On September 13, the U.S. House of Representatives Financial Services Committee passed an amended version of the Financial CHOICE Act, which will result in significant changes to the Consumer Financial Protection Bureau if it becomes law. The amended CHOICE Act would reform the CFPB’s structure and limit its regulatory authority, while also repealing several sections of the Dodd-Frank Act.
The proposed amendments address Congressional concerns regarding the CFPB’s lack of oversight by Congress and the asserted ineffectiveness of the CFPB’s existing rules. The Financial Services Committee noted that the CFPB’s jurisdiction includes banks and other large institutions with assets of more than $10 billion, mortgage lenders, mortgage servicers, and other ancillary lending institutions. The Committee is concerned with the CFPB’s power over these large lending institutions, noting that the CFPB intends to issue new rules and regulations that govern additional consumer transactions. Despite the CFPB’s intentions, the Committee believes the CFPB fails to protect consumers.
The Financial Services Committee further believes that the CFPB’s actions are actually harming consumers. In particular, the Committee found that the reduced availability of credit for low-income Americans, the increasing price for banking services, and decreased credit availability to small business were a result of the CFPB’s policies. Congress also found that the CFPB’s mortgage lending rules have excluded lower-income Americans, particularly minorities, from obtaining home mortgages.
To address these problems, the amended CHOICE Act would increase the CFPB’s accountability to Congress, and provide courts with additional oversight authority over the CFPB. It would also require the CFPB to complete comprehensive cost-benefit analysis before adopting regulations.
The amended CHOICE Act would also change the name of the CFPB to the “Consumer Financial Opportunity Commission,” while replacing the director with a five-member commission subject to congressional oversight. The CFPB would also be subject to the congressional appropriations processes, and no longer would receive money directly from the Federal Reserve as in the past.
If passed, the amended CHOICE Act might impede the CFPB’s plans to issue future rule changes in both the debt collection and mortgage industries, but whether the bill will reach the House floor for a vote remains to be seen.
The U.S. House of Representatives Financial Services Committee version of the Financial CHOICE Act can be found at Financial CHOICE Act of 2016, 114 H.R. 5983.