Director Kraninger Unlawfully Stacked “Taskforce on Federal Consumer Financial Law”; Outsourced Policymaking to Private Corporate Interests

Secretive Taskforce Held Numerous Closed-Door Meetings in February and March Alone; Poised to Recommend Rollback of Consumer Financial Protections

National Association of Consumer Advocates, U.S. Public Interest Research Group, and Prof. Kathleen Engel Fight Back as Nation Grapples with Continued Economic Crisis

Boston, M.A. — Late Monday, Democracy Forward opposed the Trump administration’s attempt to end its lawsuit against the Consumer Financial Protection Bureau (CFPB) for unlawfully creating and operating its “Taskforce on Federal Consumer Financial Law” — an outside advisory group formed by Director Kathy Kraninger that is stacked with industry-aligned members, excludes consumer advocates, does not serve a public interest, and has conducted its work behind closed doors — all in violation of the Federal Advisory Committee Act (FACA).

This latest court submission, filed on behalf of the National Association of Consumer Advocates (NACA), U.S. Public Interest Research Group (PIRG), and consumer law expert Professor Kathleen Engel, details the myriad ways in which the CFPB’s illegal actions have harmed consumer advocates’ ability to track the work of the industry-led Taskforce and educate the public about its potential impact — and how the Taskforce will likely be used to push forward harmful, anti-consumer changes to existing law.

Ahead of the CFPB’s “listening session” with members of the Taskforce later today, Democracy Forward Counsel Kristen Miller said, “The CFPB unlawfully created the Taskforce — stacking it with industry representatives eager to roll back consumer protection measures — and has unlawfully allowed the Taskforce to insulate itself from public scrutiny. Try as it might, Director Kraninger’s CFPB can’t ignore the fact that its attempt to outsource policymaking to champions of deregulation is unlawful. We’ll continue our fight to ensure the CFPB follows the law and shutters its Taskforce.”

“The unlawful creation of this Taskforce is another effort by the Consumer Financial Protection Bureau to ignore its mission, working with industry apologists to protect financial service companies over consumers,” said Ira Rheingold, Executive Director of the National Association of Consumer Advocates. “Our court case is about preventing the CFPB from doing just that.”

The Taskforce, announced by CFPB Director Kathy Kraninger last October, violates the important mandates imposed by the Federal Advisory Committee Act to prevent special interests from exerting undue influence over the Executive Branch and its policymaking process.

The Federal Advisory Committee Act requires:

Agencies to demonstrate that their advisory committees are “essential to the conduct of the agency business” and that their “functions cannot be performed by … other means.”

The CFPB has, however, utterly failed to demonstrate why the Taskforce was necessary, why the CFPB’s own division devoted to Research, Markets, and Regulations cannot adequately provide the Bureau with recommendations, or why there was a compelling public interest in forming it.

Agencies to staff advisory committees to “be fairly balanced in terms of points of view represented.”

The CFPB ran a biased application process to select Taskforce members who exclusively represent deregulatory and industry views — like Taskforce Chair Todd Zywicki, a lobbyist for the consumer financial services industry who has called the CFPB itself “a tragic failure.”

The Bureau simultaneously excluded consumer advocates from sitting on the Taskforce. Professor Kathleen Engel — a plaintiff in the suit — was, for instance, rejected after being interviewed in an ‘inquisitorial’ manner for the purpose of determining her stance on deregulation.

Agencies to ensure that outside advisory committees “operate in a transparent manner.”

Far from operating transparently, the Taskforce has not provided public notice of all its meetings, held all its meetings in public, or made its work available for the public to view.

In fact, records obtained by Democracy Forward through separate FOIA litigation make clear that the Taskforce held numerous closed-door meetings in February and March alone.

The failure to operate transparently denies NACA, U.S. PIRG, and Professor Engel the ability to monitor the Taskforce’s activities and educate advocates and consumers about potential changes to the consumer financial protection landscape.

The Taskforce is expected to produce final recommendations to Director Kraninger by January 2021. Those recommendations may well recommend measures that would roll back the crucial consumer protection regime put in place after the 2008 financial crisis — all without the transparency, input, and public oversight federal law requires.

The lawsuit was filed on June 16, 2020, in the U.S. District Court for the District of Massachusetts. The opposition to the government’s motion to dismiss was filed on September 14, 2020. Read it in full here.

David A. Nicholas, Of Counsel to Wolf Popper LLP, is Massachusetts counsel on the case. Mike Landis, Attorney and Director of the U.S. PIRG Litigation Project, represents U.S. PIRG in the litigation.

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Democracy Forward is a nonprofit legal organization that scrutinizes Executive Branch activity across policy areas, represents clients in litigation to challenge unlawful actions, and educates the public when the White House or federal agencies break the law.

The National Association of Consumer Advocates (NACA) is a nonprofit association of private and public sector attorneys, legal services attorneys, law professors, and law students whose primary focus involves the protection and representation of consumers. NACA is actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means.

U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. U.S. PIRG is part of The Public Interest Network, which operates and supports organizations committed to a shared vision of a better world and a strategic approach to getting things done.

Press Contacts

Charisma Troiano
(202) 701-1781
[email protected]

Ira Rheingold
(202) 452-1989, x101
[email protected]

Ed Mierzwinski
(571) 228-6135
[email protected]