The bureau says in the rule, which does not require public comment, that it is again establishing authority under the Military Lending Act and Consumer Financial Protection Act. The rule took effect June 23.
6/23/2021 9:00
In advance of Military Consumer Month in July, the Consumer Financial Protection Bureau has issued an interpretive rule to outline the “basis for its authority to examine supervised financial institutions for risks to active duty service members and their dependents (i.e. military borrowers) from conduct that violates the Military Lending Act (MLA),” according to a news release from the bureau.
The rule was published in the Federal Register June 23 and took effect on that day.
“The Military Lending Act is an essential law protecting the finances of our military families and we are excited to announce this rule change prior to July, which is Military Consumer Month,” CFPB Acting Director Dave Uejio said in the news release.
In September 2013, the CFPB amended its supervisory procedures to allow examiners to review lenders’ records regarding MLA violations, according to the news release. From that time until 2018, no companies disputed the CFPB’s authority to review their MLA lending practices.
In 2018, the CFPB’s leadership discontinued MLA-related examination activities, based on its stated belief that Congress did not specifically confer examination authority on the CFPB with respect to the MLA.
The current CFPB leadership has decided to resume MLA-related examination activities under the overall authority of the Consumer Financial Protection Act of 2010 (CFPA). The CFPA “authorizes the bureau to conduct examinations of supervised nonbanks for the purposes of assessing and detecting “risks to consumers,’” according to the interpretive rule. “The risks to active-duty service members and their dependents from conduct that violates the MLA fall squarely within that category. The CFPA also authorizes the bureau to conduct examinations of very large banks and credit unions for purposes of detecting and assessing those ‘risks to consumers’ that are ‘associated’ with ‘activities subject to’ federal consumer financial laws, such as the Truth in Lending Act … or the CFPA.”
Being an interpretive rule, it is exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act and will take effect upon publication in the Federal Register, according to the CFPB. The bureau also states in the rule that “it does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act.”