The final segment of this series discusses the potential impact of the Consumer Financial Protection Bureau, the Department of Financial Protection and Innovation and Federal Trade Commission on your business, your livelihood and your life.
THE CONSUMER FINANCIAL PROTECTION BUREAU
According to its website, the Consumer Financial Protection Bureau (CFPB) is a “21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are transparent, fair and competitive.” CFPB’s jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the U.S.
Elizabeth Warren originally proposed the idea of a CFPB in 2007. The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized its creation in the wake of the 2008 financial crisis. It is an “independent agency,” which means it exists outside the federal executive departments, which are those headed by a cabinet secretary. But how ‘independent’ is it really?
The CFPB’s status as an independent agency has been persistently targeted by the Republican Party and the financial industry, and the agency has been subjected to many court challenges. In June 2020, the Supreme Court ruled that the president can remove the CFPB director without cause. Perhaps seizing on this authority, President Trump, at the beginning of his second term, appointed an acting director who immediately ordered the bureau to stop regulatory activity and sought to fire 90% of its staff.
What remains of the CFPB and the regulations it has promulgated is unclear. We are aware that the infamous and unpopular Section 1071 of the Dodd-Frank Act has been stayed by the courts. The provision was originally intended to support the enforcement of fair lending laws and enabling communities and governmental entities to identify business and community development needs and opportunities for women-owned, minority-owned and small businesses. It appears that compliance has been stayed for all covered entities, at least for now. Consequently, the bureau is dropping lawsuits it previously filed. It seems possible that this “monitor” is going to be put out to pasture.
THE DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
The Department of Financial Protection and Innovation (DFPI) is a California administrative agency. Its stated purpose is to “serve Californians by effectively overseeing financial service providers, enforcing laws and regulations, promoting innovation and fair and honest business practices, enhancing consumer awareness and protecting consumers by preventing potential marketplace risks, fraud and abuse.”
The DFPI was formerly known as the Department of Business Oversight (DBO). The DFPI has a long history in California, dating back to 1909 when the state created the State Banking Department. The immediate predecessor to the DFPI and the DBO was the Department of Financial Institutions, formed in 1997.
To our readers, the agency is perhaps known for the implementation, interpretation and enforcement of the California Financing Law (CFL) and the related California Commercial Financing Disclosure Law (CCFDL). These well-intentioned statutes have caused a myriad of headaches throughout the commercial finance industry — particularly when it comes to licensing, annual reporting and, to a lesser extent now that the dust has settled, the CCFDL. Licensing, and particularly the application process, have been known to persuade many lenders and brokers to avoid doing business in the state of California. Additionally, the ongoing battle over the DFPI’s narrow interpretation of the licensing exemptions has disrupted and continues to plague many lenders.
The newly appointed commissioner is KC Mohseni. Mohseni is an attorney with an extensive background in state agencies.
It is clear to this writer that the DFPI is an extremely powerful agency, with the authority to withhold, suspend or revoke a license that is mandatory for making or brokering loans in California. What is unclear to me is who oversees the Department to ensure that the same protections offered to borrowers are provided to lenders and brokers.
THE FEDERAL TRADE COMMISSION
The stated mission of the Federal Trade Commission (FTC) is “protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research and education.” Do we detect a common thread here?
By law, no more than three FTC commissioners can be from the same political party. Similar to the CFPB, the FTC claims to be an “independent agency,” ostensibly free of federal constraints and directives. But the five commissioners who run the agency are nominated by the president and subject to Senate confirmation. And in 2023, Project 2025 (aka the Presidential Transition Project) suggested that an administration could abolish the FTC. Consequently, in 2025, President Trump ordered the dismissal of the three Democratic commissioners, although presidents do not have the authority to do so. It is unclear how, or if, this web will untangle. However, legal analysts believe that this upheaval will enable the Supreme Court to grant the president unlimited authority to fire commissioners of independent agencies such as the FTC, the Federal Reserve and the NLRB.
SUMMARY
This scenario, in my opinion, epitomizes the issue these articles were intended to address, namely, who is running the show. There are elected and appointed leaders, agencies, bureaus, departments and literally thousands of pages of laws and regulations that govern how we live our lives and conduct our business. Beneath it all, we each have a sense of our fundamental rights and limitations. What happens when the rule of law and the timeworn structure of authority yield to other forces? As you can see, there are a seemingly endless number of government agencies that oversee, regulate and occasionally penalize your business. But how do we know what behind-the-scenes forces are compelling those government entities to interpret and enforce the rules the way they do?
Only the shadow knows … •
Ken Greene is an attorney at his SoCal firm, the Law Office of Kenneth Charles Greene.
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