CBA Outlines Regulatory & Legislative Recommendations Ahead Of CFPB Semi-Annual Address

April 25, 2022

In a new letter sent to the Senate Banking Committee and House Financial Services Committee ahead of the Consumer Financial Protection Bureau’s (CFPB) semi-annual report to Congress this week, the Consumer Bankers Association (CBA) outlined legislative and regulatory recommendations necessary to ensure the agency successfully delivers on its mission in the rapidly evolving banking marketplace.

Since the Bureau’s inception, CBA has advocated for policymakers to establish well-founded rules which consider input from all stakeholders. As the letter states, increasing transparency and fairness is necessary to yield data-driven outcomes that are in the best interest of the very people banks and the Bureau are all working to serve:

“It is important for the Bureau to carefully consider input from a wide range of stakeholders – even those with whom it may disagree – and propose policy changes based on a comprehensive review of the facts. Policy proclamations based on ideological preferences rather than on data and stakeholder input only create confusion for all stakeholders, eroding confidence in our highly-competitive and well-regulated financial system.”

For more than a decade, CBA has welcomed a constructive, professional relationship with CFPB leadership on both sides of the political spectrum. As CBA goes on to say in the letter, continuing this collaboration between policymakers and bankers on the frontlines remains a top priority:

“We believe this open and honest dialogue is critical to thoughtful, consistent rulemaking in the best interest of consumers, and it is our hope this historically constructive communication with the Bureau will resume under the new leadership of CFPB Director Rohit Chopra.”

Recognizing our shared commitment with the Bureau to protect all consumers and promote a fair, transparent and competitive marketplace, CBA listed the following recommendations for the Bureau’s consideration:

  • Bipartisan CFPB Commission: CBA renewed its call to replace the CFPB’s flawed leadership structure and bring more certainty to the marketplace by passing legislation to create a 5-person, bipartisan commission.
  • Changes to UDAAP: CBA urged the CFPB to immediately rescind recent changes made to the exam manual, which provide little to no context into how banks should implement new procedures. Instead, the Bureau should follow the APA process and solicit public input into the proposed changes.
  • Overdraft Fees: CBA advocated for the CFPB to recognize many of the bank-led innovations unveiled over the past decade which now provide hardworking families more tools to avoid unintended fees. As the Bureau continues its review of overdraft policies, it should take into account this industry transformation while also recognizing the impact further restrictions on overdraft would have on hardworking families who knowingly use and value the product in times of need.
  • Small-Dollar – An Essential Solution to Emergency Liquidity Deficits: Today, the need for accessible small-dollar, emergency credit for consumers has never been greater. CBA urged policymakers to consider needed regulatory reforms meant to encourage banks to provide small-dollar lending products as an additional safety net available to consumers within the well-regulated, well-supervised banking industry.
  • The CFPB Fee Inquiry: CBA reiterated that equating bank fees as equal to those charged by other industries only creates confusion for consumers and undercuts the purpose and utility of disclosures that regulators have worked so hard to police and implement. Additionally, CBA urged policymakers to focus on consumer needs and conduct a complete market analysis, taking into consideration all the facts as they consider future action.
  • Small Business Data Collection: To protect small business access to credit and ensure banks can deliver on the promise of Section 1071, a well-balanced final rule must include a phased approach to implementation and a carefully tailored set of data points requiring collection. The rule must also apply equally to all small business lenders – especially nontraditional banks and fintechs, which are not currently bound to the same level of consumer protection standards as traditional banks.
  • Level Playing Field: Since the CFPB was founded more than a decade ago, a growing share of banking activity has occurred outside of the purview of leading regulators, putting consumers and the resiliency of the financial system at risk. In response to this market evolution, CBA reaffirmed its call for policymakers to institute a level playing to ensure every American family receives the protections they deserve, regardless of where they go to meet their financial needs.
  • Protecting Consumers’ Data: Recognizing data holders and fintechs are not subject to the same security and privacy standards as banks, leaving the personal financial data of consumers at risk of exploitation, CBA called on policymakers to impose clear and digestible disclosure requirements equally across the marketplace.

To read the full letter sent to Congress, click HERE.

Background

To read CBA’s letter sent to Congress ahead of Director Chopra’s first semi-annual address in October, click HERE.