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From Banking and Finance Law Daily, May 19, 2014

Financial Services Committee takes legislative aim at CFPB

By Katalina M. Bianco, J.D.

The House Financial Services Committee will meet this week to examine a number of bills and discussion drafts by House Republicans intended to revise the Consumer Financial Protection Bureau’s processes and procedures in specific ways that would, in effect, alter the way the bureau does business. The hearing, Legislative Proposals to Improve Transparency and Accountability at the CFPB, will be held by the Financial Institutions and Consumer Credit Subcommittee on May 21, the same day as a hearing scheduled by the committee’s Oversight and Investigations subcommittee to hear testimony by bureau officials on charges of discrimination and retaliation at the CFPB.

“These bills are designed to tie the CFPB in knots. I don’t see any one of them that’s necessary in any way, shape or form to make the CFPB more responsible to the government or to the American people,” said Ed Mierzwinski, consumer program director at U.S. PIRG, as reported in The Hill. “They’re trying to kill the CFPB by a death of a thousand cuts.”

“Any effort to alter the CFPB’s operations is likely to run into staunch Democratic opposition. House Democrats have long opposed GOP efforts to alter the CFPB. Senate Democrats have refused to take up any CFPB measures, and more broadly have been reluctant to consider any legislation that would alter Dodd-Frank until it is fully implemented,” The Hill noted, adding that “Republicans have long resisted the CFPB. They opposed its inclusion in the Dodd-Frank financial reform law, and repeatedly tried to alter its structure after it was created.”

Witnesses to testify. According to the committee memorandum on the hearing, the following witnesses will testify at the subcommittee’s hearing:

  • Andrew Pincus, Partner, Mayer Brown LLP;

  • Hester Peirce, Senior Research Fellow, Mercatus Center, George Mason University; and

  • Rob Chapman, President, American Land Title Association.

Bills to be discussed. The following measures are slated for discussion during the hearing:

  • CFPB Slush Fund Elimination Act of 2013 (H.R. 3389)—introduced by Rep. Shelley Moore Capito (R-WVa) the measure would eliminate the bureau’s Civil Penalty Fund. The bureau could still pay back consumers through fines, but any excess funds collected would be remitted to the Treasury Department;

  • Bureau of Consumer Financial Protection-Inspector General Reform Act of 2013 or CFPB-IG Act of 2013 (H.R. 3770)—the bill, introduced by Rep. Steven Stivers (R-Ohio), would create a separate, independent inspector general for the CFPB. The CFPB currently shares an inspector general with the Federal Reserve Board;

  • Bureau Advisory Commission Transparency Act (H.R. 4262)—Rep. Sean Duffy (R-Wis) introduced this measure that would require the CFPB to open some of its meetings to the public after he was denied access to a meeting of the bureau’s Consumer Advisory Committee. The bill would clarify that the Federal Advisory Committee Act applies to the CFPB;

  • Bureau of Consumer Financial Protection Small Business Advisory Board (H.R. 4383)—introduced by Rep. Robert Pittenger (R-NC), the bill would create a small business advisory board at the bureau;

  • Bureau Research Transparency Act (H.R. 4539)—the measure, introduced by Rep. Michael Fitzpatrick (R-Pa), would require that CFPB research papers made available to the public be accompanied by all studies, data, and analyses on which the paper was based;

  • CFPB Data Collection Security Act (H.R. 4604)—this bill introduced by Rep. Lynn Westmoreland (R-Ga), 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. It also would require CFPB employees accessing personally identifiable information about consumers to hold a ‘confidential’ security clearance; and

  • Bureau Advisory Opinion Act (H.R. 4662)— this measure would establish a process by which covered persons can submit inquiries concerning the conformance of prospective products and services with federal consumer financial law and receive a confidential opinion from the director. It was introduced by Rep. Bill Posey (R-Fla).

Discussion drafts. There also are several discussion drafts that will be examined at the hearing:

  1. Rep. Marlin Stutzman’s (R-Ind) discussion draft of the Bureau Guidance Transparency Act 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;
  2. Rep. Garland “Andy” Barr’s (R-Ky) discussion draft of the Preventing Regulatory Abuse Act of 2014 would: require the bureau 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; enact a moratorium on any enforcement action using the CFPB’s “abusive” authority until the final rule is published; and repeal the CPFB’s authority to prohibit “abusive” acts or practices if it fails to conform to specified rulemaking timelines;
  3. Rep. Mick Mulvaney’s (R-SC) 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; and
  4. Rep. Patrick McHenry’s (R-NC) 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.

Attorneys: Andrew Pincus (Mayer Brown LLP)

Companies: American Land Title Association; George Mason University; The Hill; U.S. PIRG.

MainStory: TopStory CFPB DoddFrankAct FederalReserveSystem UDAAP

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