Financial Services Subcommittee Holds Second CFPB Hearing

The Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee discussed two pieces of legislation proposing reforms to the structure of the CFPB

Rep. Shelly Moore Capito, subcommittee chairman of The Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee, held a hearing Wednesday, April 6, for the purpose of reviewing ways to make the Consumer Financial Protection Bureau (CFPB) more accountable and transparent.

The subcommittee discussed two legislative proposals, which address issues with the CFPB.

The first legislative proposal that was discussed was The Responsible Consumer Financial Protection Regulations Act. This legislation was introduced by Financial Services Chairman Spencer Bachus on March 16.

The bill proposes replacing the director of the CFPB with a five-member, bi-partisan commission rather than a single director of the CFPB. This bill creating the commission is identical to a provision of the regulatory reform bill that passed the House last year but was later dropped by the Democratic conferees to the Dodd-Frank Act.

Chairman Bachus stated, “Having the CFPB led by a bipartisan commission received strong support from Republicans and Democrats in the last Congress because it makes sense. The CFPB will do a better job carrying out its mission if it is led by a bipartisan commission rather than a single director.”

The second legislative proposal that was discussed was the Consumer Financial Safety and Soundness Improvement Act, which was introduced by Representative Sean Duffy on April 1. This legislation proposal restructures the Financial Stability Oversight Council’s review process of CFPB rules.

Currently, the Financial Stability Oversight Council (FSOC) has the ability to review rulemaking by the CFPB, but must meet stringent requirements to overturn any CFPB rulemaking. There are strict standards the FSOC must meet under current law to overturn a rule including; that two-thirds of FSOC members must approve; the FSOC must find the rule endangers the stability of the entire financial system; and the FSOC has only 90 days to review the proposed rule; and a review petition must be filed within 10 days of publication in the Federal Register of the draft rule.

Rep. Duffy’s proposed legislation would provide more checks and balances and limit unfettered authority of a single director.

ACA’s federal government affairs staff continues to engage the committee and the U.S. Treasury Department to provide input on these and other proposals to improve the current construct of the CFPB.