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From Banking and Finance Law Daily, June 10, 2016

Appropriations bill that would transform CFPB passes Committee, reactions ensue

By Stephanie K. Mann, J.D.

The House Appropriations Committee approved the fiscal year 2017 Financial Services and General Government Appropriations bill. The bill provides annual funding for the Treasury Department, Judiciary Department, Securities and Exchange Commission, and other related agencies, including the Federal Reserve System and Consumer Financial Protection Bureau.

The bill totals $21.7 billion in funding—$1.5 billion below the fiscal year 2016 enacted level and $2.7 billion below President Obama’s budget request. According to the committee’s press release, the legislation targets resources to programs that will help boost economic growth and opportunity, protect consumers and investors, promote an efficient federal court system, and stop financial crime. However, the legislation reduces funding for lower-priority or underperforming programs and agencies.

"The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on overspending and overreach within federal bureaucracies," Chairman Hal Rogers (R-Ky) said. "This bill makes great strides on all—carefully investing taxpayer dollars in programs that promote opportunity, while keeping these agencies accountable to the American people."

CFPB oversight. The appropriations bill includes a provision that would increase oversight over the CFPB by bringing funding for the agency under the annual congressional appropriations process, instead of direct funding from the Fed. This change is intended to allow for increased accountability and transparency of the agency’s activities and use of tax dollars. The legislation would also change the leadership structure of the CFPB from a single Director to a five-member Commission, and require the CFPB to study the use of pre-dispute arbitration prior to issuing regulations.

Amendment added. An amendment proposed by Reps. Steven Palazzo (R-Miss) and Henry Ceullar (D-Texas) would prohibit funding for the CFPB to finalize or implement a rule that would restrict payday lending until the bureau completes a report, with public comment, on the impact of the rule on populations with limited access to credit, and until it identifies existing credit products available to replace the current sources of short-term, small-dollar credit. The amendment was adopted by a 30-18 vote.

Hobbling the CFPB. In response to the committee passage, Rep. Maxine Waters (D-Calif), Ranking Member of the House Financial Services Committee, reproached Republicans for "using every tool at their disposal to push an agenda that would hurt consumers and threaten the stability of our financial system." According to Waters, the spending bill would "hobble" the CFPB by changing its structure and funding stream. "The bill would place unnecessary delays on the CFPB’s efforts to rein in predatory payday lenders who trap consumers in a never-ending cycle of debt. And it would remove protections for consumers purchasing manufactured homes from being saddled with exorbitant interest rates and fees."

Rolling back financial reform. According to Americans for Financial Reform, the funding bill will "roll back financial reform and undermine consumer protection." In a press release, the trade association continued saying, "These ideological policy provisions have no business being added to such a measure…The riders, which include some that were part of the base bill and others that were added as amendments, would seriously weaken oversight of Wall Street and of predatory lenders. By doing so, they threaten the economic security of American families, communities, and businesses."

Support for funding bill. Supporting the funding bill is the Consumer Bankers of America, who applauded the committee for taking "steps to make needed improvements to the CFPB on behalf of consumers."

Companies: Americans for Financial Reform; Consumer Bankers of America

MainStory: TopStory BankingOperations CFPB DoddFrankAct FinancialStability OversightInvestigations

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