New Product: Consumer Financial Protection Bureau
It is no easy task to create a new government agency, and the Consumer Financial Protection Bureau was no exception. After the recent financial crisis, the CFPB was conceived in 2011 as a way to regulate financial products, in the way that the Consumer Product Safety Commission regulates tangible products. However, some legislators took issue with its proposed clout, cost, and goals. The appointment of a director was wracked with controversy—President Obama instated Richard Cordray as a recess appointment while Congress was technically in session. Then, the CFPB endured a two-year purgatory, as Congress struggled to confirm Cordray as leader. The CFPB’s authority finally vested in 2013 when Cordray was approved; facing critical attention from the media and political opponents, the agency could not afford a misstep.
Its statutory mandate was simple, but vague: to “consider the potential benefits and costs” when making rules. How could an agency consider the benefits and costs when nothing like it had ever existed?
The 2011 Business Roundtable v. SEC decision raised the stakes of the mandate, suggesting that independent agencies might need to quantify costs and benefits. Between the agency’s controversial beginnings and the scrutiny of financial agencies post Business Roundtable, the CFPB needed a clear policy fast, one that could withstand litigation challenges or congressional review.
The General Counsel’s office of the CFPB had to legally navigate the agency’s semi-autonomy. It became an exercise in interpretation and discretion. Did Business Roundtable apply to the CFPB? Was quantitative cost-benefit analysis necessary, and how might it be done? How could CFPB policy best reflect these opinions? After arriving at hard-won consensus, would the courts agree with them?
Professor Howell Jackson’s case study, Consumer Financial Protection Bureau, delves extensively into the statutory mandates, precedents, and best practices for agencies setting rulemaking standards. Designed for the Problem Solving Workshop, a required 1L course at Harvard Law School, the case progresses through discussion, legal analysis, and memoranda writing before bringing participants to the heart of the problem: finding a unifying policy for rulemaking that stays true to mission of the agency. Participants play the role of new attorneys at the General Counsel’s office of the CFPB tasked with making this policy, and ultimately present their conclusions to a volunteer practitioner acting as the Director of the CFPB. Participants learn how to interpret law in context, review materials purposively, and anticipate a client’s questions and concerns when acting on their behalf.
The case includes five parts: an introduction of the problem, the agency, and the relevant court decisions; a continuation of the problem that supplies extensive appendices to consider how the agency has incorporated statutory mandates, court decisions, and recommended practices; a memorandum assignment focusing students on one of two policy objectives; final instructions to synthesize those objectives for the presentation to the CFPB Director; and a glossary of acronyms used. Consumer Financial Protection Bureau is available free of charge on the Case Studies website, and educators have free access to a detailed teaching plan as well as analysis of relevant rules and decisions.
The Problem Solving Workshop allows students to confront client problems in the way practicing lawyers do, from the very beginning. Jackson, who teaches financial regulation and federal budget policy at Harvard Law School, taught in the Problem Solving Workshop from 2010 to 2013.
For more information, or to discuss how to adapt the case study and problem solving pedagogy for your academic or professional education needs, contact the Case Studies Program at hlscasestudies at law.harvard.edu.