CONSUMER FINANCIAL PROTECTION BUREAU
- ICBA supports legislation replacing single-director governance of the Consumer Financial Protection Bureau (CFPB) with a five-member commission. Prudential banking regulators should actively participate in the consumer protection rule-writing process.
- Regulations promulgated by the CFPB must provide community banks the flexibility to meet the unique needs of their customers. Additional, unnecessary requirements could prevent community banks from serving these customers.
- All firms that offer credit or offer financial products and services should be subject to meaningful supervision and examination, as community banks have long been.
- The CFPB’s reliance on enforcement actions, rather than authoritative written guidance, creates compliance uncertainty for community banks that threatens to reduce access to credit and other financial products and services. The CFPB should work with community banks and other responsible industry participants to develop authoritative written guidance regarding problematic practices and regulatory expectations.
- ICBA strongly supports the CFPB using its statutory authority to exempt or provide tiered regulatory requirements for community banks and/or community bank products and services where appropriate. Any regulations should directly target identified problems with financial products and services while allowing community banks to continue to provide responsible products and services free from undue regulatory burden.
More Participatory Governance and Rulemaking. Replacing single-director governance with a five-member commission would allow for diverse views and expertise on issues before the CFPB and thus build in a system of checks and balances. A commission would help ensure the actions of the CFPB are measured and non-partisan and would result in balanced, high-quality rules and effective consumer protection.
Bank regulators have experience and expertise in balancing the safety and soundness of banking operations with the need to protect consumers and provide them with the information they need to make informed financial decisions. Consequently, ICBA supports legislative efforts to give prudential regulators a stronger, more meaningful role in CFPB rule writing.
Oversight of Non-Bank Providers. ICBA supports a balanced regulatory system in which all firms that offer financial products and services, including retailers, are subject to meaningful supervision, examination and enforcement. Gaps in regulatory coverage create conflicting standards that confuse and potentially harm consumers and create competitive disparities.
Enforcement Concerns. The CFPB is using enforcement actions – including charges of unfair, deceptive, or abusive acts or practices (UDAAP) – as a means of regulating marketplace behavior. This reliance on enforcement actions in place of issuing rules and other authoritative guidance creates significant concerns for community banks who do not have teams of attorneys and compliance professionals to parse the CFPB’s many decisions for compliance risk. The CFPB should work with responsible industry stakeholders to develop authoritative written guidance that provides clear examples of permitted and forbidden practices.
Community Bank Exemptions. The community bank business model is based on relationship banking. Community banks are already required to spend significant resources complying with voluminous consumer protection statutes and regulations. The CFPB has statutory authority to exempt any class of providers or any products or services from the rules it writes considering the size of the entity, the volume of its transactions, and the extent to which existing law already has protections. The CFPB should use this authority effectively to ensure community banks can continue to provide a robust alternative for consumers seeking responsible financial services providers.
Staff Contact: Joe Gormleyn