CBA Recommendations for CFPB Semi-Annual Report

CBA Recommendations for CFPB Semi-Annual Report

WASHINGTON – The Consumer Bankers Association wrote the Senate Banking, Housing and Urban Affairs Committee in advance of the Consumer Financial Protection Bureau’s Semi-Annual Report to Congress. CBA’s letter offers legislative and regulatory reforms to help ensure consumers continue to have access to highly regulated financial products.

“Improving the financial lives of consumers is a goal that unites lawmakers, regulators and industry,” CBA President and CEO Richard Hunt wrote the committee. “Achievement of this shared goal occurs when there is a stable and even-handed regulatory framework that produces clear and reasonable rules of the road to protect consumers and allow for a robust financial services market.

“The Supreme Court decision on Seila Law v. CFPB could have dramatic and lasting ramifications on the future of the Bureau. Regulatory stability and transparency will not be realized until the Bureau’s governance structure allows for the debate and deliberation of multiple stakeholders with diverse experiences and expertise. Congress should immediately pass legislation to create a bipartisan commission of five, Senate-confirmed commissioners that would provide a balanced and deliberative approach to supervision, regulation and enforcement of rules and regulations that oversee the financial services sector and provide consumers needed safeguards.”

CBA’s full letter is available here and below are some of the reforms recommended by CBA:

• Bipartisan Commission at the CFPB: The appropriate and sensible remedy for the question at issue in the Seila Law vs CFPB case currently before the Supreme Court is for Congress to swiftly pass legislation to ensure the CFPB’s independence and constitutionality by replacing the single director with a five-person, bipartisan commission, as originally intended by the House of Representatives when it first passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. In total, bipartisan legislation establishing a commission has passed the House Financial Services Committee six times and passed the House of Representatives four times with both Democrats and Republicans voting in favor. Replacing the sole director model with a bipartisan, Senate confirmed, five-person commission would depoliticize the CFPB while increasing stability, accountability and transparency for all consumers and industry stakeholders. It is crucial that appropriate checks and balances are in place given the scope and importance of the CFPB. It is also important to insulate the Bureau from political shifts with each new director that could reduce its ability to impartially ensure a fair and competitive marketplace.

• Financial Innovation & Data Aggregation: Financial services innovation benefits consumers by promoting financial security, inclusion and well-being. New and innovative financial products and services can greatly expand access to credit for all consumers, while providing improved access to important financial information and increased customer safeguards. The Bureau’s finalized innovation policies within the Office of Innovation are vital steps in ensuring that financial institutions are able to best serve their customers with innovative products and services that require a flexible and accessible regulatory environment. The recently finalized changes to the no-action letter (NAL) process has opened the door for more financial institutions to innovate to better serve and protect their customers, as well as bring new, financially underserved customers into the fold. However, CBA remains concerned about the data aggregators and the consumer data security. CBA believes consumers should be able to use apps in a safe and secure manner and urge the CFPB to take a more proactive role in making sure consumers are educated about how to manage their data security and privacy.

• Small-Dollar Bank Lending: CBA appreciate the Bureau’s interest in revisiting its 2017 rule to ensure consumers have options in the marketplace for small-dollar credit need and urge the Bureau to grant an immediate extension of the compliance date for the entire 2017 rule. The Bureau’s original small-dollar rule has greater impact on products outside of the short-term lending space. The Bureau should strongly consider exempting traditional consumer loan products which this rulemaking was not intended to address. In the 2017 rule, the Bureau expansively defined “covered loans” without regard to the loan’s amount or duration. Consequently, the rule captures many loans that are not short-term, small-dollar loans, including some wealth management products and bridge loans just to give two examples. To address this concern, the Bureau should also clarify an exemption for these loans and thus avoid restricting access to open-end lines of credit.

• Debt Collection: CBA supports the Bureau’s goals of updating the Fair Debt Collection Practices Act (FDCPA), modernizing its communication standards, and generally enhancing consumer protections. As the Bureau has acknowledged, the FDCPA is limited to third-party debt collectors and does not provide a valid legal basis for regulating creditors enforcing loan agreements. Congress enacted the FDCPA to establish ethical guidelines consumer debt collection by third-party debt collectors. As such, CBA strongly opposes placing FDCPA-like restrictions and requirements directly on creditors outside FDCPA authority.

• Qualified Mortgage Rule Amendment: CBA supports the Bureau’s recent decision to propose an amendment to the Qualified Mortgage (QM) rule. The Bureau’s position is consistent with a coalition representing the mortgage industry, relevant trades, including CBA, and consumer and civil rights groups. CBA looks forward to working with the Bureau on this issue to ensure a smooth transition and to create a safer and more inclusive mortgage market for all consumers.

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About the Consumer Bankers Association:

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.