CFPB headquarters in Washington, D.C. Credit: C. Ryan Barber

A year ago this month, White House budget director Mick Mulvaney took control of the Consumer Financial Protection Bureau and made no secret that change was coming to an agency long vilified by his fellow Republicans.

Noting repeatedly that elections had consequences, he advocated a softer enforcement approach, dropped pending lawsuits and declared an end to the days of the CFPB “pushing the envelope.” But a year later, the CFPB is showing no signs of pulling back from what is perhaps its most prominent pending enforcement action: a case, brought just days before President Donald Trump’s inauguration, against the student loan company Navient.

For the past year, the CFPB has been locked in a bitter discovery dispute with Navient, which has accused the agency of withholding thousands of documents the company sees as potentially critical to its defense against allegations that it misled borrowers and made mistakes that added billions of dollars to repayment bills.

In a recent court filing, the bureau disputed Navient’s claim that it has provided just a small fraction of documents that could be critical to the company’s defense in Pennsylvania federal district court. Navient was hunting for, among other things, any CFPB communication with Congress and the media.

“For example, the CFPB has produced only a single communication from the CFPB to a congressional staffer. It is completely implausible that the CFPB communicated with congressional members and staff only once over the course of this highly politicized five-year investigation,” wrote Wilmer Cutler Pickering Hale and Dorr partner Jonathan Paikin, in an Oct. 10 letter to U.S. District Judge Robert D. Mariani of the Middle District of Pennsylvania.

The CFPB said its records search had uncovered no communications with Congress or the media before the agency sued Navient. The agency did not appear surprised by that result.

“The lack of responsive documents makes perfect sense. With limited exceptions not applicable here, the bureau’s investigations are not public until a settlement is reached or a lawsuit is filed,” CFPB enforcement attorney Nicholas Jabbour wrote in court papers. “Thus, as a general matter, the bureau does not communicate with Congress or the media about its investigations.”

According to The New York Times, the CFPB had been in settlement talks with Navient in 2016, only to see them break down following Trump’s victory over Hillary Clinton. In recent months, concerned that Mulvaney’s comparatively light-handed approach would lead the CFPB to ease up on Navient, state attorneys general—including Xavier Becerra in California—have filed their own lawsuits against the company.

Davis Wright Tremaine partner Jonathan Engel, a former CFPB enforcement attorney, said the recent activity in the agency’s case against Navient doesn’t suggest enforcers are preparing to back down.

“They’ve had a year now to take a fresh look at things and have done nothing but continue to fight it,” Engel said, referring to Mulvaney and his leadership team. “That is plenty of window for Navient to have made an offer that would have allowed the bureau to walk away gracefully, and it hasn’t happened.”

In its October letter to Mariani, Navient’s attorneys questioned the CFPB’s claim that the vast majority of documents—picked up using the company’s requested search terms—were “false positives” and all but accused the agency of selectively sifting out records.

Navient said “it appears, based on conversations with the CFPB, that the agency has taken the view that only documents supporting its claims are relevant, and is withholding everything else, including potentially exculpatory evidence.”

The company complained it has “no way to test the CFPB’s assertions, for instance, that the 130,000 documents that hit on the term ‘Navient’ or the 90,000 documents that hit on the term ‘Pioneer’ are irrelevant or non-responsive,” a reference to the Navient subsidiary Pioneer Credit Recovery, which collects student loans in default.

“But one could only imagine the CFPB’s skepticism if [Navient] had produced less than 1 percent of the documents identified in response to tailored search terms of key custodians,” Navient added, suggesting that it be allowed to review all documents and determine their relevancy to the case.

The CFPB said this month it has complied with all of its discovery obligations and that Navient had raised no “legitimate argument to the contrary.”

“The bureau,” Jabbour wrote, “respectfully submits that the parties’ efforts should not be diverted from the huge amount of work that is left to be completed.”


Read more:

CFPB Suffers Another Appeals Court Loss Over Investigative Authority

Consumer Bureau Reaches $30M Settlement With TCF National Bank

CFPB’s Dodd-Frank Suit Against Navient Can Proceed



➤➤ Our weekly briefing Compliance Hot Spots provides the latest news and trends in compliance and enforcement—what regulators are up to and how firms and in-house counsel are crafting new strategies. Learn more and sign up here.