California Shelves Proposal to Create Mini-CFPB
Governor Newsom's proposed mini-CFPB has been removed from California's 2020-21 budget.
On June 11, 2020, California budget negotiators tabled California Governor Gavin Newsom's proposal to create a state version of the federal Consumer Financial Protection Bureau ("mini-CFPB"). As discussed in a previous Jones Day alert, Governor Newsom put forward this proposal to create a stand-alone agency to "fill the void" created by a perceived rollback of federal regulations.
While no official reason was provided for shelving the mini-CFPB, the decision was likely due in part to the necessity of prioritizing more pressing items related to the COVID-19 pandemic, as well as concerns about creating the mini-CFPB through the budget process. On the latter issue, California's Legislative Analyst's Office recommended that the mini-CFPB be removed from the budget altogether. It argued that the legislature was better suited for the task of creating the mini-CFPB because policy committee vetting would "better position the Legislature to determine which policies should be established in statute and which could be left to the regulatory process."
Despite this development, there is still strong interest in California for the creation of a mini-CFPB and there is little indication that Governor Newsom and lawmakers plan to permanently shelve the proposed agency. California has until August 31, 2020 to finalize the 2020-21 budget, and thus there is a possibility that the mini-CPFB proposal could get inserted back into the budget. If that does not happen, the new agency could of course be introduced via new legislation or through a future budget. For now, however, the fate of California's proposed mini-CFPB is somewhat uncertain.
Jones Day will continue to monitor developments related to this topic.
Hannah Esquenazi, an associate in the Boston Office, assisted in the preparation of this Alert.
