H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act
Posted by on April 26, 2011

The expansive powers given to the CFPB to write rules will have far-reaching implications. Yet, the Dodd-Frank Act makes the CFPB’s judgments essentially unreviewable. The Dodd-Frank Act did include a review process, but the process is essentially meaningless . The Act allows the Financial Stability Over-sight Council to review rulemaking by the CFPB, but it must meet virtually impossible prerequisites in order to overturn any CFPB rulemaking.

Among the extreme standards the FSOC must meet to overturn a rule are:

  • Two-thirds of FSOC members must approve;
  • The FSOC must find the rule endangers the stability of the entire financial system;
  • The FSOC has only 90 days to review draft rules; and
  • A review petition must be filed within 10 days of publication in the Federal Register of the draft rule.

The Consumer Financial Safety and Soundness Improvement Act (H.R. 1315), introduced by Rep. Sean Duffy on April 1, improves the FSOC review process and makes the review process meaningful. H.R. 1315 improves the FSOC review process by changing the vote to overturn a CFPB rule from a super-majority of two-thirds of the FSOC to a simple majority; ensuring the FSOC must set aside a rule if it is inconsistent with the safe and sound operations of United States financial institutions; and giving the FSOC sufficient time to consider the safety and soundness implications of rules.