The Consumer Financial Protection Bureau (CFPB) just announced that it will revise its adjudication rules to ensure greater fairness. Specifically, the CFPB is rescinding a 2022 amendment to its Rules of Practice for Adjudication that enabled the Director to issue dispositive motions on cases, rather than the agency’s sole administrative law judge (ALJ).
This amendment represented a subtle power grab by the Biden-era CFPB under then-Director Rohit Chopra, seeking to consolidate all adjudicatory power for himself. Among the 40+ federal agencies that conduct formal adjudication, the CFPB was the only one to reroute all adjudicative powers to a single official.
I commend Acting Director Russ Vought for taking swift action to rescind this problematic amendment, citing my comment letter in the process. As I wrote on behalf of the Competitive Enterprise Institute, the CFPB’s Director already wields substantial power to adjudicate regulatory issues before the agency.
This is evident in how the Director must approve any proposed enforcement action and oversee all settlement matters via stipulation and consent orders. As I noted in my comment letter, the agency settles 95 percent of its disputes internally. The CFPB Director thus has the first word on prosecutorial functions at the agency and the last word on virtually all cases.
Under the 2022 amendment, Director Chopra used his power to dismiss or render summary disposition on any case, absent the ALJ’s involvement. The CFPB is one of many agencies where 100 percent of adjudications are led by agency prosecutors suing private parties.
In this lopsided legal system, private parties are always on defense, and under the 2022 amendment, the CFPB could remain invulnerable to any opposition. If a private party sought to dismiss or quickly resolve a case brought against them, the Director could (and likely would) simply deny their requests. This consolidated far too much authority in one official; something that no other agency allows in adjudication.
Now that the CFPB’s dominance over adjudication has ended, Acting Director Vought and his staff can devote more time to shuttering the agency from within.
You can read my CEI comment letter here.
Read about my new report on how agencies like the CFPB secretly borrow their ALJs.
