The Consumer Financial Protection Bureau (CFPB), a federal consumer finance watchdog, recently recorded its slowest quarter for enforcement actions in a span of six years. The decrease in activity stems from many investigations and lawsuits that are currently on hold as they await judgement from the United States Supreme Court. This recent development has a variety of implications for both large corporations and small businesses involved in the financial markets.
The CFPB has primarily focused on cases involving major players in the financial markets. However, there are now instances where smaller companies are refusing to cooperate with the agency, citing the forthcoming Supreme Court decision as their justification. Some of the defendants in the paused enforcement actions include significant entities like money transmitter MoneyGram International Inc. The CFPB has been unable to execute civil investigative demands for documents or testimonies due to these pending legal proceedings and the anticipated court judgement.
An inside source reported that the legal dispute focuses on whether the current funding of the CFPB is constitutional or not. This significant legal matter is undoubtedly contributing to the slowed enforcement actions and is leading companies to be resistant towards CFPB probes.
The delay in enforcement actions is causing a shift in the approach the CFPB is taking. Single lawsuit cases, for instance, are on the rise as an alternative approach to dealing with contentious matters, hence marking a departure from the agency’s previous tendency towards wider investigatory and enforcement proceedings.
In conclusion, legal professionals and corporations should continue to monitor the developments of this situation, particularly the upcoming Supreme Court decision, which may significantly influence the operations of the CFPB and the broader financial market.
For more of the original information, visit Bloomberg Law.