The Consumer Financial Protection Bureau (CFBP) recently announced plans to end supervisory examinations of banks, lenders, and other financial institutions for violations of the Military Lending Act, a statute designed to protect military service members and their families from predatory lending. Acting Director Mick Mulvaney has expressed the belief that the CFPB lacks the statutory authority to include MLA in its supervisory work.
On November 1, the Consumer Federation of America (CFA) published a comprehensive legal analysis of the CFPB's authority to include Military Lending Act compliance within its supervisory exams. The analysis concludes that the CFPB has ample legal authority for this supervision for four reasons:
- Violations of the MLA render service members' loans void, thereby triggering concurrent violations of federal consumer financial laws that the CFPB must already cover within its exams.
- The CFPB may use its supervisory exams to obtain information about MLA compliance because such information is pertinent to business practices already subject to CFPB enforcement.
- The CFPB can cover MLA violations within its exams for the purpose of detecting and assessing risks to consumers.
- The text of the MLA itself requires the CFPB to enforce the MLA in the same way that the CFPB enforces the Truth in Lending Act - which includes supervisory exams.