Barr Delivers Remarks at Hearing to Examine the Politicization of Financial Regulation and its Impact on Consumer Credit and Community Development
Washington,
March 7, 2024 -
Today, the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, led by Chairman Andy Barr (KY-06), is holding a hearing entitled “Politicized Financial Regulation and its Impact on Consumer Credit and Community Development.”
Watch Chairman Barr’s opening remarks here.
Read Chairman Barr’s opening remarks as prepared for delivery:
“Today’s hearing will explore recent actions taken by federal regulators that will limit financial options and restrict access to financial services, particularly through mandated fee caps and price controls.
“The Biden Administration is using would-be ‘independent’ regulators as political agents to circumvent Congress and drive leftist transformations in financial regulation to the detriment of consumers and communities.
“The coordinated effort between the Biden Administration and the CFPB to eliminate so-called ‘junk fees’ is a clear illustration of this effort.
“As a concept, ‘junk fees’ is not legally defined, and the Biden Administration has failed to outline any illegal activity taking place regarding fees. They are leaning into the lazy narrative of corporate greed.
“To be clear, fees serve a purpose, and I support proper disclosure and discerning use of them.
“Today’s hearing is particularly timely given the release of the CFPB’s misguided credit card late fee final rule earlier this week.
“With its finalization, Director Chopra abandoned any notion that the CFPB is an independent regulator.
“In deciding to finalize the credit card late fee rule nearby President Biden’s State of the Union address, the CFPB is showing how politics, not consumer protection, drives the train under Director Chopra.
“Commenters on the proposal should be appalled that their thoughtful critiques were conveniently tossed aside in favor of political considerations in an election year.
“All Americans should be outraged that the cost of credit will skyrocket and access to it will be meaningfully restricted in the name of politics.
“The credit card late fee rule punishes borrowers who pay on-time to subsidize those who don’t. The rule significantly reduces the penalty fee that financial institutions may charge on delayed payments.
“This rule encourages borrowers to not worry about paying on time. Delinquent payment costs will be socialized, with late payer costs transferred to all other consumers through higher interest rates and less availability of credit, including for low-and-moderate income borrowers.
“Evidently, in the eyes of the partisan CFPB, consumers should take on credit card debt with no fear of consequences if they don’t repay, and financial institutions should extend credit with no ability to hedge against that risk and certainly no ability to profit from having taken that risk.
“Not only is this junk economics, but it is dangerous for consumers’ financial security and the health of our financial institutions.
“It also misguidedly tracks with Democrats’ desire to gain increasing control over financial institutions and turn them into public utilities.
“This flagrant act of political gamesmanship, in addition to possibly violating the Administrative Procedure Act, demonstrates why we must rein in the authoritarian CFPB.
“Fortunately, this fact has not gone unnoticed. The funding mechanism of the CFPB is currently being questioned in the Supreme Court due to its “double insulation” from Congressional accountability.
“If the CFPB is going to operate as a political arm of the administration, then it also must be answerable to Congress through the appropriations process as with every other non-independent agency.
“Today we will also discuss the need to clarify standards for enforcement actions brought by the CFPB under ‘Unfair, Deceptive, or Abusive Acts and Practices,’ or UDAAP, in order to provide clarity for financial institutions.
“Uncertainty in regulatory expectations or meaning leads to fewer choices, less innovation, and higher prices for consumers. The much-needed step of defining ‘abusive acts and practices,’ will instill the clarity and certainty needed to foster a more dynamic and inclusive consumer financial market.
“Other recent proposals from federal regulators that warrant review during today’s hearing include the Community Reinvestment Act final rule and the new CDFI Fund certification process–both of which could have a major impact on how financial institutions can continue to serve their communities.
“Banks and credit unions compete every day to attract and maintain customers and members. They do not need the federal government encroaching in their business practices or trying to dictate relationships and control prices for them.
“One-size-fits all regulations are bad for consumers and bad for our financial system.
Price controls throughout history are a known recipe for disastrous consequences for the public.
“Competition is the best consumer protection. Therefore, it is our duty to ensure financial laws and regulations foster innovation and competition to ensure all borrowers have the opportunity to access affordable financial products and services.”
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