance, in which it joined with other agencies to say that it will not take enforcement actions based on its supervisory guidance. See Board of Governors of the Fed. Res. Sys., et al, Interagency Statement Clarifying the Role of Supervisory Guidance (2018). There have been reports that the Bureau is working on an abusiveness rule. I don't see why the Bureau should do so yet. As far as I know, no one has ever identified a valuable consumer financial product that a company declined to offer because of uncertainty about whether it is abusive. In other words, the fear that uncertainty will chill the creation of products seems like much ado over nothing. Consumers would be better off if the Bureau allowed the meaning of abusive to develop over time, as the FTC did for decades with deception and unfairness before issuing its policy statements defining them.