House Committee on Oversight and Reform: CFPB a Threat to Credit Access

05 January 2013 Consumer Class Defense Counsel Blog

On December 14, 2012, the House of Representatives Committee on Oversight and Government Reform, Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs issued a scathing staff report entitled: The Consumer Financial Protection Bureau’s Threat to Credit Access in the United States. The report, from Committee Chair Darrell Issa and Subcommittee Chair Patrick McHenry, was a critique of the CFPB and it’s potential effects on restricting access to credit.

The report began by criticizing the regulatory structure and powers granted to the CFPB:

The CFPB, an unelected and unaccountable bureaucracy unlike any other government agency, has been given vast and vague regulatory authority over virtually the entire financial services industry. With its broad and sweeping power to regulate consumer financial products and services, the CFPB has been called the “most powerful agency in American history.” Despite its immense authority, the Bureau lacks the vital external and internal controls that ordinarily govern federal agencies. Even the most basic of constitutional safeguards – the Senate’s advice and consent power – was violated when President Obama installed Richard Cordray as CFPB director during a self-proclaimed “recess” of the Senate in January 2012. These circumstances have created the conditions for the CFPB to become a run-away financial regulator that is poised to add uncertainty and illiquidity to domestic credit markets.

The report focused on the possibility that the White House would seek to influence agency policy, limiting congressional oversight. It also found that despite the CFPB’s mandate, it structure reflected a “weak reliance on economics” and it did not do a standard cost-benefit analysis of policies.

The report also outlined the struggles for small businesses and consumers to access credit under current economic conditions. It found that the current state of the economy already contributed to a lack of access to credit and theorized that the CFPB could exacerbate this problem. The report discussed the Dodd-Frank mandate enabling the CFPB to prevent “unfair, deceptive, or abusive” practices and noted that the term “abusive” was undefined, creating an atmosphere of uncertainty for creditors in determining what services could be deemed illegal by the CFPB. Additionally, the report found that current CFPB proposals, including the rule to regulate international remittance transfers sent by individuals in the United States to consumers overseas and changes in mortgage regulations would cause smaller banks and credit unions to simply stop providing regulated consumer financial services and thus reduce consumer access to financial services.

Given the hostility reflected in the report, the CFPB may face challenges with congressional approval as it implements more policies in 2013.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services

Insights

Bad Holiday Season News! Estimates of an increase of Cyberattacks 20%!
13 December 2019
Internet, IT & e-Discovery Blog
Driving the Future of Automotive Technology
12 December 2019
Manufacturing Industry Advisor
Massachusetts Governor Proposes Facility Fee Ban
12 December 2019
Health Care Law Today
American Rule Prevails; PTO May Not Collect In-House Attorneys' Fees as "Expenses"
12 December 2019
IP Litigation Current
ACCC 46th Annual Meeting & Cancer Center Business Summit
04-05 March 2020
Washington, D.C.
Foley/Deloitte Compliance and Privacy Officer Roundtable
27 February 2020
Boston, MA
Let’s Talk Compliance
24 January 2020
Orlando, FL
New England Alliance Annual Meeting
15-17 January 2020
Woodstock, VT