The Trump administration on Friday moved to review the use of regulatory guidance at the Consumer Financial Protection Bureau (CFPB) to root out what it views as an unlawful rulemaking process.
Russell Vought, director of the Office of Management and Budget (OMB) and acting director of the CFPB, wrote in a memo viewed by FOX Business, “For too long this agency has engaged in weaponized practices that treat legal restrictions on its authorities as barriers to be overcome rather than laws that we are oath-bound to respect.
“This weaponization occurs with particular force in the context of the Bureau’s use of sub-regulatory ‘guidance.’ The use of guidance to regulate is unlawful and deprives the public of fair notice of what conduct is prohibited,” Vought wrote. “The Bureau will no longer engage in this practice. Effective immediately, Bureau components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Bureau.”
Vought added that “it is not enough to simply stop regulation through guidance prospectively” and that the CFPB “must rescind all ‘guidance’ that has unlawfully regulated private parties in the past. To that end, the Bureau is conducting a comprehensive internal review of guidance documents to ensure that the Bureau is not imposing rights or obligations through guidance.”
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In a related internal memo, Vought added that “guidance materials are strongly disfavored and are improper where they impose rights or obligations on private parties outside of the notice-and-comment process prescribed by the Administrative Procedure Act.”
Vought wrote that guidance issued by the CFPB has to make it clear it’s nonbinding and refrain from including mandatory language unless it’s repeating a statutory or regulatory obligation, imposing obligations beyond the terms of laws and regulations or failing to specify that non-compliance won’t result in enforcement actions.
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His memo said the “overwhelming majority of the Bureau’s existing guidance appears to not clear this bar,” and the CFPB will start a 14-day process of reviewing all previously issued guidance to rescind guidance that does not comply with the agency’s requirements.
For example, FOX Business learned the CFPB took down an interpretive rule issued by the agency in 2021 that interpreted existing regulations prohibiting sex discrimination as also barring discrimination based on sexual orientation and gender identity. The rule also sought to bar discrimination based on perceived non-conformity with traditional sex- or gender-based stereotypes and an applicant’s social or other associations.
Vought’s internal memo listed more than 100 policy statements, interpretive rules, advisory opinions and other guidance that will be subject to the review and could be rescinded by the agency.
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