The legislation, ranging from proposals on CFPB funding, rulemaking processes and the bureau’s leadership structure, is a priority for the House Financial Services Committee this Congress.
05/01/2023 12:05 P.M.
6.5 minute read
The House Financial Services Committee advanced a bill package on Consumer Financial Protection Bureau reform Wednesday for consideration on the House floor.
The bill package (PDF), H.R. 2798, brings together several proposals on CFPB reform into one piece of legislation focused on changing the funding and leadership structure of the bureau and requiring all proposed rules to consider the impact on small businesses, among other items.
Sponsor U.S. Rep. Andy Barr, R-Ky., introduced the CFPB Transparency and Accountability Reform Act for markup at the House Financial Services Committee. It passed 26-23 on a party-line vote.
“For far too long the CFPB has dodged transparency and accountability to Congress and the American people. Republicans in Congress and hopefully Democrats as well will no longer allow the agency to operate against the best interest of our financial system and the businesses and consumers who operate within it,” Barr said in his opening remarks. “The CFPB is ripe for reform. It consistently evades statutory mandates and fails to comply with the Administrative Procedure Act all the while harassing businesses it oversees and perpetuating administrative law fouls.”
The CFPB Transparency and Accountability Reform Act includes the following bills:
- H.R. 2489, the CFPB Dual Mandate and Economic Analysis Act (U.S. Rep. Tom Emmer)
Under the CFPB Dual Mandate and Economic Analysis Act, when the bureau seeks to implement and enforce federal consumer financial law, it must do so consistently for the purpose of strengthening private sector participation in markets, without government interference or subsidies, in order to increase competition and enhance consumer choice. - H.R. 1382, the Taking Account of Bureaucrats’ Spending (TABS) Act (Rep. Barr)
The TABS Act changes the source of funding for the CFPB from the Federal Reserve System to annual appropriations. - H.R. 6038, the CFPB–IG Reform Act (U.S. Rep. Blaine Luetkemeyer)
The CFPB-IG Reform Act, among other things, creates an Inspector General for the CFPB who then must appear before Congress. - H.R. 1313, the Transparency in CFPB Cost-Benefit Analysis Act (U.S. Rep. Alex Mooney)
This bill seeks to require the CFPB to conduct cost-benefit analysis to ensure that the agency weighs the burdens and negative consequences associated with implementation and compliance against the benefits of a regulation before rules can be finalized. - H.R. 2490, the CFPB Whistleblower Incentives and Protection Act (Rep. Emmer)
This legislation amends the Consumer Financial Protection Act of 2010 to provide for whistleblower incentives and protection at the CFPB. - H.R. 1410, the Consumer Financial Protection Commission Act (Rep. Luetkemeyer)
This legislation seeks to implement a Senate-confirmed, bipartisan commission to provide a balanced and deliberative approach to supervision, regulation, and enforcement by encouraging input from all stakeholders. - Encouraging Innovation and Protecting Consumers Act
This legislation restores functions to the bureau’s office of innovation. - H.R. 1749, the Making the CFPB Accountable to Small Businesses Act (Rep. Scott Fitzgerald)
This legislation includes detailed justification of the covered agency’s determination that the relative size and resources of small entities should have no bearing on a proposed rule, supported by factual policy, and legal reasons. It also includes a description of the steps the agency has taken to minimize any additional cost of credit for small entities and, where no significant alternatives for small entities was adopted, a detailed justification of the covered agency’s determination that the relative size and resources of small entities should have no bearing on a rule, supported by factual, policy and legal reasons.
Several amendments to the bill package were rejected during the markup including:
- Requiring the Financial Stability Oversight Council to conduct a one-year study of the legislation and certify that it will not increase systemic risk or contribute to a financial crisis.
- Requiring financial institutions subject to the CFPB’s regulations to offer veterans a bank account that does not require a minimum balance and does not charge overdraft fees. It would require mortgage lenders to obtain a court order before foreclosing on the homes of veterans who served in the Air Force and were discharged under honorable conditions. It would also require mortgage lenders to offer an interest-rate-reducing refinancing loan to veterans.
- Removing provisions to limit the CFPB’s authority to issue rulemakings on junk fees.
- Establishing a whistleblower program in the CFPB and provide protections for whistleblowers.
- Allowing the CFPB to use its congressionally authorized power to prevent foreclosures in rural communities.
- Allowing the CFPB to use its congressionally authorized power to continue oversight over large banks and repeat offenders.
An amendment that would provide medical debt credit reporting protections for military members and veterans was withdrawn.
ACA International has long supported reform at the CFPB to bring more transparency and accountability to its processes.
“Unfortunately, the CFPB remains undeterred in its continued efforts to regulate by enforcement actions and press releases, and, even when it does engage in actual rulemaking, it is through flawed and unlawful procedures,” said ACA CEO Scott Purcell in a letter (PDF) to the committee. “These overbroad activities undertaken by the CFPB put significant judicial, consumer, and financial service market participant resources at risk, which benefits no one. Furthermore, the ongoing litigation on the bureau’s funding structure pending before the U.S. Supreme Court, in conjunction with the CFPB’s refusal to engage in a transparent process for policymaking that follows the Administrative Procedure Act, highlights why reforms are needed to the construct to the CFPB.”
Advancing Reforms
Discussions during Wednesday’s markup ranged from support for the bill to create more congressional oversight of the CFPB, similar to other federal agencies such as the Federal Trade Commission and Federal Communications Commission, to opposition based on the fear it would weaken the bureau’s resources to protect consumers.
“My bill puts forth commonsense reforms that every member of this committee should support to rein in the agency’s widespread regulatory overreach and to vindicate Congress’ important role in the appropriations process and the separation of powers,” Barr said.
Ranking Member of the Committee U.S. Rep. Maxine Waters, D-Calif., said the bill is another attempt to tear down the CFPB as an effective federal watchdog.
“This bill will rob the CFPB of the funding it needs to properly regulate the consumer financial marketplace and would impede the CFPB’s ability to carry out its mission to protect consumers from harm. It is a brazen, yet predictable, attempt to undermine the CFPB,” Waters said in her opening remarks.
Waters and chair of the committee U.S. Rep. Patrick McHenry, R-N.C., sparred over the potential for the bill package to be bipartisan and the ability for the committee to come to a consensus.
“Since its inception, the CFPB has been one of the most unaccountable agencies ever created,” McHenry said in his opening remarks. “In 2020, the Supreme Court held the removal provisions related to the executive director as unconstitutional in Seila Law. Next term, the Supreme Court will examine the funding structure. H.R. 2798 will ensure the CFPB is finally accountable to Congress and to the American people.”
What’s Next?
McHenry said in his opening remarks the committee will hold several markups this Congress.
There were several amendments on Barr’s bill discussed during Wednesday’s hearing, ACA is reviewing for additional coverage in ACA Daily.
There were 15 bills in total that advanced out of the committee for consideration on the House floor after Wednesday’s nearly 12-hour markup, which included several recesses for floor votes.
Join Us at Washington Insights
CFPB reform is one of the main issues slated for discussion at ACA’s Washington Insights Fly-In May 15-17, and there is still time for members to join us.
Activity in Washington, D.C., stands to have a major impact on our ability to operate and provide employment. We are excited to get members back into the Capitol to advocate for our industry’s latest pressing issues.
Our registration numbers are growing and we’re seeking to have as much representation from members in different states across the U.S.—the goal being to show Congress and regulators the reach of our industry and to have power in numbers during Capitol Hill meetings.
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org to receive updates on the ACA Huddle.
