Push for CFPB to Implement Cost-Benefit Analysis Grows on Capitol Hill

cost-benefit analysis Legislative proposals in the House and Senate this Congress call for the bureau to conduct cost-benefit analysis assessments related to regulations and review potential regulatory burdens for companies. ACA is supporting these proposals.

07/27/2022 1:45 P.M.

2.5 minute read

Cost-benefit analysis legislation to ensure CFPB regulations do not include unreasonable costs or harms to taxpayers, financial entities or consumers is gaining traction on Capitol Hill through proposals in both the U.S. House of Representatives and U.S. Senate.

ACA International is supporting the cost-benefit analysis legislation related to the CFPB’s rulemaking, including the recent Senate version, S. 4522, the Transparency in Consumer Financial Protection Bureau Cost-Benefit Analysis Act, from U.S. Sens. John Kennedy, R-La., Cynthia Lummis, R-Wyo., Tim Scott, R-S.C., and Bill Hagerty, R-Tenn.

ACA also supports cost-benefit analysis legislation in the House from U.S. Rep. Alex Mooney, R-W-Va., ACA previously reported.

“Regulations from the CFPB that do not account for the costs impacting regulated entities such as staff training time, implementing new technologies, and creating new policies and procedures, for example, have the potential to create excessive burdens,” said ACA CEO Scott Purcell in a letter to the Senate supporting S. 4522. “These regulatory burdens are eventually passed on to consumers, force consolidation of industries, and leave consumers and businesses with less choice.”

The Transparency in CFPB Cost-Benefit Analysis Act would:

  • Conduct a qualitative and quantitative assessment of all direct and indirect costs and benefits of the proposed regulation. This includes compliance costs; effects on economic activity, efficiency, competition and capital formation; regulatory and administrative costs; and costs imposed on state, local and tribal entities.
  • Identify alternatives to the proposed regulation and compare the benefits and costs of those alternatives.
  • Consult with the Small Business Administration’s Office of Advocacy if a proposed rule would increase costs on small businesses.
  • Assess the regulatory burden that the proposed regulation would impose on regulated entities.
  • Provide a probability distribution of potential cost and benefit outcomes.
  • Ensure the proposed rule is not duplicative, inconsistent or incompatible with an existing rule.
  • Disclose the source material for any assumptions and identify any studies or data the rulemaking used.

“Requiring the CFPB to conduct cost-benefit analysis will guarantee 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,” Purcell said. “ACA members recently invested a significant amount of time and resources coming into compliance with the CFPB’s Regulation F, an implementing regulation for the Fair Debt Collection Practices Act. The enormous resource drain associated with this regulation has consumed thousands of hours of time and resources.”

A summary of S. 4522 is in progress and the bill has been referred to the Senate Committee on Banking, Housing and Urban Affairs.

Read ACA’s complete letter to the Senate here.

Related Content from ACA International

ACA Supports Bills on CFPB Regulations; Modern Consumer Communications

CFPB’s ‘Regulation by Press Release’ in the Limelight at Chopra’s House Testimony

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