The Consumer Financial Protection Bureau, known as the CFPB, announced a fairly esoteric-sounding policy change on Wednesday, changing the way it issues investigational subpoenas.
But consumer advocate groups are very concerned that this is another kneecapping of the agency that was supposed to have the backs of ordinary Americans.
When investigating a company, the CFPB sends a Civil Investigative Demand, known as a CID, which is a type of subpoena that asks the company to turn over information and documents the company has. As one financial services lawyer put it to Yahoo Finance, all the incriminating evidence is typically in the defendant’s possession.
The new change will require the CFPB to provide more information to companies that are being investigated as to what exactly they are being investigated for, a measure that consumer advocates fear will result in the destruction of evidence from below-board companies.
The “FPB,” said F. Paul Bland, executive director at consumer group Public Justice, dropping the “Consumer” in disgust, “is setting itself up to be one of the weakest investigative agencies in the country by showing all of its cards to a target at the outset.”
Christopher Peterson, who was a former senior counsel at the CFPB’s enforcement office and who now teaches law at the University of Utah, said that “the CFPB is tinkering with minor process revisions to make being investigated more convenient for debt collectors, banks, and other corporations suspected of breaking the law.”
In Bland’s view, “This is the kind of investigative approach a defense lawyer would have crafted.”
The CFPB, the brainchild of Sen. Elizabeth Warren (D-Mass.), who is now running for president, has lost its teeth when President Donald Trump appointed Mick Mulvaney, who had previously wanted to destroy it. The agency is now being run by Kathy Kraninger, Mulvaney’s former deputy at the Office of Management and Budget.
In the past, the CFPB tried to walk the fine line between accommodating companies too much and evidence gathering, and occasionally got burned.
As one recent comment from consumer groups read, “While some investigation subjects are forthcoming and cooperative in investigations, other subjects may engage in spoliation of evidence, concealment, and obfuscation in order to frustrate the federal government’s legitimate law enforcement goals.”
For example, Payday Lender Cash America destroyed records after being contacted by the Bureau in 2013.
The Financial Services industry has had it out for CIDs for years
In the Obama era, when it was led by Richard Cordroy, the CFPB executed regular enforcement actions of companies that did not play by the rules, and used CIDs liberally, much to the chagrin of financial services companies that had to respond to them.