CBA Releases Policy Recommendations Ahead of CFPB Director’s Semi-Annual Address to Congress

WASHINGTON, D.C. – The Consumer Bankers Association (CBA) recently sent letters to the Senate Banking Committee and House Financial Services Committee ahead of the Consumer Financial Protection’s Bureau’s (CFPB) Director’s semi-annual testimony to Congress this week. In the letters, CBA outlines legislative and regulatory recommendations to lawmakers and the Bureau for the purpose of ensuring consumers continue to have access to highly regulated financial products that enable them to achieve their financial goals.

The CFPB Director’s semi-annual address to Congress comes less than six months before Election Day – and at a time when the CFPB appears to be leaning more on political polling to drive its regulatory agenda. In the letters, CBA reiterates the negative implications the Bureau’s politically driven policy actions have on banks and the millions of consumers they serve:

“The CFPB frequently proposes new policies to use as campaign talking points and short-term political gain, circumventing the Administrative Procedure Act (APA) and an evidence-based process required for new rulemakings all while ignoring input from stakeholders. A perfect example of the hyper-politicalization of the Bureau is the CFPB’s so-called ‘junk fees’ campaign that appears to be driven more by polling data, not economic or accurate market data. [...] To make matters worse, the current CFPB Director regularly makes misleading public claims against banks that play well on the front page of newspapers, but contribute to the erosion of consumer confidence in the banking system and undermines efforts to bring more consumers into highly regulated and time-tested depository institutions.”

CBA has long illustrated the recent politicization of financial regulatory policy under the current CFPB and even testified before Congress on the issue. Recognizing the agency’s important role in promoting a fair, transparent, and competitive marketplace, the letters go on to say:

“The political shifts at the CFPB have been significant from administration to administration, and Bureau policy inevitably reflects these differences in political philosophies. However, the Bureau’s recent actions have raised important questions about whether it is prioritizing politics over people. Banking agencies must stop writing regulations for short-term political wins and renew their commitment to principled policies that are truly for the people. We call on Congress to recognize the benefits of credit cards, overdraft services, and other services provided by highly regulated retail banks and reject the administration’s misleading ‘junk fees’ narrative. Further, CBA stands ready to work with Congress and the CFPB to implement legislative and regulatory improvements to the Bureau.”

What We’re Advocating For

Below are the legislative and regulatory recommendations to lawmakers and the Bureau for the purpose of ensuring consumers continue to have access to highly regulated financial products that enable them to achieve their financial goals:

• Credit Card Late Fees Final Rule: The CFPB’s credit card late fees final rule will increase the cost of credit, reduce credit availability, and increase the negative outcomes for consumers when paying late. In particular, the rule’s focus on short-term political polling runs the risk of causing significant long-term harm to consumers. In particular, the CFPB’s rule may cause consumers who pay on time to see their costs increase. Further, frequent late payers may stand to save a minimal amount in the short-term – only to have much longer lasting impacts to their credit scores and long-term financial costs. Ultimately, this rule could result in more Americans falling into what the CFPB has described as “persistent debt.” Congress should pass a Congressional Review Act resolution to reject the rule.

• Overdraft Proposed Rule: The CFPB’s proposed rule regarding overdraft services would make it increasingly difficult for banks to offer overdraft services, ultimately leaving many consumers – particularly low-deposit consumers – those most in need of short-term liquidity – without this critical safety net. The CFPB should withdraw its overdraft proposed rule.

• Forthcoming Fair Credit Reporting Act (FCRA) Proposed Rule: The CFPB should exempt fraud detection and identity verification processes, along with their associated data inputs like credit header data, from the forthcoming FCRA rulemaking.

• Dodd-Frank Act Section 1033 Proposed Rule: The Bureau’s Dodd Frank-Act Section 1033 rule should broaden the coverage of data providers, address liability more robustly, and meaningfully sunset the practice of screen scraping.

• Dodd-Frank Act Section 1034(c) Advisory Opinion: The Bureau should withdraw its advisory opinion and propose it as a formal rulemaking pursuant to the Administrative Procedure Act.

• Structural CFPB Reforms: Congress should enact structural reforms to the CFPB to create more transparency, ensure the CFPB follows the law, and establish proper checks and balances for an agency with such a broad scope and influence over the financial services marketplace.

To read the full letters sent to the House and Senate, click HERE and HERE.

CBA Advocacy

• To read CBA President and CEO Lindsey Johnson’s op-ed on the need for financial regulations to focus on sound policy, not partisan politics, click HERE.
• To read Johnson’s testimony before the House Financial Services Committee on the politicization of financial regulatory policy, click HERE.
• To read CBA’s regulatory and legislative recommendations from the CFPB’s semi-annual address to Congress in November 2023 and June 2023, click HERE and HERE.
• To read CBA’s blog post that sets the record straight on the CFPB’s misguided credit card late fee proposal, click HERE.
• To read CBA’s response to the CFPB’s Section 1033 notice of proposed rulemaking, click HERE.
• To read more about how bank-led innovations reflect the century-long commitment to meet consumer demands, click HERE.
• To read CBA’s comment letter regarding Section 1034(c) of the Dodd-Frank Act, click HERE.