Patrick McHenryChairman

Washington, March 13, 2024 -

Today, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, led by Chairman French Hill (AR-02), is holding a hearing entitled “Bureaucratic Overreach or Consumer Protection? Examining the CFPB’s Latest Action to Restrict Competition in Payments.”

Watch Chairman Hill’s opening remarks here.

Read Chairman Hill’s opening remarks as delivered:

“Today’s hearing, ‘Bureaucratic Overreach or Consumer Protection? Examining the CFPB's Latest Action to Restrict Competition in Payments,’ in my view, is critical, because it’s going to talk about this ‘larger participants’ in the general-use digital consumer payment applications market. This is the sixth LPR that the CFPB has initiated.

“And putting aside the egregiously short comment period—which frustrates both Members of this committee—and the deeply flawed cost-benefit analysis, which have both become hallmarks of this Administration, I find the substance of CFPB’s proposal deeply concerning. 

“The proposal asserts that companies that let you send money to friends, peer to peer, or companies that keep your credit card information on your phone, somehow are in the exact same market.

“Why? Well just because the CFPB says so.

“This breadth of the ‘market’ the CFPB is trying to define has perplexed many on this committee, from potentially covered entities to, as I say, Members on both sides of the aisle here.

“Many companies are utterly confused, wondering not only how the rule will be implemented but whether they are even covered by it. 

“I would argue that this confusion is by no means an accident. The CFPB is trying to cast as wide a net as possible and become a ‘technology regulator.’ 

“And in many more ways than one, this proposal marks a sharp departure from the CFPB’s previous Larger Participant Rules. 

“Director Chopra has decided, on a whim and, in my view, without justification, that technology companies pose a threat to consumers, and this rule should be viewed as a thinly veiled workaround to get CFPB supervision teams into these tech companies.

“And that’s because once an entity is designated as a ‘larger participant,’ the CFPB can not only supervise the activities—which is what I think the intent of Dodd Frank was—that originally qualified, but they can actually supervise the entity’s businesses itself.

“The proposal attempts to establish limits by only capturing those companies with 5 million transactions within a year—we would love to hear from the panel on whether that is a good number or a bad number.

“But don’t be fooled: this modest threshold is so low that the agency will effectively have carte blanche to knock down the door of companies, large and small, with their fleet of examiners. 

“There is no doubt that this proposal will decrease incentives to innovate in the payments space and leave consumers encumbered with fewer firms from which to choose a payment method–that decreases competition. 

“This LPR doesn’t benefit consumers or provide market clarity. In fact, the only people this proposal potentially will benefit besides witnesses like you are compliance lawyers. 

“To further expand their authority, the CFPB has decided to capture digital assets under this proposal, as well.

“The CFPB asserts that the definition of ‘funds’ includes digital assets. 

“This is a novel position, and the CFPB justifies their interpretation only in a very small and unassuming footnote. 

“Concerns around this proposal are not strictly partisan. 

“Comment letters were submitted by both sides of the aisle to express concern about the proposal’s scope and implications. 

“The CFPB needs to go back to the drawing board, work to protect consumers, and not hinder innovation or expand the CFPB’s insatiable reach for more power and scope. 

“We thank our panel of witnesses for being here today, and we greatly appreciate your testimony and willingness to work with us.”

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