CONSUMER FINANCIAL PROTECTION BUREAU
- ICBA supports legislation that would replace single-Director governance of the Consumer Financial Protection Bureau (CFPB) with a five-member commission.
- Regulations promulgated by the CFPB must provide community banks the flexibility to meet the unique needs of their customers, and not burden community banks with additional and unnecessary regulatory requirements that could prevent them from serving their communities.
- Prudential banking regulators should actively participate in the consumer protection rule-writing process. The Financial Stability Oversight Council (FSOC) should have the power to veto CFPB rules under a more practical and realistic standard than currently exists.
- All financial firms that grant credit should be subject to robust supervision and examination, as community banks have long been. The focus of any enhanced regulation of consumer financial products should be on the unregulated “shadow” financial industry. ICBA supports a broad definition of non-depository “covered persons” subject to Consumer Financial Protection Bureau rules, examination, and enforcement.
- ICBA supports CFPB efforts to use its authority to address non-banks, such as Wal-Mart, serving as channels for financial products. While the CFPB does not have jurisdiction over merchants, it does have the authority to regulate the financial services offered by merchants.
- The CFPB should use its authority to exempt any class of providers or any products or services from the rules it writes to grant broad relief to community banks and/or community bank products 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 regulatory burden.
More Participatory Governance and Rulemaking. ICBA strongly opposed provisions in the Dodd-Frank Act that exclude the prudential banking regulators from the CFPB rule-writing process. Bank regulators have long expertise in balancing the safety and soundness of banking operation with the need to protect consumers from unfair and harmful practices and provide them with the information they need to make informed financial decisions. While we are pleased that the Dodd-Frank Act allows community banks with less than $10 billion in assets to continue to be examined by their primary regulators, ICBA supports legislative efforts to give prudential regulators a stronger, more meaningful role in CFPB rule writing. In particular, we support legislation that would give the Financial Stability Oversight Council (FSOC) the power to veto CFPB rules under a more practical and realistic standard than currently exists. In addition, replacing single-Director governance with a five-member commission would allow for a variety of 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.
Oversight of Non-Bank Providers. Any enhanced consumer protection laws should focus on the unregulated “shadow” financial industry which has been most responsible for victimizing consumers while avoiding serious regulatory scrutiny. ICBA supports a balanced regulatory system in which all firms that offer financial products are subject to meaningful supervision, examination and enforcement. This balanced regulatory system should also address financial products offered by merchants not directly supervised by the CFPB. While the CFPB does not have jurisdiction over merchants, it does have the authority to regulate the financial products offered by merchants.
Community Bank Exemptions. Community banks are already required to spend significant resources complying with voluminous consumer protection statutes. Any further laws enacted by Congress or regulations enacted by the CFPB should not add to these significant costs. The Dodd-Frank Act gives the CFPB 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. ICBA urges the CFPB to use this authority to grant broad relief to community banks and/or community bank products where appropriate.
Staff Contact: Elizabeth Eurgubian