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Cmte Financial Services (R)
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Financial Institutions Subcommittee Examines Structure of the CFPB
Washington, Mar 26 -
The Subcommittee on Financial Institutions, led by Chairman Andy Barr (KY-06), held a hearing entitled, "A New Era for the CFPB: Balancing Power and Reprioritizing Consumer Protections." The hearing examined the current regulatory and legal landscape for federal consumer financial protection, as well as the structure and funding of the Consumer Financial Protection Bureau (CFPB).
Watch the hearing online HERE.
As part of the hearing, the subcommittee reviewed several bills that would improve the regulatory landscape and bring accountability to the CFPB. A full list of the attached bills can be found HERE.
On the CFPB's deviation from its core mission:
- "Since it's creation, the CFPB has acted as an overreaching regulator. Partisan political agendas have led to burdensome regulations and truly redundant, duplicative supervision that overlooks the impact on Americans' access to credit and discouraging innovation. The CFPB urgently needs reform..." said Chairman French Hill (AR-02).
On the benefits of improving the CFPB:
- “The best consumer protection is consumer choice. A transparent, law-abiding CFPB will foster an environment that promotes competition and delivers better outcomes for all Americans,” said subcommittee Chairman Andy Barr.
On reforming the CFPB:
- "The CFPB's unique structure prevents Congress from conducting meaningful oversight," said Rep. Bill Huizenga (MI-04).
- “Consumer protections have existed in every federal agency long before the CFPB was ever contemplated or created. And those are the facts. That said, if the least we could do is actually reform CFPB and actually be an agency that is responsive to congress and responsible as it executes rulemaking in the marketplace, that could have some positive benefits,” said Rep. Byron Donalds (FL-19).
On the harm of overregulation at the CFPB:
- "While consumer protection is critical, the regulations are overly burdensome and are poorly analyzed. They can reduce access to financial products." said Rep. Scott Fitzgerald (WI-05).
Witnesses echoed their support for the work of the Committee.
- Ana Fonseca, President and CEO, Logix Federal Credit Union stated, "While the concept of an independent entity to protect consumers from unregulated bad actors is a laudable one, the single director structure of the CFPB has created great regulatory uncertainty in the marketplace. The last four years have seen the CFPB too often take an approach that could be called “regulation by enforcement” where press releases on enforcement actions seem to create new standards that entities must comply with to promote a political agenda, leading to greater uncertainty. Consumer protection in financial services is important, and we applaud the Subcommittee for beginning this difficult discussion on how to reform and improve the CFPB moving forward to prioritize consumer protection."
- Rebecca E. Keuhn, Partner, Hudson Cook, LLP, added, "The contours of the Bureau’s abusiveness authority—its limits and how it differs from unfairness and deception—remain unclear to this day. The Bureau has primarily used its enforcement authority to declare what it believes is abusive. The enforcement cases to date have not shown how abusiveness is different from unfairness or deception, and they have been inconsistent in applying different abusiveness prongs to similar facts and circumstances. The result is that enforcement can appear arbitrary and results-oriented or—as some have put it—as “regulation by enforcement.”
- David Pommerehn, General Counsel, Head of Regulatory Affairs, Consumer Bankers Association added, "Under the prior administration, the Bureau frequently sought to score political points by penalizing businesses in the press, rather than prioritizing true consumer protection. While unfortunate, this outcome is no surprise given that the CFPB is statutorily structured to be immune from oversight from elected legislators. Additionally, unlike most other financial regulators, the CFPB is led by a single Director with unilateral authority, which allows for significant political and policy swings when the Bureau’s leadership changes. ...CBA is eager to work with Congress and the administration to establish long-term stability and credibility at the CFPB for the benefit of consumers.”
- Bryan Schneider, Partner, Manatt, Phelps & Phillips, LLP, added, “While the Supreme Court has recently held that the CFPB’s current funding structure is constitutional, that by no means suggests that it is optimal or even salutary. Indeed, the CFPB’s budget is presently subject to no congressional oversight. As a result, it goes without saying, the CFPB’s priorities are in no meaningful way subject to the priorities of the American people represented in Congress. Considerable ink has been spilled on just how unusual the CFPB’s funding mechanism is within the Federal government, but, speaking as a former State regulator, it is to my eye inconsistent with fundamental principles of separation of powers and ordered liberty. … Having your work examined and evaluated by appropriations committees is not something generally welcomed, but it is assuredly the only reliable way for the legislature to ensure that a regulatory agency is tying its activities to the authority granted to it.”