For our recent webinar, "What a Blue Wave in the November 2020 Elections Could Mean for the Consumer Financial Services Industry," we were joined by special guest Isaac Boltansky, Director of Policy Research at Compass Point Research & Trading. The webinar examined the potential implications for the consumer financial services industry should Joe Biden win the Presidency and Democrats win control of the Senate while retaining control of the House.
Alan Kaplinsky, Practice Leader of the firm's Consumer Financial Services Group, moderated the webinar. Chris Willis, Practice Leader of Consumer Financial Services Litigation at Ballard Spahr, and Tim Jenkins, Leader of the firm's Government Relations practice, discussed, respectively, how a blue wave could impact the regulatory agendas of the CFPB and other agencies and the legislative agenda of the next Congress.
Key takeaways regarding the implications of a blue wave scenario include the following:
- Chris Willis commented that the CFPB's approach to the exercise of its authorities is likely to reflect criticism by Democrats that the CFPB has been lax in its approach to industry under Director Kraninger's leadership. (In Chris's view, such criticism is unfounded.) More specifically, in contrast to the CFPB's current approach of handling more matters in supervision, there will likely be more enforcement cases involving larger dollar amounts and a more aggressive focus on fair lending.
- Chris also raised the possibility that the Madden-fix rules adopted by the OCC and FDIC and the OCC's proposed true lender rule could be reversed or eroded and that there could be less interest in moving forward with special purpose national bank charters for fintechs or payments companies.
- Chris indicated that state attorneys general and regulators, many of whom have taken on a more active role during the Trump Administration to fill a perceived gap in enforcement by the CFPB, will likely remain very active and receive significant support from the CFPB.
- Tim Jenkins commented that in addition to legislation targeted at providing COVID-related relief, a Democratic-controlled Congress is likely to advance legislation dealing with FCRA reform (e.g. reporting of medical debts and servicemember debts, credit reports used for employment purposes, dispute resolution, free credit scores), interest rate limits, and debt collection. Other possible areas of legislative activity identified by Tim were arbitration and student loans.
- Isaac Boltansky commented that the CFPB will likely renew its focus on overdrafts and payday lending, including by reopening a rulemaking on small-dollar loans with the goal of restoring an ability-to-repay standard.
- Isaac indicated that he also expects to see more regulatory or legislative focus on bank-non-bank partnerships. While he also expects there will be many "headlines" about efforts to enact a federal interest rate cap, he believes such efforts are unlikely to prevail. He also believes such efforts will fuel efforts on the state level to enact interest rate caps.
- In Isaac's view, Senator Elizabeth Warren is likely to play a key role in selecting the leadership of the CFPB and other financial regulatory agencies and that the individuals she selects will take aggressive and innovative approaches, resulting in immediate change at the agencies. He also noted that while a blue wave will result in an immediate change in the CFPB's and OCC's leadership, there will be staggered changes in the leadership of the FDIC, FTC, and Federal Reserve Board because commissioners and board members have staggered terms.
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