Republican lawmakers on the House Financial Services Committee unveiled legislation Tuesday that could change how the Consumer Financial Protection Bureau is funded, as well as limit its ability to enforce against unfair, deceptive, or abusive acts or practices.
The bill would require the CFPB to receive its funding from congressional appropriations instead of the Federal Reserve, which it has been uniquely funded by since its establishment in 2010.
Bringing the CFPB under the congressional appropriations process would “restore accountability to this agency,” said Rep. Andy Barr, R-KY, who introduced the bill, in a press announcement. It was co-sponsored by House Financial Services Committee Chair French Hill, R-AR, and 28 other Republicans.
The bill aims to establish clearer standards for UDAAP enforcement actions, and would modify what could be “deemed abusive only if there is risk of substantial injury to the consumer which countervailing benefits do not outweigh,” the committee wrote in an accompanying one-pager.
Cost-benefit analyses for rulemakings – and already-established rules – would be required in consideration of their impacts on small businesses, competition, innovation and credit access.
“For too long, shifting priorities, unclear legal standards, duplicative supervision, and haphazard and overreaching enforcement at the CFPB have created uncertainty for consumers and the businesses that serve them,” Hill said in a prepared statement. “This package establishes durable guardrails to make the CFPB more accountable and transparent while keeping its focus where it belongs: protecting consumers and promoting competition, innovation, and access to affordable financial products and services.”
In a fireside chat with lawmakers Tuesday following the bill’s proposal, Consumer Bankers Association CEO Lindsey Johnson said it’s “so important” that rules are based on “actual consumer harm – evidence of consumer harm and/or a market failure.”
The bill would also eliminate the Consumer Financial Protection Fund and require the agency to return to the U.S. Treasury any civil penalties remaining in the Civil Penalty Fund after victims have been paid.
Additionally, the bill would establish a dedicated CFPB inspector general, something most other federal financial regulators have. The Office of the Comptroller of the Currency, FinCEN and FINRA don’t, however: the former two fall under the purview of the Treasury Department OIG, and the latter, its internal audit department. The CFPB falls under the purview of the Federal Reserve’s OIG.
Republicans have sought to de-emphasize, or entirely close down, the CFPB for years.
