House Financial Services Committee Holds Hearing on CFPB Reform
At a hearing last week, the House Financial Services Committee (HFSC) discussed ways to either reform or defund the Consumer Financial Protection Bureau (CFPB) as Republicans continued to criticize the agency for what they purport is a lack of accountability, insufficient rulemaking, and overreach after it recently announced plans to eradicate “junk fees” that consumers are charged.
“The agency is led by a single, partisan director, Rohit Chopra, who has routinely acted unilaterally and arbitrarily, often outside any statutory mandate, without engaging rulemaking in compliance with the Administrative Procedures Act, and even sometimes without adjudication,” said Rep. Andy Barr (R-Ky.), chair of the Subcommittee of Institutions and Monetary Policy. “This has led to the CFPB becoming the most unchecked, unaccountable agency in the whole federal government.”
Republican lawmakers have criticized the CFPB’s funding structure, which does not go through the annual appropriations process. The subcommittee is set to consider proposed legislation that includes changing the agency’s funding source, oversight of existing guidance, rules and regulations, and establishing an Office of Inspector General.
In line with the Biden administration’s view on junk fees, the CFPB released a list of illegal junk fees surrounding deposit accounts, auto and mortgage loan servicing, and payday and title lending. According to CNBC, Rep. Blaine Luetkemeyer (R-Mo) said that Chopra has used junk fees to extend his authority.
Devin Watkins, an attorney at the Competitive Enterprise Institute, accused the CFPB of lumping “any fee they don’t like” into its definition of junk fees. “When the definition under how they’re acting is so broad like that, it raises real non-delegation concerns that could undermine their authority to enact any of these,” he said.
Congresswoman Maxine Waters (D-Calif.), the top Democrat on House Financial Services, and Senator Sherrod Brown (D-Ohio), Chair of the Senate Banking Committee, released a statement after the HFSC hearing in which they defended the Bureau.
“The CFPB has made major progress in supporting consumers, combatting discrimination and junk fees, holding large financial institutions accountable for repeatedly harming consumers, and so much more,” they said.