Senate Bill Would Shield Companies from Falling Under CFPB Reign

A bill introduced last month before a Senate subcommittee would shield certain financial institutions with less than $50 billion of total assets from examination and reporting requirements of the Consumer Financial Protection Bureau (CFPB). 

Introduced by Senator Pat Toomey (R-PA), The Consumer Financial Protection Bureau Examination and Reporting Threshold Act of 2014 (S.2732) would raise the minimum benchmark figure at which regulated depository institutions are subject to direct exam and reporting requirements of the CFPB from $10 billion to $50 billion.

The bill seeks to amend Sections 1025(a) and 1026(a) of the Consumer Financial Protection Act of 2010 by replacing each “$10,000,000,000” term and replacing them with “$50,000,000,000.”

The Consumer Financial Protection Act—also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act—was signed into law by President Obama July 21, 2010.

The monumental legislation, which changed the financial landscape of the U.S. in the years following the onset of the economic recession, is also credited with establishing several regulatory bodies such as the CFPB, the Office of Financial Research and the Financial Stability Oversight Council.

The act excludes certain financial institutions that have total assets of less than $10 billion from examination and reporting requirements to federal regulators like that of the CFPB. 

Additionally, one provision requires bank holding companies with total assets equal or greater to $50 billion, or a nonbank financial company supervised by the Fed’s Board of Governors, to maintain a debt to equity ratio of more than 15 to 1.

For these institutions that have assets greater than the $50 billion threshold, Dodd-Frank states that the Financial Stability Oversight Council may also require any bank or non-bank to submit certified reports on the company’s financial condition, systems in place to monitor risk, as well as transactions with subsidiaries that are regulated banks. 

So far, S.2732 has been read twice and referred to the Senate Committee on Banking, Housing and Urban Affairs since its introduction on July 31. It is co-sponsored by Sen. Joe Donnelly (D-IN). 

View the legislation text.

Written by Jason Oliva

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