Monday, April 17, 2017

Hensarling: Financial CHOICE Act protects Americans against CFPB ‘defective design’

By Katalina M. Bianco, J.D.

House Financial Services Chair Jeb Hensarling (R-Texas), joined by Rep. Roger Williams (R-Texas), stated in an op-ed that the House Financial CHOICE Act is the way to protect Americans from “the most powerful and least accountable Washington bureaucracy in history”—the Consumer Financial Protection Bureau. The post comes on the heels of reports that an updated version of the Financial CHOICE Act soon will be unveiled.

Hensarling and Williams note that the CFPB’s “bizarre, unique and defective design” is the reason behind the ruling by a panel of judges that the bureau is unconstitutionally structured. The Financial CHOICE Act would change the bureau “from an unconstitutional agency of unelected bureaucrats into a constitutional and accountable civil enforcement agency that enforces consumer protection laws written by Congress” and “truly make the CFPB the ‘cop on the beat’ its supporters claim they want.”

Cordray. The legislators also targeted CFPB Director Richard Cordray, charging that the director “recklessly ignores the due process protections that have been deeply rooted in our American legal system for centuries.” Hensarling and Williams noted that although the Dodd-Frank Act grants Cordray “incredibly broad powers to regulate consumer credit products,” the CFPB chief still chooses to “ignore the law and the intent of Congress.”

Hensarling and Williams cited the CFPB’s UDAAP authority as another example of the agency’s “violation of due process,” because the “largely undefined” UDAAP leaves “plenty of wiggle room for the director to decide what the law says and means.”

Waters rebuts claims.
Representative Maxine Waters (D-Calif), Ranking Member of the Financial Services Committee, fired back, stating, “The so-called Financial Choice Act is a piece of legislation that will essentially kill the most important aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was designed to prevent another financial crisis.” The lawmaker said that the Republicans and President Donald Trump are prioritizing Wall Street over hard-working Americans and putting the nation’s economic security at risk.

Waters took aim at the new version of the legislation, calling it the “Wrong Choice Act” and claiming the measure:
  • “bows down shamefully to Wall Street’s worse impulses”; 
  • would “completely gut and functionally terminate the “highly successful” CFPB; and 
  • encourages “a race to the bottom of Wall Street by removing financial stability safeguards.” 
The measure also would provide a two-year “escape hatch for Trump-appointed regulators to administratively roll back regulations before making it easier for industry to litigate and block any future effort by regulators to restore or strengthen consumer and investor protections,” Waters added. 

AFR on revised bill. The Americans for Financial Reform expressed its opposition to the revision of the Financial CHOICE Act, stating that the new version would:
  • make a “disastrous bill” even worse; 
  • eliminate the CFPB’s ability to stop abuse and deception; and 
  • render regulators weaker than before the financial crisis. 
NCRC statement. The National Community Reinvestment Coalition released a statement in response to news of the revised legislation. “If made law, the Financial CHOICE Act would pull the rug out from under our system of protecting consumers from abuse by financial institutions.” The NCRC added, “Backers of this bill have failed to learn their lessons from the Great Recession.”

For more information about efforts to modify the CFPB, subscribe to the Banking and Finance Law Daily.