The California Legislature passed a budget by its annual deadline to do so–June 15, 2020—but the budget did not include Governor Gavin Newsom’s proposed mini-CFPB. Earlier, Governor Newsom’s January 2020 proposed budget included the California Consumer Financial Protection Law, which sought to overhaul the California Department of Business Oversight (“DBO”) and remake it into a more powerful Department of Financial Protection and Innovation (“DFPI”). The stated goal of the DFPI, according to Governor Newsom, was for the DFPI to be a California version of the Consumer Finance Protection Bureau (“CFPB”). The proposed DFPI would have the authority to bring enforcement actions against companies, issue fines and crack down on “unfair, deceptive and abusive acts or practices, and register providers of consumer financial services, among other powers.
The budget must still be approved by Governor Newsom and its likely there will be modifications in the coming days. However, some have questioned whether the proposal should be considered as part of a stand-alone bill rather than the budget process, which would allow a more thorough discussion on the subject. For example, the Legislative Analyst’s Office issued a report making such a recommendation. Overall, it remains to be seen whether Governor Newsom’s proposal will be taken up again, and in what form, given the health crisis and budget constraints.
If you have questions or need additional information or guidance, please contact Laszlo Ladi at ll@severson.com