A federal consumer protection agency’s withdrawal of numerous guidance documents will have little legal effect.
As more and more Americans struggle to pay their bills every month, the Trump Administration is spending its time on pointless gestures to impress big banks and corporate interests. This week, the Consumer Financial Protection Bureau (CFPB) withdrew 67 guidance documents—statements by the CFPB from as far back as 2011 informing the public of its policies or legal interpretations. These documents covered a variety of critical consumer protections issues, from employers unlawfully surveilling their workers to student loan companies ripping off teachers and students and debt collectors illegally targeting nursing home residents’ families. Although withdrawing so many documents in one fell swoop is consistent with Acting CFPB Director Russell Vought’s flair for the dramatic, the reality is that this move was closer to performance art than actual legal action. Under Loper Bright Enterprises v. Raimondo, a recent U.S. Supreme Court decision, an agency’s official positions on legal questions is largely irrelevant. What matters is the “best reading” of the law. And the CFPB withdrew these documents—with one goofy exception—without even pretending to engage with their reasoning. So the CFPB’s mass withdrawal of guidance documents has basically no legal significance.
The CFPB is the principal federal regulator responsible for administering federal consumer financial laws. Across administrations, the CFPB has consistently produced guidance documents on a variety of topics, and earlier this year it published a “compendium” of recent guidance on issues including emerging technology, the rise of artificial intelligence, the entrance of large technology firms into consumer financial markets, privacy, junk fees, surveillance, and more. This package is widely available online. As the CFPB stated, this guidance reflects the agency’s “considered judgment, reasoning, knowledge, and expertise.” The documents contain detailed explanations of law and policy.
The most important thing to notice about the CFPB’s mass guidance withdrawal is the lack of any considered analysis of the logic of the documents themselves. The CFPB’s announcement arguably engages with—generously speaking—the reasoning of only one of the documents, in a single sentence of a footnote. Yet as the Supreme Court made clear, the analysis that the government offers about how the law should be interpreted is what is important—not the government’s formal position. As the Court said, in cases involving federal government agencies, there is a “best reading” of the law, which is “the reading the court would have reached if no agency were involved.” And in many instances, courts have agreed with the reasoning of CFPB guidance documents about how the law should be interpreted. So withdrawing those documents without persuasively rebutting their reasoning is basically meaningless.
Importantly, the withdrawal of these guidance documents does not suddenly legalize previously prohibited conduct. Student loan companies can still be held liable for ripping people off, as can employers that illegally monitor their workers or debt collectors that harass nursing home residents’ families. The underlying laws and regulations remain unchanged. States can still sue companies for violating these laws under the logic that the CFPB guidance describes, as can individuals in many circumstances. Ironically, then, the likely effect on financial institutions of the withdrawal of the CFPB guidance documents is likely to be greater uncertainty about what the law requires and when institutions may face liability.
The primary reason the CFPB gave for pulling the guidance documents back is its “current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.” In a very real sense, this is saying the quiet part out loud: The CFPB is saying explicitly that it is now more concerned with protecting big businesses and corporations than it is with helping people. What other explanations could there be for only issuing guidance that reduces “compliance burdens”?
The main effect of the CFPB withdrawal is not legal, but rhetorical—these guidance documents no longer carry the stamp of approval of the current CFPB leadership. Some parties will undoubtedly try to use this fact to create confusion about what the law requires. When people injured by the practices addressed in the withdrawn guidance documents cite to their logic, they will be told that “the CFPB withdrew that.” But the documents themselves demonstrate the detailed, careful work of the CFPB. The CFPB’s withdrawal of them without specific, compelling justification is little more than grandstanding.
Indeed, while the CFPB’s withdrawal notice contains some haughty language about the requirements of the Administrative Procedure Act, the withdrawal itself probably violates that law. The Supreme Court has made clear that “when an agency changes its existing position,” it must “show that there are good reasons for the new policy.” The CFPB probably did not give good reasons for withdrawing each individual guidance document because there are none—even the current CFPB leadership knows that those documents still largely reflect the best reading of the law. In fact, less than a week later, current CFPB leadership is itself demonstrating the pointlessness of the mass guidance withdrawal by starting to issue longer statements re-rescinding, if that is even possible, some of the 67 documents withdrawn en masse. Why would the CFPB bother doing that if they had any faith in the mass withdrawal?
The good news for consumers and honest businesses is that the reasoning contained in the withdrawn CFPB guidance documents does not simply disappear. For example, the CFPB’s explanation of why state laws prohibiting credit reporting of medical bills are not preempted still stands, as multiple federal courts of appeals have concluded. People can still sue companies unlawfully collecting on “zombie” mortgage debt that is past its statute of limitations. The reasoning in the CFPB’s guidance documents remains available to courts, private litigants, state attorneys general, other federal agencies, and even future incarnations of the CFPB. They will keep relying on these documents because they are right, because people are still being harmed by the practices addressed in them, and because those people should get justice.
