WASHINGTON, D.C. – On Tuesday, July 2, the Lawyers’ Committee for Civil Rights Under Law filed a complaint against the Consumer Financial Protection Bureau (“CFPB”) in order to compel documents from the CFPB that were granted to the Lawyers’ Committee through the Freedom of Information Act (“FOIA”). The documents related to the CFPB’s decision to roll back the 2017 Payday Loan Rule, which regulates payday loans, auto title loans, and other types of expensive loans aimed at low-income communities of color with poor credit.
The CFPB enacted the Payday Loan Rule in October 2017 after years of outreach, research, and review of over a million public comments from consumer advocates, payday lenders, state regulators, and others. The Rule sought to protect low-income consumers and consumers of color in the lending market who are often victims of predatory loans that trap consumers in cycles of insurmountable debt through exorbitant interest rates. However, in January 2018, the CFPB arbitrarily announced its intention to initiate a rulemaking to roll back the Rule, only three months after it was adopted.
Under new leadership, the CFPB has prioritized deregulation of the lending market, including payday lending. In addition to repealing part of the regulations protecting low-income consumers from predatory payday and auto title lending practices, former Acting Director Mick Mulvaney reorganized the CFPB to strip the Office of Fair Lending and Equal Opportunity (“OFLEO”) of its power to enforce lending discrimination rules. He also fired all 25 members of the Consumer Advisory Board (“CAB”). On January 23, 2018, Mulvaney affirmed that the CFPB serves “those who use credit cards and those who provide the credit; those who take out loans and those who make them; those who buy cars and those who sell them.”
“Director Mulvaney’s decision to roll back consumer protections for low-income borrowers in America is a prime example of regressive policies that harm consumers across the country, particularly African Americans and other communities of color,” stated Kristen Clarke, President and Executive Director of the Lawyers’ Committee for Civil Rights Under Law. Clarke continued: “We know that Mr. Mulvaney previously accepted large campaign contributions from key points of contact in the payday lending industry as a member of Congress, and the American people deserve to know if their influence had anything to do with his decision to undermine anti-discrimination enforcement or roll back regulations preventing predatory lending. The law requires the White House to disclose any records relating to Mulvaney’s communications with industry lobbyists. Through our litigation we are fighting to promote transparency during an era in which CFPB, OMB, and other agencies have increasingly concealed information to keep the public in the dark.”
The CFPB exists to protect consumers, not banks or lenders. The Lawyers’ Committee sought communications and documents about the many enforcement rollbacks from the CFPB through FOIA requests. Although the CFPB responded to three of the four requests, the responses were inadequate, and the CFPB granted the Lawyers’ Committee’s appeal for more information. The CFPB has since taken no further action to comply with the appeal decision, leading the Lawyers’ Committee to file this action. The Lawyers’ Committee seeks to ensure economic justice and protection for low-income consumers and consumers of color, who can no longer turn to the CFPB for relief against predatory lending practices.
In filing the complaint, the Lawyers’ Committee for Civil Rights Under Law received support from pro bono counsel Crowell & Moring LLP.
About the Lawyers’ Committee for Civil Rights Under Law
The Lawyers’ Committee for Civil Rights Under Law, a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination. Now in its 56th year, the Lawyers’ Committee for Civil Rights Under Law is continuing its quest to “Move America Toward Justice.” The principal mission of the Lawyers’ Committee for Civil Rights Under Law is to secure, through the rule of law, equal justice for all, particularly in the areas of criminal justice, fair housing and community development, economic justice, educational opportunities, and voting rights.