Main Street Ledger: Now is the Time for Congress to Reboot the CFPB
Acting Director of the Consumer Financial Protection Bureau (CFPB), Russ Vought, will testify before both the House Financial Services Committee (HFSC) and the Senate Banking Committee this week as part of the Bureau’s semi-annual report to Congress, marking the first time the Acting Director has testified as head of the CFPB since assuming the position in this Trump Administration.
Ahead of the hearings, the Chairman of the House Financial Services Committee published a draft comprehensive CFPB reform package titled, the CFPB Reform Act of 2026.
The draft reform package proposes a restructuring of the CFPB by increasing congressional oversight, revising its funding and governance, and expanding transparency and accountability requirements for rulemaking and enforcement. The draft includes a number of CBA-championed proposals that it would modify the CFPB’s supervisory and enforcement authorities, including the Bureau’s UDAAP authorities, clarifies legal standards for consumer protection actions, promotes regulatory coordination with other financial regulators, and establishes new safeguards for financial institutions while also updating complaint processes, civil penalty provisions, and regulatory review requirements.
With the House expected to begin their August recess at the end of this week, any action on this reform package will occur in September, at the earliest.
For more than a decade, the CFPB has played an important role in safeguarding consumers and promoting fairness in our financial system. After years of regulatory uncertainty and political swings, there is growing bipartisan recognition that the Bureau’s current structure needs reform. Lawmakers from both parties have raised concerns about its shifting priorities, lack of transparency, and approach to regulation.
Ultimately, lasting reforms to the CFPB must come through Congress, which has the constitutional authority and responsibility to establish the agency’s structure, authorities, and oversight framework. The Supreme Court’s recent decision in Trump v. Slaughter further underscores the importance of ensuring federal agencies have appropriate accountability while maintaining stability and consistency in their operations. While the decision clarified the President’s authority to remove leaders of certain independent agencies, it also reinforces the need for Congress to establish durable structures that promote accountability and transparency, regardless of which administration is in office.
In a new letter sent to policymakers ahead of this week’s hearings, CBA will convey the need for Congress to pursue legislative action rooted in the following core reform principles intended to transform the Bureau into an apolitical regulator that follows the law, sets consistent rules, and provides the stability that consumers and markets depend on.
- Ensure the CFPB follows the law and provides clear rules of the road: The Bureau should use enforcement to address clear violations and consumer harm — not create new legal standards after the fact.
- Require rigorous analysis before imposing new regulations: CFPB rules should be grounded in sound data and transparent cost-benefit analysis that considers impacts on consumers, access to credit, competition, and financial inclusion.
- Strengthen oversight of nonbank providers while preserving targeted supervision of banks: Consumer protections should follow financial activity and risk, not the type of institution providing a product or service.
- Promote coordinated, risk-based supervision: The CFPB should work with other financial regulators to reduce duplicative examinations and focus its resources where it can have the greatest impact.
- Improve the integrity and usefulness of consumer complaint data: The CFPB’s complaint system should be accurate, verified, and focused on identifying legitimate consumer harm.
- Create a more stable and accountable CFPB structure: The Bureau’s current structure has contributed to policy swings from one administration to the next. Recent legal developments underscore the importance of ensuring appropriate accountability while establishing institutional guardrails that promote stability, transparency, and consistent application of the law.
As CBA has long conveyed, consumers deserve a regulator that is credible, durable, and accountable. The conversation should no longer be about expanding or limiting the CFPB's authority based on politics. Instead, it should focus on ensuring the Bureau operates within the framework Congress intended.
Even as Director Vought’s time at the Bureau comes to a close at the end of August, the Bureau continues with a steady pace. Last week, the CFPB made news by issuing a request for information on credit card late fees. Despite some misleading headlines, a closer examination makes clear that this data-gathering exercise does not represent a proposed rule, plans for a proposed rule, or any change in policy.
Jaret Seiberg, Managing Director at TD Cowen, said this of the RFI:
“This is not a proposal. It is only a request for information. It means this effort cannot directly result in new limits on late payments and late fees related to credit cards. We view this instead as an opportunity for the industry to demonstrate with data that cuts to credit card late fees are not justified. That could then make it harder for a future CFPB to lower credit card late fees as it would need to initiate a new process to demonstrate why there is an economic justification to bring down credit card late fees.”
July is likely to see continued activity at the CFPB, as CBA anticipates the long-awaited 1033 proposed rule this month and as Congress could also consider Brian Johnson’s nomination before the Senate leaves for August recess.
These developments are notable and as CBA said in our letter to the House Financial Services Committee this week ahead of the semi-annual CFPB testimony:
“After years of regulatory whiplash, there is growing bipartisan recognition that the Bureau’s current structure is not working. Lawmakers on both sides of the aisle have raised concerns about the Bureau's regulatory and political swings, its reliance on legal interpretations that pushed beyond what the statute authorized, and the lack of transparency and accountability.
“CBA has long championed a CFPB that is credible and durable, both by ensuring the CFPB bases its rulemaking and other actions in an apolitical manner based on data, and that it adheres to its statutory limits.”
To read our full letter, click HERE.
USA Today Highlights Consumer Tips to Manage Credit Card Rates
What’s Happening: As affordability continues to play an important role in policymaking, credit cards play a pivotal helping consumers make ends meet – and banks are helping consumers do that.
Why It Matters: Credit cards are an essential financial tool that help millions of hardworking Americans meet their financial needs – especially when they face an unexpected expense.
What We’re Saying: As we told USA Today:
"Every day, issuers compete on interest rates, rewards, fees and other benefits […] Credit card pricing reflects a wide range of individual and market factors, and this data shows banks are continuing to work directly with customers to provide flexibility based on their unique circumstances."
By the Numbers: More than 80 percent of cardholders who asked for a lower rate in the past year met with success, LendingTree reports.
- Over the past year, 92 percent of requests for late fee waivers were granted, LendingTree reports. And 94 percent of cardholders were successful in waiving or reducing an annual fee.
Yes, and: As USA Today reports, “one of the best ways to pay off a high-interest credit card is with another credit card, one that charges no interest at all. A zero-APR card allows a consumer to make purchases and pay no interest for a promotional period of 12, 18 or even 24 months. When the promotion ends, interest kicks in – but only on the debt that remains on the card.”
Dive Deeper: To read more, click HERE.
How the Federal Student Loan Overhaul May Impact Banks
What Happened: Major changes to the federal student-loan program took effect last week, including the phase out of the Graduate PLUS loan program along with new caps on the amount of borrowing allowed for graduate students.
Why It Matters: The overhaul of the loan program – along with the resumption of collections on delinquent borrowers – will have major ripple effects for borrowers and banks alike, including the substantial growth of the private student-loan market in place of the phased-out programs.
What They’re Saying: Banks are preparing extensively for the changes, even though some haven’t been in the student lending space for almost 15 years. Sallie Mae CEO Jonathan Witter told analysts in April:
"We have been actively preparing for this opportunity […] We have already rolled out several of these enhancements, including our new medical and dental school offering, with more to come. Our goal is to serve as many students, families and university partners as possible as the higher education sector navigates this time of change."
Yes, but: Mark Kantrowitz, a student loan expert and author of books about planning and paying for college, is skeptical that many large banks will want to return to the market:
"I think that we're not going to see very many reentrants, because making private student loans is not as simple as making credit cards or auto loans […] There's a lot more disclosure that's required, and some of the lenders that dropped out were doing so because they didn't like the negative animus that was associated with being a private student loan lender."
Looking Back: CBA President and CEO Lindsey Johnson penned an op-ed earlier this year highlighting the forthcoming changes to the graduate student lending market and urging need to restore balance, accountability, and transparency. The op-ed follows a recent white paper that CBA published on the topic.
“The changes coming are intended to inject market-driven solutions and discipline, where to date, there has been little if any. That reality means students must be more discerning, schools must rethink pricing, and families should ask hard questions about the value of each degree program. The result is a renewed need for a broader conversation, for borrowers and lenders alike, on the value of education: What will the degree cost? What is the expected earnings potential? And how likely is repayment?”
Dive Deeper: To read more, click HERE.
Fed’s Bowman: Low-Risk AI Usage Should Get Lighter Regulation
What Happened: In an introduction of a new report on AI adoption best practices for the Financial Stability Board (FSB), Federal Reserve Vice Chair for Supervision Michelle Bowman said she is steering global regulatory standards on AI to a framework that is tailored based on bank size and riskiness.
Why It Matters: Bowman’s remarks align with her goals to foster innovation in her work at both the Fed and at the FSB – with the adoption report being the first step in the FSB’s push to create global AI guidelines and clear guidance for all institutions looking to build products, services, and operational functions using AI.
What They’re Saying: In her remarks, she notes the Fed’s monitoring of bank adoption of AI:
"We have seen a noticeable increase in the use of AI by banks of all sizes, and we have seen a variety of use cases […] Our focus has been on supporting institutions that want to innovate responsibly by leveraging AI tools in their operations. Our work in the U.S. has helped to inform the FSB's report."
Vice Chair Bowman urged banks to provide input on the report regarding to the types of AI use-cases they are deploying or planning to deploy:
"We need to ensure these practices support responsible innovation across the financial system while maintaining appropriate safeguards, especially for higher-risk applications.”
Dive Deeper: To read more, click HERE.
