To Whom It May Concern:
The U.S. Chamber of Commerce, the American Bankers Association, the Bank Policy Institute, and the Consumer Bankers Association (the “Associations”) appreciate the opportunity to comment on the Consumer Financial Protection Bureau’s (“CFPB”) Proposed Rulemaking on Rules of Practice for Adjudication Proceedings; Rescission (“the proposal” or “the rescission”).[1]
The CFPB proposes to rescind in full the amendments to its Rules of Practice for Adjudication Proceedings adopted on February 22, 2022[2] and on March 29, 2023 (“the amendments”).[3] As noted in the proposal, the amendments expanded the opportunities for litigation parties to conduct depositions in adjudication proceedings and made amendments concerning timing and deadlines, the content of answers, the scheduling conference, bifurcation of proceedings, the process for deciding dispositive motions, and requirements for issue exhaustion, as well as other technical changes.”[4]
The CFPB proposes to rescind the amendments particularly due to concerns with the provisions that transferred authority to decide dispositive motions from the hearing officer presiding over the proceeding to the Director of the CFPB. In addition, the CFPB noted that commenters criticized the amendment for “concentrating authority in the Director at the expense of the hearing officer.”[5] The CFPB further stated it is considering rescinding the remainder of the amendments because the changes were unnecessary. The CFPB has requested comments on the proposal.
The Associations strongly supports the proposal to rescind the amendments. In response to the CFPB’s request for comment on the amendments proposed in 2022, the trade groups previously sent the CFPB a letter commenting on the amendments on April 8, 2022, attached here as Appendix A. In that letter, the trade groups strongly objected to the amendments and requested that the CFPB rescind the amendments and revert to the prior rules for adjudication. In response to this proposal, we write to reaffirm our position that the amendments should be rescinded and express support for the CFPB’s proposal to rescind the amendments. The Associations requests the CFPB consider its comments both in this letter and in Appendix A.
We accordingly write to make the following points in support of the CFPB’s proposal:
· The amendments concentrate adjudicative authority in the Director, creating legal uncertainty and instability.
· The amendments risk depriving defendants of due process.
· Meaningful access to Article III courts is critical to sound and fair adjudication of enforcement actions.
· Recent legal precedent supports the proposal to rescind the amendments.
· Additional amendments would improve the CFPB’s adjudication process.
For the reasons explained in this letter and in Appendix A, rescinding the amendments resolves the potential significant potential harms created by the provision in the amendments. The proposal would also eliminate regulations that altered the CFPB’s adjudication process unnecessarily and for reasons that were unclear.
Analysis
I. The amendments concentrate adjudicative authority in the Director, creating legal uncertainty and instability.
The amendments created the opportunity to concentrate adjudicative authority in the Director. As we noted in our April 8, 2022, comments, the Director is not an impartial judge who can bring stability to the law. Rather, the Director is a political appointee who serves at the will of the current President. Chosen because of his or her alignment with the policy goals of the appointing President, each Director brings that policy perspective to the enforcement actions that he or she pursues, the legal interpretations that he or she adopts, and the priorities that he or she emphasizes. The inevitable consequence is that the views and judgments of U.S. executive branch officials change by administration. Here, that means that the decisions of the Director in any administrative adjudication would not be viewed as permanent statements of the law, or as impartial applications of settled legal principles to the facts, but as the individual views of a single official that only reflect the policy judgments of the present administration. Rather than creating legal stability and certainty, the amendments encouraged the imposition of legal interpretations that swing, often substantially, under the appointees of one administration to the next. Moreover, this concentration of authority combines the distinct functions of investigator, prosecutor, and adjudicator, exacerbating due process risks and undermining the legitimacy and defensibility of the Bureau’s adjudications.
The CFPB’s proposal to rescind the amendments corrects this impermissible concentration of authority. Importantly, rescission of the amendments will enhance legal certainty and stability in the CFPB adjudication process.
II. The amendments risk depriving defendants of due process.
In response to the proposal, the Associations reasserts that concentrating adjudicative authority in the very Director who authorized the enforcement action deprives regulated entities of due process. The Due Process Clause entitles a person to an impartial and disinterested tribunal in both civil and criminal cases. As the Supreme Court has held, “[t]his requirement of neutrality in adjudicative proceedings safeguards the two central concerns of procedural due process, the prevention of unjustified or mistaken deprivations and the promotion of participation and dialogue by affected individuals in the decisionmaking process.”[6] The Director is no impartial arbiter. Rather, the Director, who personally approved the filing of the enforcement action, has a vested interest in the success of each enforcement action that the Director serves. As a result, the amendments greatly increase the risk that administrative proceedings before the CFPB will not provide due process to defendant companies. The CFPB’s proposal to rescind the amendments will correctly eliminate this risk.
III. Meaningful access to Article III courts is critical to sound and fair adjudication of enforcement actions.
Rescission of the amendments would strengthen meaningful access to Article III courts. Administrative adjudication should not unfairly advantage either side. But, as described above, the amendments could result in unfair administrative adjudications. Meaningful access to Article III courts mitigates the risk of inappropriate outcomes. Courts offer defendants appropriate rights and protections while also allowing the CFPB to vigorously pursue its actions. Whether by allowing a defendant company to elect to remove a case to federal district court or by providing robust appellate rights, meaningful access to Article III courts supports the sound and fair administrative adjudication of enforcement actions.
Rescinding the amendments would make it easier for regulated entities to exhaust claims and preserve them for appeals. And importantly, rescission will reduce the risk that regulated entities will be subject to unfair proceedings in the CFPB’s administrative forum.
IV. Recent legal precedent supports the proposal to rescind the amendments.
The U.S. Supreme Court ruled in SEC v. Jarkesy that the Securities and Exchange Commission can only bring actions alleging securities fraud, for which the SEC attempts to impose a civil money penalty, in a federal court and not in an administrative hearing. The Court specifically found that the Seventh Amendment gives defendants a right to a jury trial to adjudicate common-law claims, if the remedy sought is “legal in nature.” In Jarkesy, the Court found that because the SEC sought civil money penalties designed to punish or deter the defendant, the defendanthad a right to a jury trial. The Court also found that the public rights exception to the Seventh Amendment does not apply in cases where a defendant’s private rights are involved, including claims closely resembling common law claims.
The Jarkesy decision does not directly rule on the CFPB’s adjudication process, but it offers a useful point of comparison to administrative hearings before the CFPB. The proposed recission of the amendments is consistent with the Court’s ruling in Jarkesy, which affirmed the constitutional rights of defendants subject to administrative hearings.[7] The amendments substantially increased the adjudicative authority of the Director and had implications for defendants’ access to Article III courts. Reverting the CFPB’s adjudication rules to the rules as they existed prior to the amendments is a step towards effectuating the EO and the Court’s ruling in Jarkesy.
V. Additional amendments would improve the CFPB’s adjudication process
Rescinding the amendments is an important step to improving the CFPB’s rules of practice for adjudication proceedings. We commend the CFPB for moving quickly to address the recent, and very troubling, changes to the adjudication process. We would welcome a future opportunity to provide broader input on how to improve the agency’s adjudication process.
We believe there are additional changes that would enable the CFPB to achieve its statutory objectives more effectively. In developing additional amendments to its adjudication process, the CFPB could follow the example of the prudential regulators and issue a rulemaking proposal so it can draw upon the considered comments from a broad range of stakeholders.[8] Further amendments to the CFPB’s administrative adjudication forum will promote confidence among participants that it can be a more efficient – and equally fair – alternative to civil litigation.
* * * * *
We thank you for your consideration of these comments and would be happy to discuss these issues further.
Sincerely,
American Bankers Association
Bank Policy Institute
Consumer Bankers Association
U.S. Chamber of Commerce
[1] See CFPB, Proposed rule; request for comment; Rules of Practice for Adjudication Proceedings; Rescission, 90 Fed. Reg. 20,241 (May 13, 2025), https://www.govinfo.gov/content/pkg/FR-2025-05-13/pdf/2025-08344.pdf (hereinafter “Proposal”).
[2] See CFPB, Procedural rule; request for public comment; Rules of Practice for Adjudication Proceedings, 87 Fed. Reg. 10,028 (Feb. 22, 2022).
[3] See CFPB, Final rule; consideration of comments; Rules of Practice for Adjudication Proceedings, 88 Fed. Reg. 18,382 (Mar. 29, 2023).
[4] Proposal at 20,241.
[5] Proposal at 20,241.
[6] See Marshall v. Jerrico, Inc., 446 U.S. 238, 242 (1980).
[7] Rescinding the amendments is also consistent with the President’s Executive Order 14219 (“the EO”), which ordered agencies to review and identify unlawful regulations.
[8] OCC, Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Rules of Practice and Procedure (Mar. 22, 2022), https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20220322a1.pdf.
