Republicans on the House Financial Services Financial Institutions Subcommittee have sent Acting CFPB Director Russell Vought a letter calling for the CFPB to withdraw a wide variety of final and proposed rules.
In addition, the GOP members are calling for the CFPB to withdraw guidance documents, circulars, interpretive rules, and advisory opinions that did not go through the comment period required under the Administrative Procedure Act.
“These misguided efforts reduce clarity for consumers, limit access to credit and financial products and services, and hinder the innovation that drives the American economy,” Committee Chairman Rep. French Hill, R-Ark., Financial Institutions Subcommittee Chairman Rep. Randy Barr, R-Ky., and Republican members of the Financial Institutions Subcommittee, wrote.
The Biden Administration failed to consider negative consequences “in its rush to pursue partisan politics,” the GOP members wrote.
“Competition and innovation, not government edicts, are the best way to ensure consumers have access to low-cost financial products and services,” they added.
And, they said, “to best foster this environment, we believe these rules, circulars, guidance, and advisory opinions should be rescinded, modified, or reproposed as appropriate,” including the rules:
- Prohibiting credit reporting agencies from including medical debt on credit reports and lenders from considering this information when making credit decisions, leading consumers to taking on new debt they cannot afford. See our prior posts on this and related subjects here, here, here, and here and our podcast here.
- Prescribing ability-to-pay rules for Property Assessed Clean Energy (PACE) financing and applying certain liability provisions of the Truth in Lending Act (TILA). “The final rule does not properly consider the States’ sovereignty and has the potential to unnecessarily impede Americans’ ability to access critical funding to protect against natural disasters such as hurricanes and floods,” the Republicans wrote. In addition, the CFPB failed to follow the congressional directive in S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, to consider the unique nature of PACE financing in issuing a rule to apply certain TILA provisions to these transactions, according to the Republicans. See our posts on this and related subjects here and here.
- Imposing new restrictions on overdraft programs at financial institutions with more than $10 billion in assets. By classifying overdraft services as “overdraft credit” under Regulation Z, the rule imposes burdensome disclosure requirements they said. “The bottom line is that when financial institutions are forced to provide overdraft services without the ability to generate profit or under the strict requirements of Regulation Z, they will stop offering these services to consumers who rely upon them,” the Republicans wrote. See our prior posts on this and related subjects here, here, and here and our podcast here. Republicans are in the process of attempting to repeal this rule through the Congressional Review Act. The Senate and House have adopted a resolution repealing the rule and the resolution now is in President Trump’s hands. He is expected to sign the resolution.
- Modifying the CFPB’s small dollar loan program. Much of that rule has been rescinded and the CFPB has said it no longer will prioritize enforcement of the rule’s payment provisions that went into effect at the end of March. “The CFPB should continue to work through issues in these underlying requirements to ensure compliance is not overly burdensome,” the Republicans wrote. See our prior posts on this and related subjects here, here and here.
- Capping credit card late fees. The GOP members contend that the rule threatens to restrict access to credit for riskier consumers and would require all cardholders to subsidize the few cardholders who pay late. They added that the rule also encourages individuals to pay late on their credit cards by removing a fee level that is adequate to deter late payments. See our prior posts on this and related subjects here, here, here and here and our podcast here.
- Requiring financial institutions to report their lending to women- and minority-owned businesses. “The overly burdensome rule would require lenders to report on 81 data points, including sensitive personal information such as small business owners’ race, ethnicity, and sex,” they wrote, adding that the compliance costs will increase the cost of credit. The House Financial Services Committee has approved legislation rescinding this rule. See our prior posts on this and related topics here, here and here and our podcasts here and here.
The Republicans said that despite their calls by the committee to stop rulemaking after the election, the CFPB issued several proposed rules after Trump won the election, but before he took office. Those pending rules should be withdrawn the Republicans said. They include proposals to:
- Prohibit certain contractual terms in agreements for consumer financial products and services. The overly broad and confusing rulemaking will inject further uncertainty into consumer contracts and require a wholesale reworking of existing contracts at significant costs to financial institutions, without clear benefits to consumers, according to the Republicans. See our prior posts on this and related subjects here and here.
- Expand the definitions for the terms “identity theft” and “identity theft report” in Regulation V. Specifically, the CFPB proposed forcing consumer reporting agencies to block any debt that was acquired “without effective consent.” This would fundamentally alter the accuracy of credit reporting and force consumer reporting agencies to become arbiters of whether a debt was “coerced,” a task for which they are ill suited and would have to expend significant resources to undertake, the GOP members wrote. See our prior on post on this and related subjects here.
- Expand the scope of Regulation V, including what is considered a consumer report. See our prior post on this and related subjects here, here and here and our podcast here.
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