Positioned To Protect

How State and Local Authorities Can Fill the CFPB Void

With the CFPB under new management less interested in consumer protection and law enforcement, our new report highlights steps states, counties and cities are taking to protect consumers better. Coincidentally, the report was completed on the same day that the U.S. Senate confirmed Kathy Kraninger to a 5-year term as CFPB director. She replaces her mentor, the OMB director Mick Mulvaney, who has been serving as acting CFPB director for just over a year.

U.S. PIRG Education Fund

Introduction and Summary

The Consumer Financial Protection Bureau (CFPB) is a federal government agency established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in the wake of the 2008 financial collapse. The CFPB was designed to be a consumer watchdog, looking out for consumers all across the financial marketplace — whether they do business at banks or non-banks. 

Under the first CFPB director, Richard Cordray, the CFPB did just that. However, since Cordray left the position in 2017, acting director Mick Mulvaney has slowed enforcement, lowered penalties to wrongdoers and restructured the agency in several ways, apparently to minimize its impact.[1]He has delayed implementation of a Payday Lending Rule approved by Cordray, joined payday lender efforts to overturn it in court and announced an effort to rewrite it.[2]He has indicated he will no longer fully enforce the Military Lending Act.[3]His proposed replacement, Kathy Kraninger, is a close Mulvaney ally who lacks a track record of protecting consumers in the financial marketplace.[4]Her nomination to a full five-year term was approved by the Senate Banking Committee in August and she was confirmed by the full Senate on Thursday, December 6, 2018.[5]

Shortly after Mr. Mulvaney’s appointment as acting director of the CFPB, a group of state attorneys general expressed concerns about the new leadership and promised to enforce federal and state consumer protection laws. In a letter to President Trump about the appointment of Mulvaney, the attorneys general wrote, “If incoming CFPB leadership prevents the agency’s professional staff from aggressively pursuing consumer abuse and financial misconduct, we will redouble our efforts at the state level to root out such misconduct and hold those responsible to account.”[6]Attorneys general from sixteen states and D.C. signed onto the letter.[7]

In addition to bringing actions under state laws, states have the authority to enforce federal financial consumer protection laws. Section 1042 of the Dodd-Frank Wall Street Reform and Consumer Protection Act gives state attorneys general authority to bring action to enforce Title X of Dodd-Frank, the Consumer Financial Protection Act (CFPA) which established the CFPB.[8]Additionally, Mulvaney himself has indicated he would like to collaborate with state attorneys general as they decide which cases to bring.[9]However, we have seen no evidence that this has occurred 

Given the fact that federal enforcement has weakened, state enforcement of consumer protection laws is as critical as ever.  This report looks at a number of state and local actions that protect consumers, especially as federal agencies slow their activity.

Some ways that states have acted to increase consumer protection activity include the following:

  • Some states have established what have been referred to as their own “Mini-CFPBs” within their Attorney General’s Office (AGO). In addition to these states, other state AG offices have been active with multi-state actions as well as single state actions, primarily through enforcement of their own state Unfair and Deceptive Acts and Practices (UDAP) laws. 
  • States have also improved student loan borrower protections in the absence of an aggressive CFPB or U.S. Department of Education. These states have protected student loan borrowers through establishing student loan servicing licensing requirements, creating offices of student loan ombudsman, and implementing a student loan borrower bill of rights.
  • Local actions: In addition to state attorneys general, some county, city and local governments have implemented new education and enforcement programs to help protect consumers financially. While some local consumer agencies have existed for decades, new projects are being developed, some with support of a nonprofit with substantial philanthropic backing called the CFE Fund, as well as through other individual city and local efforts. 

This report highlights some examples of successful consumer protection efforts from the states and recommends how other states can follow their lead and build upon their successes. States and other regulators should use ideas and case studies from this report to emulate successful state and local actions and better protect consumers. 

In any case, please note that this report is only a first step in evaluating state and local responses to the pause and even reversal of course by the CFPB and other federal agencies, including the Department of Education. It is a snapshot of state and local actions to better protect consumers, not a comprehensive analysis. We hope, however, that it will serve as a source of ideas for steps that state and local policymakers can take to help police financial markets better and also give consumers some tools that they can use to protect themselves.


[1]Evan Weinberger, “Enforcement Slowdown Defines Mulvaney’s CFPB Tenure,”Bloomberg Government, 23 November 2018.

[2]Kate Berry, “Judge suspends compliance deadline for CFPB payday rule,” American Banker,7 November 2018.

[3]Kate Berry, “Pentagon, others baffled by CFPB plan to cease military lending exams,” American Banker, 11 October 2018. 

[4]Jim Puzzanghera, “Critics say CFPB nominee Kathy Kraninger lacks the experience to be the nation’s top consumer financial watchdog,”Los Angeles Times, 18 June 2018.

[5]Steve Goldstein, “Kraninger approved by Senate committee to lead CFPB,”MarketWatch, 23 August 2018. The Senate voted 255 (50-49) 6 December 2018 to confirm Kathy Kraninger. https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cf…

[6]Kate Berry, “Mulvaney unfit to lead CFPB: Schneiderman, 16 state AGs,”American Banker, 12 December 2017. 

[7]Letter to President Donald J. Trump, 12 December 2017. 

States include: California, Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Oregon, Vermont, Virginia, Washington.

[8]Robert Jaworski, “New Jersey AG Attempts to Fill Perceived Void Left By CFPB Retrenchment,” Financial Regulatory Report6 April 2018.

[9]Barbara Mishkin, “CFPB to look to state AGs for more leadership in enforcement arena,” Ballard Spahr LLP Consumer Finance Monitor, 1 March 2018.