WEBVTT - CFPB Signals New Leadership with $0 Budget Request (Audio) 0:00:03.480 --> 0:00:07.560 Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every 0:00:07.640 --> 0:00:10.440 day we bring you insight and analysis into the most 0:00:10.480 --> 0:00:13.440 important legal news of the day. You can find more 0:00:13.480 --> 0:00:18.000 episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud 0:00:18.320 --> 0:00:22.480 and on Bloomberg dot com slash podcasts. Google is gearing 0:00:22.560 --> 0:00:25.120 up for its first battles in a London court over 0:00:25.120 --> 0:00:28.280 the so called right to be forgotten. Two cases will 0:00:28.320 --> 0:00:31.520 test the boundaries between personal privacy and the public interest. 0:00:31.840 --> 0:00:35.960 The anonymous plaintiffs described themselves in court filings as businessmen 0:00:36.320 --> 0:00:38.760 and want the search engine to take down links to 0:00:38.840 --> 0:00:42.920 information about their old convictions, one for conspiracy to account 0:00:42.920 --> 0:00:47.360 falsely and the other for conspiracy to intercept communications. Google 0:00:47.400 --> 0:00:50.720 says it will defend the public's right to access lawful information. 0:00:51.320 --> 0:00:53.800 My guest is Craig Newman, chair of the Privacy and 0:00:53.880 --> 0:00:58.000 Data Security Group at Patterson Bell, Nap Webb and Tyler Craig. 0:00:58.080 --> 0:01:00.760 The e use Highest Court ESTA published the Right to 0:01:00.800 --> 0:01:05.360 be forgotten in a precedent setting ruling in May. What 0:01:05.640 --> 0:01:11.000 is it exactly? June? What the European Court of Justice 0:01:11.080 --> 0:01:15.320 said was that if you're an EU resident and if 0:01:15.360 --> 0:01:18.840 there's something out there on the Internet. That and this 0:01:18.920 --> 0:01:23.040 is the words of the court, that's either inadequate, irrelevant, 0:01:23.200 --> 0:01:27.560 or excessive. An EU resident has the right to ask 0:01:27.640 --> 0:01:32.040 Google to take that link out of its search engine results. Now, 0:01:32.080 --> 0:01:35.200 the judge in these cases has said the plaintiffs are 0:01:35.200 --> 0:01:40.120 not celebrities or politicians and have been rehabilitated since their convictions, 0:01:40.480 --> 0:01:43.480 and the cases are separate, but the issues are related. 0:01:43.840 --> 0:01:48.360 What are the plaintiff's claims here? The plaintiffs claims are 0:01:48.480 --> 0:01:52.280 that they both have criminal records about a decade old 0:01:52.560 --> 0:01:56.920 in each case, and what they've said is that these 0:01:57.000 --> 0:02:00.400 records are just tooled to be relevant anymore and they 0:02:00.440 --> 0:02:04.040 shouldn't be subject to search results. I mean, the fallacy 0:02:04.360 --> 0:02:06.720 in the argument is that there really is no right 0:02:06.760 --> 0:02:09.800 to be forgotten, because what they're simply asking for is 0:02:09.880 --> 0:02:14.040 the search engines to remove the results. The original source data, 0:02:14.160 --> 0:02:18.639 whether it's in a newspaper or government website or news website, 0:02:18.720 --> 0:02:20.920 it's still going to remain out there in the Internet. 0:02:21.240 --> 0:02:25.160 They're simply trying to get the search engines to delete 0:02:25.280 --> 0:02:28.120 those results when someone puts in their name. When you 0:02:28.160 --> 0:02:30.919 say there is no right to be forgotten, where does 0:02:30.960 --> 0:02:36.400 that put the EU you use highest courts decision that 0:02:36.480 --> 0:02:40.079 there is such a right. Well, that's why it's such 0:02:40.080 --> 0:02:44.760 a fallacy because what what essentially the EU Court is 0:02:44.800 --> 0:02:47.799 saying is that he used an example of walking into 0:02:47.840 --> 0:02:50.799 the New York City Public Library. Um, if you can 0:02:50.840 --> 0:02:54.200 find a book on the shelf by your own effort, 0:02:54.280 --> 0:02:56.880 that's fine. But the EU Court basically said, look, you 0:02:56.919 --> 0:02:59.880 can't ask the librarian, you can't look in a card catalog, 0:03:00.040 --> 0:03:03.480 an index, which is essentially the search engine. But if 0:03:03.520 --> 0:03:05.200 you can find it on your own by going to 0:03:05.280 --> 0:03:08.880 a news website, you can do that. So that that's 0:03:08.919 --> 0:03:13.440 why it's almost a counterintuitive rulings. The data still remains 0:03:13.480 --> 0:03:16.120 out there in the digital ether, just a question of 0:03:16.120 --> 0:03:19.720 how to find it. So a Google spokeswoman said, we 0:03:19.800 --> 0:03:22.080 work hard to comply with the right to be forgotten, 0:03:22.120 --> 0:03:25.079 but we take great care not to remove search results 0:03:25.080 --> 0:03:29.360 that are clearly in the public interest. What's Google's position 0:03:29.560 --> 0:03:35.120 about these old convictions. Well, I think the statistics are 0:03:35.160 --> 0:03:38.160 probably where we should start tune. It's interesting. In the 0:03:38.560 --> 0:03:41.720 about three and a half years since the High Court ruling, 0:03:42.440 --> 0:03:47.560 Google's received about two million requests to delete links for information, 0:03:48.360 --> 0:03:53.600 and of those two million requests. They've granted about of them. 0:03:53.840 --> 0:03:59.600 That's over links that have been taken down, and they've 0:03:59.600 --> 0:04:03.920 denied at about sixty about fifty six of those requests, 0:04:03.960 --> 0:04:07.920 So a fair number of those requests are are being granted. Really, 0:04:07.920 --> 0:04:11.680 the real question for Google is applying a very ambiguous 0:04:11.760 --> 0:04:15.400 legal standard two different sets of facts. This ultimately that's 0:04:15.440 --> 0:04:18.800 a judgment call, and it begs a bigger question. You know, 0:04:18.880 --> 0:04:22.479 our search engines really well suited to make these sorts 0:04:22.480 --> 0:04:26.520 of judgment calls. Are regulators, are courts. So what is 0:04:26.560 --> 0:04:34.080 Google saying in response? Google's view is that if these 0:04:34.120 --> 0:04:39.599 individuals are allowed to have their private their information that 0:04:39.680 --> 0:04:44.200 they believe is now outdated or embarrassing taken off search 0:04:44.240 --> 0:04:49.880 engine results, that it actually creates somewhat of a misleading impression. 0:04:50.160 --> 0:04:52.760 Because if you plug someone's name into a Google search 0:04:52.760 --> 0:04:56.320 engine in the EU and you find no results, you're 0:04:56.320 --> 0:05:01.400 going to the only inferences that there's no information out there. 0:05:01.560 --> 0:05:04.359 So you take an example of say a doctor, and 0:05:04.520 --> 0:05:07.440 you've gotten you resident doing some diligence on whate or 0:05:07.440 --> 0:05:09.520 not they want to go to a particular doctor. That 0:05:09.640 --> 0:05:13.599 person has had some nefarious contact with the law in 0:05:13.640 --> 0:05:16.760 the past. I certainly want to know about it, and 0:05:17.000 --> 0:05:19.760 under this court ruin that doctor would have the right 0:05:20.000 --> 0:05:23.800 to petition Google and eventually the local data authorities to 0:05:23.880 --> 0:05:27.360 take that information down. So this is the first time 0:05:27.400 --> 0:05:30.359 an English court is going to decide this issue of 0:05:30.360 --> 0:05:33.160 the right to be forgotten. But tell us about Google's 0:05:33.200 --> 0:05:37.520 battles in European courts and with privacy regulators over the principle. 0:05:38.279 --> 0:05:42.800 Just Street sure the bigger issue and they I think 0:05:42.800 --> 0:05:46.719 the bigger fight is being fought in France because they're 0:05:47.279 --> 0:05:51.240 Google is fighting with the French data protection authorities and 0:05:51.240 --> 0:05:53.919 this ultimately as a question that will be before the 0:05:53.960 --> 0:05:57.839 European Court of Justice later this year as to how 0:05:58.360 --> 0:06:02.320 broad this right to be forgotton goes. The Google position 0:06:02.400 --> 0:06:06.200 now is that they're trying to confine these rulings to 0:06:06.279 --> 0:06:11.400 each individual country. But France's view is there should be 0:06:11.440 --> 0:06:14.840 a global right to be forgotten. So if an EU 0:06:14.920 --> 0:06:18.360 resident makes a request to delete their name or their 0:06:18.360 --> 0:06:21.320 search results from an engine, the French government wants it 0:06:21.400 --> 0:06:24.240 to be applied globally, and that I think that's a 0:06:24.320 --> 0:06:27.960 stretch point that's going on now. George Brock, a journalism 0:06:28.000 --> 0:06:31.120 professor at City University of London said, Google has been 0:06:31.200 --> 0:06:35.719 opaque about its approach to making these decisions about taking 0:06:35.760 --> 0:06:40.120 things down that are supposedly connected to the right to 0:06:40.160 --> 0:06:44.159 be forgotten. Are there any standards that are obvious because 0:06:44.200 --> 0:06:47.520 here you have um a case where the English law 0:06:48.040 --> 0:06:52.039 is designed to rehabilitate offenders by putting these things in 0:06:52.080 --> 0:06:58.520 the background. It's actually a clash of privacy cultures because 0:06:58.560 --> 0:07:01.680 in Europe, and there's yellow professor who's written quite a 0:07:01.680 --> 0:07:04.520 bit about that, the right of privacy is rooted in 0:07:05.080 --> 0:07:08.960 the sense of personal honor and wanting to have standing 0:07:09.000 --> 0:07:13.080 in your community, and any embarrassing search results, even if 0:07:13.080 --> 0:07:18.120 they're absolutely true, can undermine this this cultural norm. And 0:07:18.240 --> 0:07:21.280 obviously in the United States we take a polar opposite 0:07:21.320 --> 0:07:25.800 view of privacy with our free speech rights and freedom 0:07:25.800 --> 0:07:28.440 of the press. So you really are view viewing this 0:07:28.640 --> 0:07:33.920 through the lens of two different continents with with startling 0:07:33.920 --> 0:07:39.480 different privacy norms. Just briefly about thirty seconds the trial. 0:07:39.560 --> 0:07:43.120 One trial will start on February second, on March thirteenth, 0:07:43.520 --> 0:07:45.520 So that does that mean the judge is going to 0:07:45.560 --> 0:07:49.720 be considering the actual facts in his determination of each 0:07:49.760 --> 0:07:53.960 person's case. It's not just the broad issue right, So 0:07:54.440 --> 0:07:57.480 in each of the two separate trials June, the judge 0:07:57.520 --> 0:08:00.520 is going to have to apply this this okay legal 0:08:00.560 --> 0:08:03.960 standard from the European Court of Justice and decide in 0:08:04.080 --> 0:08:10.040 each case which involves separate businessmen whether those links are inadequate, 0:08:10.080 --> 0:08:14.920 irrelevant or excessive. And what a judge in in the 0:08:15.040 --> 0:08:19.520 UK might decide, interestingly, could differ from what a judge 0:08:19.600 --> 0:08:22.080 in another U country might decide. So ultimately, it's a 0:08:22.160 --> 0:08:24.920 judgment judgment called that the courts are now going to 0:08:25.000 --> 0:08:27.320 have to make. All right, thank you for being here, Craig. 0:08:27.360 --> 0:08:30.560 That's Craig Newman, a partner partner at Patterson Bell Now. 0:08:35.640 --> 0:08:39.160 Last quarter, the former director of the Consumer Financial Protection Bureau, 0:08:39.280 --> 0:08:43.520 Richard Cordray, requested two hundred seventeen point one million dollars 0:08:43.520 --> 0:08:47.199 in operating funds from the Federal Reserve. In his January 0:08:47.280 --> 0:08:50.760 seventeenth letter to Federal Reserve Chair Janet Yellen, the acting 0:08:50.800 --> 0:08:54.960 director of the Consumer Financial Protection Bureau, Nick mulaney, writes, 0:08:55.360 --> 0:08:58.040 this letter is to inform you that for second quarter 0:08:58.080 --> 0:09:03.680 of fiscal year eighteen, the Bureau is requesting zero dollars. 0:09:03.720 --> 0:09:06.880 This let's call it non request is unprecedented in the 0:09:06.960 --> 0:09:10.880 history of the consumer watchdog agency. Mulvaney also said that 0:09:10.960 --> 0:09:14.640 all the bureau's activities are being put under review. Former 0:09:14.679 --> 0:09:18.160 Massachusetts Attorney General Martha Coakeley said, because of this shift, 0:09:18.320 --> 0:09:21.360 many state attorneys general are jumping in to fill the gap, 0:09:21.480 --> 0:09:24.679 even looking at former staffers from the CFPB to come 0:09:24.679 --> 0:09:28.280 into their offices. I think the CFPB is going to 0:09:28.360 --> 0:09:31.000 cut way back. I think you've already seen certain state 0:09:31.080 --> 0:09:35.080 ages recognize that they may try to take on some 0:09:35.240 --> 0:09:39.160 of the efforts to protect consumers. Under the statutory scheme, 0:09:39.320 --> 0:09:43.440 ages have the authority to bring certain suits on behalf 0:09:43.480 --> 0:09:48.560 of their states and on consumers. Coakeley says New Pennsylvania 0:09:48.640 --> 0:09:51.319 a g has put in a division modeled on the CFPB, 0:09:52.040 --> 0:09:54.840 joining me Is Dallier him Andez, professor at the University 0:09:54.840 --> 0:09:57.400 of Connecticut School of Law and founding staff mender of 0:09:57.600 --> 0:10:02.079 the CFPB Dolliate. Wilvaney writes that no additional funds are 0:10:02.160 --> 0:10:05.280 necessary to carry out the authorities of the bureau because 0:10:05.280 --> 0:10:08.880 the agency has one seventy seven point one million dollars 0:10:08.920 --> 0:10:11.480 in reserve, and he intends to spend down the reserve 0:10:11.840 --> 0:10:17.880 with expenses of about one million dollars. Does that sound reasonable, Well, 0:10:17.920 --> 0:10:20.440 I mean it sounds reasonable in the sense that this 0:10:20.520 --> 0:10:23.240 is what he wants to do to to basically, UM 0:10:23.720 --> 0:10:27.200 have the bureau do a lot less and um uh. 0:10:27.240 --> 0:10:28.880 And so if you're doing a lot less, so it 0:10:29.000 --> 0:10:32.360 better be a lot cheaper. UM. So it's just it's 0:10:32.360 --> 0:10:35.160 it's really signaling UM, you know, not that we needed 0:10:35.200 --> 0:10:40.199 anymore UM signals really, but it's just further example of 0:10:40.320 --> 0:10:45.000 UM how much he wants to basically neuter the agency. 0:10:45.280 --> 0:10:48.280 The day before this, the CFPB announced that it was 0:10:48.360 --> 0:10:52.720 dropping a lawsuit against a group of online pay day 0:10:52.840 --> 0:10:56.120 lenders and that that suit shook the industry when it 0:10:56.120 --> 0:10:59.280 was filed last year. It gave no reasons for dropping 0:10:59.400 --> 0:11:05.240 the lawsuit. Can you make an educated guess as to why, um? Well, 0:11:05.240 --> 0:11:08.520 on the law not really it was UM, you know, 0:11:08.600 --> 0:11:11.840 assuming their allegations are correct, it was a pretty strong case, 0:11:12.000 --> 0:11:14.520 I thought, UM. And so that's what kind of showed 0:11:14.559 --> 0:11:19.840 the industry because that basically the lawsuit was against UM 0:11:19.920 --> 0:11:24.240 companies that had used American Indian tribes as UM you know, 0:11:24.280 --> 0:11:27.160 for lack of better term, a front um for UM 0:11:27.520 --> 0:11:31.480 for their activities and alleging basically that because UM, they 0:11:31.520 --> 0:11:34.720 were doing their work in American Indian territory, they weren't 0:11:34.720 --> 0:11:38.040 subject to state regulation, and so they could charge easers 0:11:38.080 --> 0:11:41.640 interest rates and UM and operate without licenses in those 0:11:41.679 --> 0:11:44.160 states in which they were operating. And so that, you know, 0:11:44.200 --> 0:11:46.880 if they could do that, that's great for them. But 0:11:47.000 --> 0:11:48.800 I think the Bureau had a very good case that 0:11:48.800 --> 0:11:51.800 that UM was not uh you know, that that wasn't 0:11:51.880 --> 0:11:55.240 legal in this particular case, based on their allegations. So 0:11:55.360 --> 0:11:57.720 why are they dropping it? Well, it goes right in 0:11:57.760 --> 0:12:01.920 hand with UM their other notice UM recently that they're 0:12:01.920 --> 0:12:05.120 going to revisit the payday lending rules that the Bureau 0:12:05.200 --> 0:12:09.360 had just proposed UM just before Mulvaney became you know, 0:12:09.960 --> 0:12:14.760 acting director. So Mulvaney is putting the entire operation of 0:12:14.800 --> 0:12:19.840 the CFPP under review. Besides the payday loans. What areas 0:12:20.000 --> 0:12:24.520 is he targeting for change or even repeal? UM? It 0:12:24.559 --> 0:12:27.560 seems like everything is up for grabs. UM. The other 0:12:28.000 --> 0:12:32.120 recent things. Then he put a hold on prepaid prepaid 0:12:32.160 --> 0:12:36.640 card rules that were actually finalized in and the Bureau 0:12:36.640 --> 0:12:39.480 had put a hold on them to basically tweak them 0:12:39.520 --> 0:12:42.280 and get more commons from the industry. UM and they 0:12:42.280 --> 0:12:45.319 seem like they were they were going to be effective 0:12:45.360 --> 0:12:47.719 in April of this year. UM. And they would have 0:12:47.760 --> 0:12:51.679 protected consumers for very basic things, so things like if 0:12:51.720 --> 0:12:55.319 you lost the losers or have your card stolen. Um, 0:12:55.360 --> 0:12:57.120 you know, there would be some protections for you which 0:12:57.160 --> 0:13:01.280 aren't there now. Uh. They know, requiring for iters to 0:13:01.320 --> 0:13:04.680 make the accounts easily be accessible and to basically have 0:13:04.920 --> 0:13:09.600 better accounts error and resolution uh procedures. I mean that's like, 0:13:09.679 --> 0:13:11.480 that's the stuff you have if you don't have a 0:13:11.480 --> 0:13:13.040 pretty bad card, if you have a debit card or 0:13:13.120 --> 0:13:16.400 credit card. UM. So in a way, the consumers who 0:13:16.400 --> 0:13:18.760 have these prepaid cards sent to be people who do 0:13:18.800 --> 0:13:21.880 not have regular bank accounts um. And you know they're 0:13:21.960 --> 0:13:24.880 using them as bank accounts. So they're scrapping these rules 0:13:24.880 --> 0:13:29.000 which are just um, you know, really affecting the most 0:13:29.040 --> 0:13:32.800 vulnerable among us um. Uh. And the deck collection rules 0:13:32.880 --> 0:13:35.400 are not rules. UM. They also we're doing a det 0:13:35.400 --> 0:13:39.320 collection uh information gathering and basically he scrapped that too. 0:13:39.679 --> 0:13:45.320 So he he changed the CFPBS mission statement last month, 0:13:45.360 --> 0:13:48.800 and part of the change was adding helping consumer finance 0:13:48.880 --> 0:13:53.920 markets work by regularly identifying and addressing outdated unnecessary or 0:13:54.000 --> 0:13:59.559 unduly burdensome rules. How long? How long I mean he's 0:14:00.000 --> 0:14:02.440 say he's going to be in there at least three years. 0:14:03.320 --> 0:14:07.040 It would take a long time to undo the regulations 0:14:07.040 --> 0:14:09.120 that are in place. Now, what did I mean that 0:14:09.200 --> 0:14:12.200 has to be public, common period, etcetera. Or is it 0:14:12.480 --> 0:14:16.079 easier than that? Well, I mean, I think you can 0:14:16.120 --> 0:14:19.360 do a lot, uh, you know, before you can do 0:14:19.400 --> 0:14:20.800 a lot in a short period of time. He's doing 0:14:20.840 --> 0:14:22.480 it already, Like so one of the things he's done 0:14:22.600 --> 0:14:24.880 is basically true UM at least I don't think it's 0:14:24.880 --> 0:14:27.120 finalized yet, but he wants to basically shut down a 0:14:27.120 --> 0:14:29.840 lot of the UM information gatherings that the Bureau is 0:14:29.920 --> 0:14:33.480 doing UM in various ways. And so it's basically the 0:14:33.480 --> 0:14:35.840 the idea that you know, we're going to regulate by 0:14:36.280 --> 0:14:39.480 closing our eyes, covering our ears and pretending, uh that 0:14:39.560 --> 0:14:42.440 nothing's happening to avoid learning bad things some people that 0:14:42.520 --> 0:14:44.760 we should UM that we should too or we should 0:14:44.800 --> 0:14:47.720 examine because they're valuating the law. UM. So if you do, 0:14:47.800 --> 0:14:49.920 you know, if you do that and you basically choose 0:14:50.040 --> 0:14:53.200 not to bring cases that maybe meritories or perhaps not 0:14:53.240 --> 0:14:56.200 even to investigate them, you don't really need to change 0:14:56.240 --> 0:14:59.720 all the rules. UM. You know, you're basically affecting, uh, 0:15:00.040 --> 0:15:02.880 affecting both the morale and the personnel that you get 0:15:03.040 --> 0:15:06.960 UM an agency, UM, and the institutional history. And you're 0:15:06.960 --> 0:15:10.680 also affecting how the marketplace reacts because then they think, 0:15:10.760 --> 0:15:13.000 you know, we can get away with more because the 0:15:13.000 --> 0:15:16.960 the bureau is not interested in basically checking up on us, 0:15:17.000 --> 0:15:20.760 which is their entire purpose. UM. What he did with 0:15:20.800 --> 0:15:23.280 the changing of the miser statement it really is just 0:15:23.360 --> 0:15:27.800 another uh signaling to the agency to consumers, UM that uh, 0:15:27.880 --> 0:15:30.760 you know, this is not I'm gonna have to stop 0:15:30.800 --> 0:15:32.640 you there. We'll we'll pick this up some other time. 0:15:32.720 --> 0:15:36.720 That's Daliajimenez, professor at the University of Connecticut School of Law. 0:15:37.240 --> 0:15:40.200 Thanks for listening to the Bloomberg Law Podcast. You can 0:15:40.200 --> 0:15:43.960 subscribe and listen to the show on Apple Podcasts, SoundCloud, 0:15:44.040 --> 0:15:47.920 and on Bloomberg dot com slash podcast. I'm June Brolso 0:15:48.400 --> 0:15:49.680 this is Bloomberg