The sponsors of legislation to restructure the Consumer Financial Protection Bureau used a Capitol Hill panel discussion yesterday to press for placing the agency under congressional appropriations and for writing a statutory definition of “abusive” into law.
House Financial Services Committee Chairman French Hill and Rep. Andy Barr [R-Kent.], sponsor of H.R. 10184, appeared alongside former CFPB Director Kathy Kraninger, now president and chief executive of the Florida Bankers Association; Lindsey Johnson, president and chief executive of the Consumer Bankers Association; and Penny Lee, chief executive of the Financial Technology Association. Click here for previous coverage of the bill’s introduction.
Rep. Hill said the Dodd-Frank Act’s decision to exempt the Bureau from appropriations surrendered congressional authority over how much the agency spends, how many staff it employs and how those positions are allocated. He cited last year’s budget reconciliation measure, which lowered the cap on Federal Reserve transfers to the Bureau, as the only step taken to date.
Rep. Barr said administrative changes made by the current CFPB leadership can be undone by a future director and that only Congress can make the reforms durable. He drew a distinction between enforcing the law and inventing it, and pointed to the doctrine of subsequent remedial measures in the federal rules of evidence as precedent for protecting companies that self-report and correct problems.
Kraninger endorsed the appropriations provision, the Senate-confirmed inspector general, the cost-benefit analysis requirements and the shift to a substantial injury standard requiring concrete, quantifiable harm. She said Congress could go further by requiring the Bureau to publish a civil money penalty matrix.
The panel returned repeatedly to the abusiveness standard, which was likened during the discussion to Justice Potter Stewart’s obscenity test. Speakers said the Bureau has not distinguished abusiveness from unfairness and deception in 15 years and that the resulting uncertainty affects product development.
Johnson said conduct that had been legal for decades was declared unlawful by a prior director who then sought to punish companies retroactively. Lee said regulators had defined products in ways that did not match how those products operate, and cited earned wage access as a service defined one way by one administration and differently by the next.
On supervision, Hill described Title IV’s higher threshold and the option for institutions to elect a prudential regulator as consistent with tailoring measures that have drawn bipartisan support.
Section 204, which would remove attorneys engaged in litigation activities from the Fair Debt Collection Practices Act’s definition of debt collector, did not come up. Barr said the package also contains consumer complaint database changes and nonbank supervision revisions that the discussion did not reach.
