House Republicans Bluntly Voicing Their Contempt for CFPB
GOP members take aim at agency at house hearing.
House Republicans are expressing their disdain for the CFPB and its mission this week, as the Financial Services Committee grilled agency Director Rohit Chopra on Wednesday and GOP members prepared to try and nullify one of the bureau’s key rules.
“Congress is going to send you a very clear message,” Rep. Frank Lucas, R-Ok., told Chopra during the Financial Services Committee hearing.
Republicans have been blunt in their opposition to many of the policies being implemented by the CFPB, which they view as an out-of-control, unaccountable agency.
The House later this week is scheduled to consider S. J. Res. 32, a resolution that would void the CFPB’s rule requiring financial institutions to report their lending to women- and minority-owned businesses.
As the House hearing began, a key Republican set the tone for GOP opposition.
“The ongoing barrage of press releases from the CFPB is misleading at best. They all too often paint with a broad brush to vilify entire sectors of the financial services industry, and even the U.S. financial system as a whole—rather than targeting bad actors,” House Financial Services Chairman Rep. Patrick McHenry, R-N.C., said, as the hearing began.
He continued, “To make matters worse, where the Biden Administration doesn’t have the authority or votes in Congress to make a change, the CFPB under your leadership simply forges ahead, unchecked.”
Financial Services Committee ranking Democrat Rep. Maxine Waters of California came to Chopra’s defense.
“It is no mystery why the CFPB has such broad bipartisan support,” she said. “It has cracked down on financial institutions that repeatedly engage in abusive practices, held lenders accountable for discriminating against borrowers, taken action to remove medical debt from credit reports, eliminated junk fees, increased access to capital for small businesses – particularly businesses of color, and more.”
Chopra defended his agency, saying that the CFPB is attempting to foster competition in financial services by ensuring consumers have the information they need to make informed decisions.
“We want a lot of competing firms,” he said.
Small Business Rule
When it came to the small business reporting rule, Chopra reminded committee members that his agency is required to implement Section 1071 of the Dodd-Frank Act, which discusses small business lending.
He added that when regulations implementing Section 1071 were not issued for several years, consumer groups filed suit against the agency. As part of a settlement of that lawsuit, the CFPB was required to issue the rule.
The House is attempting to nullify the rule using the Congressional Review Act, which allows Congress to review major rules. The Senate has already adopted the resolution. If the House adopts it, the Biden Administration has made it clear that the president would veto it.
The House Rules Committee on Tuesday adopted a rule for debate on the resolution. That rule, if approved by the House, would not allow amendments to the resolution.
Trade Group Letter
In preparation for the hearing and another one scheduled before the Senate Banking Committee on Thursday, NAFCU and CUNA sent a joint letter to Capitol Hill complaining about a variety of CFPB policies.
In the letter, NAFCU President/CEO Dan Berger and CUNA President/CEO Jim Nussle said that the CFPB, under federal law, could exempt certain institutions from its rules.
“Under Director Rohit Chopra’s leadership, the Bureau has yet again missed numerous opportunities to recalibrate its approach to regulation in a manner that fulfills its consumer protection mission without impeding consumers’ access to credit or safe and affordable financial products and services,” they wrote.
They added, “If the Bureau spent fewer resources on regulating and supervising credit unions and other small lenders subject to federal prudential regulation, then it will have more availability to focus on the businesses actively engaged in objectionable practices that exploit consumers.”
They went on to make recommendations, including that the CFPB should:
–Emphasize regular and open communications with financial services providers and be more transparent in developing rules.
–Stop using blog posts, guidance, and amicus briefs to “issue proclamations regarding the application of consumer financial protection laws.”
–Develop a standard for evidence-based rulemaking. They said that the agency has failed to make public the evidence, data, and research on which it bases its policies.
–Use credit union, as well as bank data, to justify policies.
–Abandon the use of the term “junk fees” to describe fees charged by credit unions. “We strongly object to the government’s inflammatory messaging as it is intentionally misleading and clearly wrong-headed,” they wrote. “To be clear, credit unions do not assess ‘junk fees.’”