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Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations
appealing a supervisory determination regarding the MLA.
In 2018, the Bureau discontinued examination activity regarding the MLA.
This was because the Bureau changed its position, taking the view that it lacked the authority to engage in MLArelated examination activity, for reasons that will be discussed below.35 In 2019, the Bureau wrote to Congress to suggest legislation to clarify the Bureaus authority to supervise for compliance with the MLA. 36
The Bureau is now returning to the original position that it took from 2013
until 2018. The Bureau believes that it does have the requisite authority, and that the view that it originally took in 2013 was the correct one, for the reasons discussed below.
III. Analysis of Section 1024b1C
Supervised Nonbanks
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A. Statutory Text Section 1024b1C of the CFPA, in relevant part, straightforwardly authorizes the Bureau to conduct examinations of supervised nonbanks for purposes of detecting and assessing risks to consumers. 37 As the Supreme Court has explained in another context:
Congress knows to speak in plain terms when it wishes to circumscribe, and in capacious terms when it wishes to enlarge, agency discretion. 38
Risks to consumers that arise from conduct that violates the MLA fall well within that capacious phrase. Such conduct risks having adverse financial consequences for active-duty service members and their covered dependents.
One reason why these consequences can be particularly significant for military families is that financial status can affect servicemembers ability to maintain their security clearances and therefore maintain their military careers.
Congress considered the risk of harm from contracts made in violation of the MLA so severe that it made such contracts entirely void.
35 See Letter from Kathleen L. Kraninger, Director of the Bureau, to Senator Sherrod Brown Feb. 1, 2019.
36 Letter from Kathleen L. Kraninger, Director of the Bureau, to the Hon. Nancy Pelosi, Speaker, House of Representatives Jan. 17, 2019, https
files.consumerfinance.gov/f/documents/cfpb_MLAlegislative-proposal-to-Pelosi.pdf. No legal conclusion can be drawn from the fact that this particular proposal has not as yet been enacted.
37 The statute also includes the authority to require reports. CFPA sections 1024b1, 1025b1, 12 U.S.C. 5514, 5515. This analysis focuses on the authority to conduct examinations for simplicity, but the same analysis would be applicable to requiring reports, because the same operative statutory language is also applicable to requiring reports.
38 City of Arlington, Tex. v. FCC, 569 U.S. 290, 296 2013 Scalia, J..

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B. Statutory Scheme A statute should be interpreted as a symmetrical and coherent regulatory scheme. 39 Here, the statutory scheme provides additional confirmation that risks to consumers include conduct that violates the MLA, for three main reasons.
First, the Bureau believes that risks of harm to consumers that the Bureau can address through its enforcement authority, when that proves necessary, are logically within the core of risks to consumers that the Bureau can detect and assess. There can be many types of risks to consumers, and the Bureaus ability to use its range of authorities to remedy those risks can vary in effectiveness. But if risks to consumers did not include, at the very least, those risks that are so severe and so central to the Bureaus consumerprotection mission that they can lead to a Bureau enforcement action for civil money penalties, restitution, disgorgement, and other relief,40 it is unclear what remaining meaning the category would have. It would be anomalous to read out of the category of risks to consumers a type of risk that the Bureau canout of all the potential risks to consumersforcefully remedy through enforcement action if that becomes necessary. Thus, not only does conduct that violates the MLA fall within the plain language of risks to consumers, in the Bureaus view it is not a borderline case, but sits within the core of the provision.
Second, the Bureaus textual interpretation is the most effective way of carrying out the statutory scheme of the CFPA and MLA. When the Bureau is already examining a supervised nonbank or very large bank or credit union for potential violations of TILA
that are intertwined with potential violations of the MLA, it is especially inefficient for both the Bureau and the supervised institution if the Bureau relies exclusively on enforcement tools under Subtitle E of the CFPA to identify and address MLA violations, closing off any use of the Bureaus supervisory process to detect and assess these risks to consumers. As one example, under the contrary interpretation, verifying TILA disclosures may be the work of a Bureau examiner, but scrutinizing the related MLA disclosures in the very same document would be reserved to a Bureau enforcement attorney, who would normally obtain copies of those 39 Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 103 2012 quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 2000 quoting Gustafson v. Alloyd Co., 513 U.S. 561, 569 1995.
40 See CFPA section 1055, 12 U.S.C. 5565.

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disclosures by sending a civil investigative demand. The Bureau believes that the capacious reference to risks to consumers in section 1024b1Cwhen read according to its plain termsavoids this incongruous result by allowing examiners to consider the potentially overlapping MLA and TILA issues together in one review.
A third reason why examinations regarding the MLA complement the Bureaus enforcement authority under Subtitle E is that such examinations can play a role in preventing violations of the MLA before they occur. In a Bureau examination to detect and assess the risk that consumers will be harmed by violations of the MLA, the Bureau is able to detect and assess not only fully completed violations of the MLA, but also practices by the supervised institution that present a danger of violations of the MLA and therefore risk harm to consumers. For example, one important practical step that creditors generally need to take, in order to avoid violations of the MLA, is to correctly identify which of their borrowers are active-duty servicemembers or covered dependents and therefore protected by the MLA.41 If examiners observe an error or deficiency in the processes that a supervised institution uses to identify borrowers that are covered by the MLA, they can alert the institution of their assessment in their examination report or supervisory letter, and this may occur before the danger manifests in an actual violation of the MLA that in turn harms consumers. When Bureau examiners work cooperatively with supervised institutions to identify and address risks to consumers before they harm consumers, both the Bureau and supervised institutions can often avoid an after-the-fact enforcement action under Subtitle E of the CFPA. The Bureau believes that this is a prime example of a proper exercise of its authority under section 1024b1C to conduct examinations for the purpose of detecting and assessing risks to consumers.
C. Discussion of Counterarguments During the period when it ceased MLA-related examination activity, the Bureau was persuaded by arguments that it lacked this authority. But for the following reasons, the Bureau no longer finds these arguments persuasive.
First, the Bureaus interpretation during this period was informed by the fact that the MLA is not a Federal consumer financial law, which is the focus of the examination authority in the separate section 1024b1A of the 41 See
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