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House Republicans struggle to control CFPB

Democrats say GOP wants "death by a thousand paper cuts"

Washington DC
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The Subcommittee on Financial Institutions and Consumer Credit heard Wednesday from witnesses in a hearing on how to improve transparency and accountability at the Consumer Financial Protection Bureau.

The CFPB has been criticized for its lack of transparency and its lack of clarity in regulations and guidance. The CFPB has argued that it is not subject to the Federal Advisory Committee Act, a sunshine law passed in 1972.

However, days before the hearing, the CFPB relented and said it will open its advisory committees to the public now after resisting such efforts. 

Witnesses included Andrew Pincus, a partner with Mayer Brown; Hester Peirce, senior research fellow at the Mercatus Center at George Mason University; Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, and Rob Chapman, president of the American Land Title Association.

Aside from the usual jockeying, grandstanding and prepared speeches disguised as question from committee members on both sides, the committee discussed a number of bills that would change how the CFPB does business.

The bills include:

  • H.R. 3389, the CFPB Slush Fund Elimination Act of 2013, which would eliminate the Bureau’s Civil Penalty Fund and requires the CFPB to remit fines it collects to the U.S. Treasury, and another that would create a separate, independent inspector general for the CFPB. The CFPB currently shares an inspector general with the Federal Reserve System.
  • The committee also considered H.R. 4262, the Bureau Advisory Commission Transparency Act that the FACA applies to the CFPB.
  • Bills would also create a small business advisory board for the CFPB, and another that would require that the CFPB research papers be made available to the public along with all studies, data, and analyses on which the paper was based.
  • In a nod to privacy concerns that have become so widespread since the government’s warrantless, electronic snooping on Americans was brought to light last year, there was also a bill that would require the CFPB to create an opt-out list for consumers who do not want the CFPB to collect personally identifiable information about them and to delete or destroy information about a particular consumer within a specified period of time following collection.
  • A discussion draft of the Bureau Arbitration Fairness Act would repeal the CFPB’s authority to prohibit, condition, or limit the use of arbitration provisions in contracts for consumer financial products or services.
  • There was also a discussion draft of the Bureau Guidance Transparency Act that would require that the CFPB, in issuing any guidance, provide a public notice and comment period before issuing the guidance in final form, and must make public any studies, data, and other analysis it relied on in preparing and issuing its guidance.
  • Another draft bill would require the CFPB to go through a formal rulemaking with public notice and comment in order to publish a final rule that gives clear guidance on the CFPB’s definition of an “abusive” act or practice; would enact a moratorium on any enforcement action using the CFPB’s “abusive” authority until the final rule is published; and would repeal the CPFB’s authority to prohibit “abusive” acts or practices if it fails to conform to specified rulemaking timelines.
  • Finally, there was a discussion draft of the Bureau Examination Fairness Act would prohibit the CFPB from including enforcement attorneys in examinations, regulate CFPB data requests during the course of examination, place time limitations on the completion of examination field work and the issuance of exam reports and supervisory letters, and prohibit concurrent limited-scope exams at the same institution.

Democrats on the subcommittee said opening the CFPB to more scrutiny and oversight would be burdensome, and said they would resist any Republican efforts to do so. They say the efforts are designed to defang the CFPB.

U.S. Rep. Carolyn Maloney, D-N.Y.

“Take all these together and it’s like death by a thousand cuts for the CFPB,” said U.S. Rep. Carolyn Maloney, D-N.Y.

Republicans said the CFPB needs to operate more like the SEC or FCC, and that the bureau’s actions and judgments are too arbitrary. They say the CFPB operates without proper oversight or limit on its authority.

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