Earlier this month, House Financial Services Committee Chairwoman Maxine Waters sent a letter to President-elect Joe Biden recommending various actions that the Biden Administration should take in the financial services arena. Chairman Waters and members of her staff are expected to have a strong voice in shaping the Biden Administration’s approach to financial services regulatory policy. As a result, Chairman Waters’ letter is likely to receive close attention from the President-elect’s agency review teams and influence the priorities of the individuals appointed to lead the financial regulatory agencies.
Chairman Waters’ letter sets out a wide-ranging agenda for the Biden Administration in the areas of COVID-19 relief, climate change, diversity and inclusion, affordable housing, consumer protection, investor protection, financial stability, and international development. It includes as an attachment a list of regulatory and administrative actions by the Trump Administration “that [President-elect Biden’s] team should prioritize the elimination of on day one of [his] presidency.”
In the area of consumer financial services, Chairman Waters’ recommendations include the following actions “that should be taken to help consumers struggling during the pandemic”:
- CFPB Director Kraninger should be fired and a new Director should be installed “who will fulfill the CFPB’s statutory mission to protect consumers.”
- The CFPB, under new leadership, should be directed “to aggressively protect consumers by enforcing the law.”
- The CFPB should rescind the July 2020 rule that rescinded the underwriting provisions in its 2017 rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans (2017 Payday Rule) and reinstate the 2017 Payday Rule.
- The new CFPB Director should restore the role and responsibilities of the Office of Fair Lending and Equal Opportunity
- The CFPB should rescind its debt collection rule and reissue it “with meaningful consumer protections, along with the new time-barred debt rule proposal.”
- Once becoming President, Mr. Biden should issue an executive order directing the Treasury and other federal agencies to immediately suspend the collection of debts owed by consumers to the federal government until after the pandemic ends.
Other recommendations in the area of consumer financial services include:
- In addition to reinstating the 2017 Payday Rule and rescinding the debt collection rule and reissuing a collection rule with stronger consumer protections, the CFPB should issue new rules with stronger consumer safeguards in areas that include fair lending, credit reporting, student lending, forced arbitration clauses, and overdraft protection.
- The OCC and FDIC should rescind their Madden-fix rules and the OCC should rescind its “true lender” rule.
- The DOJ, CFPB, and federal banking regulators should prioritize fair lending enforcement.
- The CFPB should expand the mortgage data required to be collected by HMDA.
- The OCC should rescind its CRA rule and the federal banking regulators “should work on a new plan to strengthen CRA’s implementation to ensure we can finally put an end to modern-day redlining.
- The CFPB should promptly implement Dodd-Frank Section 1071 small business data collection requirements.
- The CFPB should rescind its no-action letter policy, trial disclosure program, and compliance assistance sandbox.
- The CFPB should rescind its policy statement on abusive acts or practices.
Among the letter’s recommendations in the area of diversity and inclusion is a recommendation involving the Offices of Minority and Women Inclusion (OMWIs) that Section 342 of the Dodd-Frank Act required the CFPB, the federal banking agencies, and other federal agencies to create. The letter calls on the Biden Administration to make “full use” of Section 342 and, as an example, recommends that the Biden Administration require the agencies to make it mandatory for regulated institutions to comply with the Joint Standards for Assessing the Diversity Policies and Practices of Regulated Entities, including annual reporting of diversity data. Currently, the use of the Joint Standards by regulated entities and the submission of diversity self-assessments to the OMWIs is voluntary. The letter also recommends that “given the exacerbated decline of Black businesses, in particular, as a result of the COVID-19 pandemic, [the Biden] administration should ensure that OMWIs are monitoring and advising on any unintended consequences and harm that may be caused by agency policies to minority owned businesses and communities of color.”
In her letter, Chairman Waters also calls on the Biden Administration to require disclosure by public companies and regulated entities of their boards’ diversity, including by approving proposals by national exchanges to change their listing standards to require such disclosure as well as setting minimum board diversity standards. Members of Ballard Spahr’s Diversity and Inclusion Team recently issued a legal alert on the proposed rule filed by the Nasdaq Stock Market with the U.S. Securities and Exchange Commission. If approved, the rule will require listed companies to disclose the racial, LGBTQ+ status, and gender makeup of their boards of directors and have a minimum number of diverse directors or explain why they could not—or elected not to—achieve the established targets.
