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H.R. 1315 - Assault on Consumer Protections

Millions of Americans on Main Street lost their jobs, homes, life savings, and pensions because of the recklessness of some on Wall Street. Years without accountability for Wall Street and the big banks under President Bush and Congressional Republicans led to this economic collapse.  

Yet, one year after Democrats passed and President Obama signed the Wall Street Reform and Consumer Protection Act into law, Republicans continue their relentless pursuit to undermine and weaken these vital reforms, siding with big banks over consumers and American families.  At every turn, Republicans have tried to delay and defund parts of the law that will protect consumers the most.

On July 21st, Republicans passed H.R. 1315 to weaken, delay, and erode the consumer protections that stop unfair, deceptive and abusive practices and ensure credit card, mortgage, student loan, and other financial transactions are more clear, transparent, and fair to all Americans.

The Republican bill (H.R. 1315):

  • replaces the Bureau's Director with a five-person commission,
  • makes it easier for the other banking regulators, who failed to protect consumers for years, to overturn the Bureau's rules, and
  • delays core functions of the Bureau until a Director is confirmed by the Senate.

It's no surprise Republicans are pushing this legislation, 'bank lobbyists and their allies on Capitol Hill have spent millions of dollars.. seeking to gut the law, or at least stall it [Wall Street Reform].'  [New York Times, 4/19/11]  GOP Banking Chairman Bachus has stated, 'my view is that Washington and the regulators are there to serve the banks.' [LA Times, 12/15/11]

To help bring back financial security for American families, the Bureau must be strong and independent to effectively oversee the $3 trillion consumer finance industry.  But the Bureau  is in no way unaccountable: new rules and actions can be overturned by a two-thirds vote of the Financial Stability Oversight Council, unlike with any other regulatory agency.

The bill is opposed by the Obama Administration, Americans for Financial Reform (a broad array of consumer, senior, civil rights, labor, religious, investor groups), AARP, Consumer Federation of America, Consumers Union, Center for Responsible Lending, AFL-CIO, Leadership Conference on Civil and Human Rights, National Council of La Raza, NAACP, Public Citizen, US PIRG, and SEIU.

Key provisions:

  • H.R. 1315 fundamentally weakens the structure of the CFPB, replacing the single Director with a 5-member commission. The bill would lead to gridlock, instead of a strong and independent watchdog that can act decisively to protect consumers and support a well-informed, efficient marketplace for consumer financial products.  And this proposal was considered and rejected last year.  A regulatory agency led by a single director is not unprecedented.  The Office of the Comptroller of the Currency, which regulates some of the largest banks in the country, is headed by an individual, not a Commission.
  • H.R. 1315 undermines the independence of the CFPB, by making it easier for the Financial Stability Oversight Council (FSOC), which is comprised primarily of federal financial regulators, to override CFPB's regulations.  The Wall Street Reform Act permits the FSOC to overrule a CFPB rule by a two-thirds vote of the FSOC if the regulation would put the safety and soundness of the banking system at risk.  No other Federal financial regulatory agency is subject to the veto of its regulations by its sister agencies.  This bill weakens both the voting threshold and the standard for review, permitting a mere majority of the FSOC to overrule a CFPB regulation that is “inconsistent with” safe and sound operation of U.S. financial institutions.  In effect, bank regulators could overrule a CFPB rule on nearly any policy grounds they  deem appropriate.  
  • H.R. 1315 delays the transfer date for the CFPB until there is a Director confirmed by the Senate - leaving the CFPB with no meaningful consumer protection authority when it officially opens its doors. The same federal banking regulators that failed to regulate the many practices in consumer finance that resulted in the most severe financial crisis since the Great Depression would continue to be in charge. Strong consumer protections are essential to stabilizing the economy, promoting competition and transparency, and bringing confidence back to the financial marketplace. Delaying the ability of the CFPB to begin its operations will significantly undermine this effort and leave consumers unprotected from the unfair, deceptive, abusive, and predatory practices that brought our economy to the brink of collapse and led to 8 million jobs lost. 

Impact of Wall Street Reform Law
Since being created by law last year, the CFPB has already made progress for consumers in a number of areas:

New Consumer Complaint  Process 
The CFPB is designing a new consumer complaint process with the first piece coming out this week.

Streamlining Help for Consumers
The CFPB will consolidate the authority of seven other agencies and have clear accountability for policing abuses in consumer financial products like credit cards and mortgages and for making sure people have the information they need to make the decisions that are best for them. The CFPB will become the dedicated cop on the beat protecting American consumers in their financial transactions.

Credit Cards
CFPB is pushing credit card providers to simplify their forms in order to make sure consumers can better understand the fees and costs associated with credit. Credit cards are the most commonly used form of consumer credit. Almost two out of three families now have at least one credit card, and almost half of all families carry a balance.  The CFPB will assume responsibility for enforcing the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), enacted by Congress in 2009.

Simplifying Mortgage Disclosures
CFPB launched an effort to simplify the forms that consumers receive when they shop for a mortgage so they have easy-to-understand information that helps them compare different mortgage offers and find the one that's best for them. It also aims to reduce the regulatory burden by giving mortgage originators a clearer, less complicated form with which to work.

Protecting Servicemembers
CFPB is helping servicemembers navigate the unique circumstances that affect their finances - a first step in protecting servicemembers from financial abuses in the consumer finance marketplace.

Leveling the Playing Field to Ensure Payday Lenders, Debt Collectors and Other Non-Banks Comply with Consumer Protection Laws
CFPB has taken initial steps required to protect Americans against abuses by certain parts of the financial industry - like payday lenders and debt collectors -- that we were unable to monitor before the passage of the Wall Street Reform and Consumer Protection Act.