Consumer Law & Policy Blog

Senate Committee Approves REINS Act That Would Block Major Regs Unless Congress Votes to Approves Them

The House passed the bill in January.  The bill provides that regulations imposing more than $100 million in costs would not take effect unless Congress affirmatively voted to approve them. The bill passed the Senate Homeland Security and Governmental Affairs Committee on a vote of 8 to 6.  More here from Reason.

House Expected to Vote On Financial Choice Act to Cripple CFPB (Gulp) in June

Here.

150+ Consumer Protection Academics Join Letter Opposing Financial Choice Act CFPB Provisions

Here.

Two Columns Make Strong Case For Preserving Strong CFPB and Against Financial Choice Act

One is by my co-author, Chris Peterson, in the Salt Lake Tribune. Here's an excerpt:

[The Financial Choice Act] imposes the absurd requirement of an exhaustive economic study every time the agency opens a law enforcement case. The bill even creates a special exception prohibiting any law enforcement cases against payday lenders. Most astonishing, the bill actually eliminates the federal prohibition of "deceptive acts or practices" that the CFPB has used in court to provide over 90 percent of its restitution to the public — because, apparently, we need more deception in the consumer finance industry?

The other piece is by LA Times columnist David Lazarus, and headlined Banks, making record piles of cash, plead for 'much-needed regulatory relief'. It responds to claims that the Dodd-Frank Act has created a regulatory burden which has crippled banks.  Excerpts:

• U.S. banks reported record annual profit of $171.3 billion last year, up 5% from a year before, according to the Federal Deposit Insurance Corp. Only 4.2% of the nation’s almost 6,000 banks lost money in 2016 — the lowest percentage since 1995.
• FDIC-insured institutions reported total profit of $43.7 billion in the fourth quarter alone, up nearly 8% from a year earlier. Almost 60% reported year-over-year growth in quarterly earnings.

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• Wells Fargo, which went out of its way to alienate customers with its bogus-accounts scandal, nevertheless saw its first-quarter profit hold steady at $5.5 billion.

“Banks need regulatory relief like a bald man needs a comb,” said Linda Sherry, a spokeswoman for the advocacy group Consumer Action.

Republican members of the House Financial Services Committee who voted to approve Hensarling’s bill received almost 80% more money during the 2016 election cycle from commercial banks and holding companies than Democrats who voted against it, according to the nonpartisan research organization MapLight.

CFPB Prepaid Card Rule Expected to Survive CRA Challenge

Congress could have blocked the rule using the Congressional Review Act, but the deadline for the Senate vote appears to be tomorrow and it looks like the Senate won't get to it, and that even if it did, it might not pass. Bloomberg and American Banker have reports. Here's an excerpt from the American Banker story:

In the end, it appears Congress didn't have the appetite to reject the prepaid regulation, which a Senate Republican staffer said was partly due to an extensive ad campaign by progressive groups.

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However, [Senator David] Perdue [who tried to block the rule] issued a warning Tuesday to the CFPB that he would be willing to use the Congressional Review Act in the future if the agency were to promulgate other controversial rules.

"The Congressional Review Act process was an important tool to inject some oversight of this rogue agency, and something we will utilize again to rein in future overreaching rules," said Perdue.

 

The Hill Reports House Financial Committee Expected to Vote on Choice Act Wednesday While Morning Consult Says Thursday

The report about tonight is here while the report about tomorrow is here. In either case, it's soon. Not surprisingly, in light of the makeup of the Committee, CFPB supporters' proposals are being rejected.

Should the Financial Choice Act be Called the Accountability to Lobbyists Act?

by Jeff Sovern

During hearings on the CFPB and the Choice Act, I kept hearing critics of the CFPB saying they want to increase its accountability (I haven't started listening to the markups yet, but it's probably a recurring theme there too).  In fact, the CFPB is accountable.  But assume it isn't for the moment.  CFPB critics argue that one way it should be made more accountable is by subjecting it to the congressional appropriations process.  While that sounds good in theory, the problem is that the voices of lobbyists are much louder at appropriations committee proceedings than the voices of consumers. Corporate lobbyists have the resources to pay attention to the inside baseball of appropriations while ordinary consumers busy making a living and providing for their families don't.  The result of such "accountability" in the past has been that lobbyists urge members of Congress to starve regulators of funds if the regulators don't play ball with the lobbyists--and that in turn leads to regulatory capture.  That is exactly what happened with Fannie and Freddie's former regulator, which was a disaster.  Critics of the Choice Act have been calling it the Wrong Choice Act, but they could also call it the Accountability to Lobbyists Act, because that's what it would create.

House Financial Services Committee to Markup (Vote on?) Choice Act Tuesday

The Hill reports that "Panel Democrats say they're preparing to offer dozens of amendments and plan to draw out the hearing for hours, as they make the case to protect the Obama-era financial regulation law."  Meanwhile, according to CNN Money,  the "bill is likely to clear the House, where Republicans hold the majority and don't need Democrat's support. It's chances in the Senate, however, would require Democratic support to win a 60-vote majority to pass." The CFPB structure is a particular sticking point.

Credit Union Times on the Financial Choice Act Hearing: Partisan Infighting

Here.

House Financial Services Committee Reported Set to Markup Financial Choice Act Next Week

by Jeff Sovern

So CNNMoney reports here. The Committee will hold a hearing tomorrow; the witness list appears here.  Seems pretty rushed for a 600-page bill that would make major changes in financial regulation, including changing the structure of the CFPB, eliminating its power to prohibit unfair, deceptive, and abusive practices, abrogating its power to regulate arbitration, and plenty of other changes.  But that's how this Congress rolls. I suspect this bill will share the fate of Trumpcare, though it may get further in the legislative process than Trumpcare did.