CBA Letter to HFSC re markup of H.R.5983, the Financial CHOICE Act of 2016



September 12, 2016


The Honorable Jeb Hensarling


Committee on Financial Services

U.S. House of Representatives

Washington, D.C. 20515


Dear Chairman Hensarling,


The Consumer Bankers Association (CBA) applauds the goal of H.R. 5983, the Financial CHOICE Act of 2016, to reform the financial services regulatory framework and reduce regulatory burdens on financial institutions.  CBA is the voice of the retail banking industry whose products and services provide access to credit for consumers and small businesses.  Our members operate in all 50 states, serve more than 150 million Americans, and collectively hold two-thirds of the country’s total depository assets.


CBA welcomes many provisions included in your bill to reduce regulatory and compliance burdens so capital can more easily flow to our customers, all while ensuring consumer protections are upheld.  We greatly appreciate the Chairman’s efforts in Title III of the bill to reform the Consumer Financial Protection Bureau (CFPB or Bureau).  This title will help to ensure the Bureau serves as a non-partisan regulator that operates within the framework of the law by giving Congress more oversight authority, taking into account the opinions of all stakeholders, and properly weighing the impact its regulations have on the availability of credit.  In particular, we applaud the bill’s inclusion of language to improve the governance structure at the CFPB by creating a bipartisan commission and to repeal the harmful Durbin Amendment, which placed price controls on debit card interchange fees.  


CBA commends the Chairman for the inclusion of the following provisions in the Financial CHOICE Act:




Section 311 – Creating a Commission at the CFPB


We strongly support Section 311 to bring about needed changes to the governance structure at the CFPB by transitioning its leadership to a five-member, bipartisan commission that is appointed by the President and confirmed by the Senate.  The creation of a commission at the CFPB will ensure a balanced and deliberative approach to supervision, regulation, and enforcement over financial institutions.



Section 314 – Private Parties Authorized to Compel the Commission to Seek Sanctions by Filing Civil Actions


We support and appreciate the Chairman’s efforts to provide private parties with the ability to choose a civil action in a court of law in place of an administrative proceeding.  As we have seen in the PHH Corporation v. CFPB case, the CFPB used their administrative proceedings to ignore long-standing Housing and Urban Development (HUD) precedent and amplify the Administrative Law Judge’s recommended damages by more than $100 million.  By allowing private parties to compel civil actions, they will hopefully receive a more balanced resolution process.


Section 315 – Civil Investigatory Demands to be Appealed to Courts


We support the goal of giving financial institutions tools to dispute unduly burdensome CFPB civil investigatory demands (CIDs).  Under this provision, financial institutions would be better equipped to prevent CFPB “fishing expeditions.”  Institutions are often expending unnecessary resources that could be better utilized serving consumers, in order to comply with excessive CIDs.  Just as in legal proceedings where there are limits on discovery, this would provide institutions with a mechanism to contest needlessly excessive CIDs.


Section 323 – Reform of Consumer Financial Civil Penalty Fund


We appreciate the Chairman’s inclusion of this provision to give transparency to the CFPB’s Civil Penalty Fund.  By segregating civil monetary payments into different accounts, Congress, oversight entities, and the public will have a better understanding of the exchange of funds, how the CFPB is handling the money, and who is receiving redress. 


Section 324 – Commission Research Paper Transparency


The CFPB has long held itself out as a data-driven agency that operates with full transparency.  However, the Bureau’s many reports and data collection efforts have failed to publicly provide the relied upon data for which it draws conclusions.  CBA appreciates the inclusion of Section 324 to allow independent analysis of the Bureau’s data and deeper review of its conclusions.


Section 327 – Requirement to Verify Information in the Complaint Database Before Public Release


The Dodd-Frank Act required the CFPB to establish a database for the “collection of, monitoring of, and response to consumer complaints,”[1] not to create a shopping tool.  The CFPB has gone far beyond the scope mandated by the Dodd-Frank Act without justifying the utility of its discretionary expansion.  As CBA has asserted for years, the complaint database contains complaints that are not checked for accuracy.  By releasing them to the public, the CFPB is implying they are verified and legitimate.  The complaint database can serve a useful function for the CFPB to red flag areas for further investigation, but making them all publicly available implies that consumers can rely upon them when shopping for financial services.


Section 335 – Repeal of Section 1075 of the Dodd-Frank Act


We would also like to thank you and express strong support for Section 335 to repeal Section 1075 of the Dodd-Frank Act, known as the Durbin Amendment.  The Durbin Amendment was added to the Senate’s version of the Dodd-Frank Act and adopted by a conference committee without ever being debated by the committees of jurisdiction or the House of Representatives.  This flawed legislation forced government mandated price controls on the banking industry, causing some to eliminate products and services consumers enjoyed, including free checking accounts and debit rewards programs. 


Section 337 – Removal of Abusive Authority


CBA supports Section 337 to remove the abusive standard from the Dodd-Frank Act.  Between the Federal Trade Commission (FTC) interpretations and case law precedent, the terms “unfair” and “deceptive” are well-defined.  They have served to create an effective set of rules under the FTC Act to protect consumers.  It is not clear how the addition of “abusive” provides any important consumer protection not already provided; but given its vagueness of meaning, it provides an unnecessary level of risk for companies that must comply, and results in an excessive compliance cost to the industry, ultimately at the expense of consumers. 


Section 338 – Repeal of Authority to Restrict Arbitration


CBA supports Section 338 to repeal Section 1028 of the Dodd-Frank Act.  CBA has expressed strong concern regarding the CFPB’s arbitration study and subsequent proposal to restrict the use of arbitration.  While the Bureau’s study is the most extensive arbitration study conducted to date, it remains incomplete and fails to prove restricting arbitration is “in the public interest and for the protection of consumers,” as is required by law for rulemaking. 




Subtitle C – Financial Institution Customer Protection


CBA supports the inclusion of the “Financial Institution Customer Protection Act” to place restrictions on federal regulators’ ability to conduct its Operation Chokepoint efforts to force financial institutions to close customer accounts without evidence of wrongdoing or illegal activity.


Subtitle H – Financial Institutions Examination Fairness and Reform


CBA supports the inclusion of the “Financial Institutions Examination Fairness and Reform Act” to put in place examination standards, create an Office of Independent Examination Review, and require timely examination reports.



Subtitle M – Right to Lend


CBA members anticipate a chilling of small business lending and compliance complications due to the complex new data collection requirements under Section 1071 of the Dodd-Frank Act.  As such, CBA supports the inclusion of the Right to Lend Act to repeal Section 1071.


Subtitle O – Homeowner Information Privacy Protection


CBA strongly supports the inclusion of the Homeowner Information Privacy Protection Act to require the Government Accountability Office to conduct a study on the privacy implications of the expanded Home Mortgage Disclosure Act data collection.




The Financial CHOICE Act offers a number of positive reforms to the financial regulatory system that will ensure greater deliberation, efficiency and transparency in the rulemaking process.  The legislation also brings about many needed reforms to the CFPB that will ensure a balanced and deliberative approach to supervision, regulation, and enforcement.  CBA thanks the Chairman for the inclusion of these important provisions and stands ready to work with Congress to advance legislation that appropriately reforms the CFPB and reduces regulatory burdens on financial institutions. 




Richard Hunt

President and CEO

Consumer Bankers Association



[1] 12 U.S.C. § 5493(b)(3)(a).