CBA Recommends Structural Reforms & Regulatory Actions To Strengthen Consumer Protections At The CFPB

Consumer Bankers Association President and CEO Richard Hunt today sent the following letter to the Chairs and Ranking Members of the House Financial Services Committee and Senate Banking Committee ahead of the Consumer Financial Protection Bureau's (CFPB) semi-annual report to Congress this week. The hearings mark Director Rohit Chopra's first Congressional testimony since he was officially sworn-in as the third permanent head of the Bureau earlier this month.

In the letter, CBA offered legislative and regulatory recommendations to lawmakers and the Bureau to ensure consumers continue to have access the financial products they need and want with the level of protections they deserve, stating:

"CBA shares the CFPB's goal to improve the financial lives of consumers. Banks can share in this common mission when they have stable and even-handed regulatory frameworks to serve consumers. These regulatory recommendations will help ensure 'financial markets work for consumers, responsible providers, and the economy as a whole."

Recognizing CBA's shared commitment to protecting consumers and promoting a fair, transparent and competitive marketplace, the letter outlines the following recommendations for the Bureau's consideration:

• Avoid "rulemaking by enforcement" and utilize the Administrative Procedures Act (APA) to create clear, transparent rules by including supervised stakeholders in the process.
• Amend the larger participant rule to include unsecured consumer loans so the Bureau can supervise key nonbank financial companies in the market and ensure the highest level of consumer protections are upheld, regardless of where consumers go to meet their financial needs.
• Expand the Section 1071 implementation timeline to three years and lower the covered entities threshold to $1 million in annual revenue to limit the Bureau's risk of creating unintentional impediments to small business credit access and empower banks to satisfy Section 1071's goals.
• Include sufficient security safeguards in the Section 1033 rule to protect consumer permissioned data shared throughout the data access ecosystem and require knowing, voluntary consent for the use of consumer data.

Additionally, CBA renewed its longstanding call for Congress to immediately pass legislation replacing the Bureau's flawed sole director leadership structure with a bipartisan, Senate confirmed, five-person commission to increase stability, accountability and transparency at the CFPB:

"The lack of certainty and long-term consistency in leadership at the Bureau adversely affects consumers, our economy, and the financial services industry. […] As demonstrated by other government regulators, a bipartisan commission would create more certainty and stability so banks can plan and better serve consumers."

As Director Chopra begins implementing his vision for the Bureau, the letter concludes by advocating for leading policymakers to modernize the rules of the road and so all consumers receive the protections they deserve in the evolving financial marketplace:

"To ensure the most thorough consumer protection initiatives are upheld, the Bureau should strive to create a level playing field for all financial institutions. The CFPB has an obligation to apply consumer regulations across the board so Americans using a fintech or non-bank lender are assured the same protections as those using a well-regulated bank. CBA stands ready to work with Congress and the CFPB to implement (these) legislative and regulatory improvements."

To read the full letter sent to Congress, click HERE.

To read CBA's statement after the CFPB issued a series of orders to collect information on the business practices of large technology companies operating payments systems, click HERE.

In a letter sent earlier this month to Director Chopra, CBA urged the Bureau to mitigate the potential for consumer harm in the under-regulated fintech lending market by issuing a larger participant rule. You can read the full letter HERE.

To read "The Case For Regulation Through Rulemaking & Guidance," a new CBA white paper advocating for the Bureau to utilize rulemaking and informal written guidance in lieu of enforcement when creating new guidelines or interpretations of existing regulatory standards, click HERE.

To read CBA's statement following the confirmation of CFPB Director Rohit Chopra in the United States Senate, click HERE.

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