Published by U.S. Chamber of Commerce | April 20, 2022
The Consumer Financial Protection Bureau is departing from its core responsibilities by attempting to regulate market competition, shunning procedural requirements under the Administrative Procedure Act, and devising new enforcement powers for the Director.
The core mission of the Consumer Financial Protection Bureau (CFPB) is to ensure that financial institutions are adhering to consumer protection laws and regulations. Under the leadership of the CFPB’s newest Director, Rohit Chopra, the agency is departing from its core responsibilities by attempting to regulate market competition, shunning procedural requirements under the Administrative Procedure Act, and devising new enforcement powers for the Director.
Points to Know
1. The CFPB is mischaracterizing the competitive landscape of the financial services sector.
Across the U.S., thousands of banks, credit unions, and fintech companies all compete for consumers’ business and trust. American consumers benefit from a highly competitive market when it comes to selecting the banking services that suit their needs and are empowered to make informed decisions about their banking and financial services’ needs.
2. The CFPB is not a competition regulator.
President Biden’s 2021 Executive Order, “Promoting Competition in the American Economy,” directed the CFPB to stray from its core responsibilities of consumer protection. Despite potential legal issues amounting from the EO’s improper direction of an independent agency, including invalidation of Chevron Deference, the CFPB has already embarked on a regulatory agenda ostensibly focused on competition. In early 2021, the agency issued a request for information (RFI) and a series of blog posts and reports implying consumers are the unwitting victims of fees by financial services providers without acknowledging the robust disclosure requirements they are charged with enforcing under multiple laws.
As we detailed in an article on our website, and in more detail in a letter to the CFPB, the agency is exhibiting a misunderstanding of the financial services market and business more broadly by overlooking overhead costs including, but not limited to, development of the services, marketing (which can be extremely expensive in a competitive market), and the infrastructure, including customer service, that makes products function.
3. The CFPB is depriving companies of their day in court.
Uncertainty creates confusion in the marketplace, and consumers ultimately lose out because responsible, compliance-minded companies hesitate to invest in new products and services when they are unsure of the potential legal ramifications.
The agency recently issued an interim-final rule (IFR) that unilaterally reshapes administrative adjudication. The U.S. Chamber of Commerce and other industry groups wrote to the CFPB that these changes to the CFPB’s rules for administrative adjudication expand the Director’s powers and reduce protections for defendant companies in ways that will lead to a lack of due process and make it more difficult for defendants to appeal to Article III courts.