Chapman Law Review - Chapman University

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40 Chapman Law Review [Vol. 15:1
Bureau can perform its supervisory function. 97 These
requirements could have a variety of effects in fringe markets.
For instance, if only payday lenders are supervised, it could put
other fringe lenders in a better competitive position because they
will be able to avoid the costs payday lenders are paying for
compliance. More generally, capital requirements and
substantial reporting requirements could favor larger firms and
drive mom and pop shops out of business.
It would be easy to underestimate the importance of this
information-gathering function. As David Skeel points out:
The power to investigate and require data may be the most important
power of all. As a scholar seeking data, Warren was not a welcome
presence at the office of the credit card banks. But now banks are
required to open their doors and answer questions about their
business practices. 98
This observation is especially true for fringe banking
operations that have not been subject to examinations like banks
but, for the first time, will have to produce significant amounts of
information for the Bureau.
C. Rulemaking
The Bureau‘s ability to promulgate rules is the least
delimited of its powers, has the least understood power, and has
the greatest potential to affect businesses in the fringe economy.
The Act empowers the Bureau to make rules supporting two
goals: sections 1021(c)(5) and 1022(a) authorize rulemaking to
enforce federal consumer protection laws, 99 and section 1031(b)
gives the Bureau the right to create rules to identify ―unlawful,
unfair, deceptive, or abusive acts or practices . . . .‖ 100 The
Bureau‘s power to write new rules to enforce existing federal
consumer laws might affect fringe lenders, but there is little
room for surprise here as the federal consumer laws are already
on the books and have been implemented by other agencies
writing rules for years. The main effect of this rulemaking power
will be that existing laws will be more stringently enforced.
97 Dodd-Frank § 1024(b)(7)(B).
98 DAVID SKEEL, THE NEW FINANCIAL DEAL: UNDERSTANDING THE DODD-FRANK ACT
AND ITS (UNINTENDED) CONSEQUENCES 112 (2011).
99 Dodd-Frank § 1021(c)(5) (―The primary functions of the Bureau are . . . issuing
rules, orders, and guidance implementing Federal consumer financial law.‖); § 1022(a)
(―The Bureau is authorized to exercise its authorities under Federal consumer financial
law to administer, enforce, and otherwise implement the provisions of Federal consumer
financial law.‖).
100 Dodd-Frank § 1031(b).