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CFPB Assault

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Consumer Financial Protection Bureau logoThe Consumer Financial Protection Bureau (CFPB), a new federal agency created in 2009 and implemented in 2011, and an agency created to protect you from financial predators is under assault again.

On the fifth anniversary of the Credit CARD Act of 2009, which has reportedly saved American consumers nearly $13 billion annually in lower fees and interest charges, the CFPB remains under the gun from politicians. By the way. the CFPB says there are nearly $4 billion in annual savings in fees alone since its inception.

However, the CFPB has been under relentless attack from lawmakers since its inception and subjected to an assault never before seen on a government agency. Last month no less than eleven bills were introduced by the U.S. House to hog-tie the CFPB.

Our good friends at the Consumer Federation of America say the CFPB has proven itself to be a transparent, deliberative and data-driven agency that has worked closely with consumers and the financial services industry to develop sensible safeguards against unsafe mortgage lending practices, abusive credit card practices, and unfair and discriminatory financial practices that have harmed consumers and servicemembers.  The Bureau has made the financial market place more fair for consumers since it became operational in 2011 and much work remains to be done.

Here is a review of the eleven U.S House bills aimed at hampering the CFPB:

#1 The “Bureau Arbitration Fairness Act” would repeal the CFPB’s authority to ban or regulate the use of arbitration provisions in contracts for consumer financial products or services. Forced arbitration clauses eliminate consumers’ access to the court system by requiring consumers to instead, proceed to a private and secret dispute settlement system. The Dodd-Frank Act required the CFPB to conduct a study on the use of forced arbitration. In December of 2013, CFPB released preliminary data showing the pervasiveness of forced arbitration clauses and class-action bans.  Rescinding the agency’s authority to restrict the practice of forced arbitration provisions is contrary to consumers’ interests. This bill would weaken consumers’ ability to deter wrongdoing and hold wrongdoers accountable.

#2 H.R. 4262, the “Bureau Advisory Commission Transparency Act,” would apply the provisions of the Federal Advisory Committee Act (FACA) to the CFPB, which would require that all advisory committee meetings be made public. The CFPB has already implemented much of the FACA voluntarily, and recently the CFPB increased its longstanding substantial conformance with the FACA.

#3 H.R. 4383, the “Bureau of Consumer Financial Protection Small Business Advisory Board Act,” would establish a Small Business Advisory Board that would meet at least twice a year and would be made up of at least twelve representatives of the small business community. This proposal is unnecessary and duplicative because the CFPB is already required to take small business concerns into account when issuing rules.

#4 H.R. 4539, the “Bureau Research Transparency Act,” would require that publicly available CFPB research papers include all related studies, data, and analyses. This bill creates burdensome and impractical demands that could force the CFPB to release trade secrets or other materials specifically protected by contracts with companies providing data, as well as potentially requiring them to release confidential supervisory information.

#5 H.R. 4604, the “CFPB Data Collection Security Act,” would require an opt-out list for consumers who do not want the CFPB to collect personally identifiable information (PII) about them. This bill is unnecessary and misleading: the CFPB does not collect PII, unless it is voluntarily provided with affirmative consent and the Bureau collects much of its information from commercial vendors, which do not provide PII. CFPB consistently and effectively protects consumer privacy.

#6 H.R. 3389, the “CFPB Slush Fund Elimination Act of 2013,” would get rid of the Bureau’s Civil Penalty Fund by directing the Federal Reserve to transfer existing funds and future penalties to the Treasury. The CFPB’s Civil Penalty Fund is intended to help consumers who have been harmed in the financial marketplace by providing remediation to consumers when the company that defrauded them is insolvent and by funding financial literacy.  This bill would thwart CFPB’s ability to protect and educate consumers.

#7 H.R. 3770, the “CFPB-IG Act of 2013,” would create a separate, independent inspector general (IG) for the CFPB and would require the IG to appear at semi-annual hearings of the House Financial Services Committee and the Senate Banking Committee.  This legislation is unnecessary because the CBPB already has an IG, shared with the Federal Reserve, within which the CFPB is housed.

#8 H.R. 4662, the “Bureau Advisory Opinion Act,” would establish a process for certain people to submit inquiries concerning the conformance of prospective products and services with consumer financial laws. The bill requires the Director of the CFPB to issue a confidential opinion in response to each such inquiry.   This bill would create an unprecedented and impractical procedural requirement—one that is not imposed upon any other agency within the United States government.

#9 The “Bureau Guidance Transparency Act” would require the CFPB to provide a public notice and comment period before issuing any guidance in final form and to publicize any studies, data, and analyses it relied upon for preparing and issuing the guidance. Guidances are not currently subject to the Administrative Procedures Act (APA).  This bill would reduce the CFPB’s ability to clarify compliance expectations and would make it harder for CFPB to act in a timely way to facilitate compliance.

#10 The “Preventing Regulatory Abuse Act of 2014” would require the CFPB to go through a formal rulemaking process before publishing a final rule that provides guidance on the agency’s definition of an “abusive” act or practice. The bill would also institute a moratorium on any enforcement action using the CFPB’s “abusive” authority until the final rule is published; and would repeal the CFPB’s authority to prohibit “abusive” acts or practices if it fails to conform to specified rulemaking timelines. The Dodd-Frank Act already provides parameters as to what constitute “abusive” practices and it would be impractical to construct a rule that could effectively apply to all industries and circumstances where there is abusive conduct.

#11 The “Bureau Examination Fairness Act” would prohibit the CFPB from including enforcement attorneys in examinations, regulate data requests, and place time limitations on the completion of examination field work and the issuance of exam reports. This bill is somewhat redundant as the CFPB has already removed enforcement attorneys from examination practices.  CFPB should retain the flexibility to include enforcement attorneys if necessary.

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