Policymaking Should be More Than a Press Release
Transparency in government is a good thing. When it works, it allows us to see how the people who work on our behalf (policymakers and government staff) set the policies and make the decisions that affect us … individuals, businesses, even other government agencies.
A part of that transparency is the way agencies now communicate in a far-more timely manner than waiting for the “dead tree” version of the Federal Register to be published. This is usually accomplished via press releases or blog posts that announce new policy proposals, explain decision-making and enforcement actions, or inform industries or citizens.
But “transparency” is not the same as “policymaking” or “rulemaking,” and certainly not for significant changes in policy. A good example of this occurred on March 16, when the Consumer Financial Protection Bureau (the Bureau) announced a significant change to its approach to fair lending.
In a press release, the Bureau announced that it will begin targeting “discrimination” as an “unfair practice” under its unfair, deceptive, and abusive acts or practices (UDAAP) authority well beyond the limits of the Equal Credit Opportunity Act (ECOA). The CFPB also announced an updated UDAAP Examination Manual to include the types of discrimination it will seek to identify, including “emotional impacts or dignitary harms.”
Many consumer finance products are subject to anti-discrimination requirements of the Equal Credit Opportunity Act (ECOA). Congress also incorporated anti-discrimination rules in the Fair Housing Act (FHA), the Americans with Disabilities Act (ADA), and a number of other laws designed to level the playing field for all consumers and to address specific harms related to specific industries. But the Bureau’s announcement significantly expands its jurisdiction for identifying discriminatory actions during its UDAAP examinations.
Beyond the press statement and the revised manual, there is very little information for financial institutions, the broader financial services industries or the public, to draw on. This decision by the Bureau is not based on a mandate from Congress, a new rulemaking or a process that allowed for public comment. The Bureau did not release a “red line” version of its manual, making it difficult to see what changes have been made.
It is, effectively “Policymaking by Press Release,” and this is not the accepted process by which the sausage-making of policy should be undertaken. Back in January, Commodity Futures Trading Commissioner Dawn Stump spoke of the need for today’s policymakers to do the hard work of proposing and shaping sound policies to serve the American economy and all Americans. Her message – that policymakers must engage, not kick the can down the road, cut corners, or pull new mandates from thin air – was seen as controversial. It shouldn’t be.
Transparency has enabled the Bureau to more readily share its views with consumers and with those it regulates. But that’s not enough. If the Bureau is going to set a new legal standard, it needs to explain, in detail and with opportunities to comment, what that standard is. AFSA is ready to take part in that process.
March 25th, 2022 by Dan Bucherer