We’ve been hearing about efforts to reign in the CFPB for a while now. Yet here the bureau is, proposing 1,300-page rules and enforcing hundreds of regulations. Don’t give up quite yet; FY17 is on the case!
Fiscal Year 2017 Financial Services Bill
On May 24, 2016, the House Appropriations Committee released its Fiscal Year 2017 Financial Services Bill (FY17). Aside from its usual job, to appropriate money from the yearly budget, the bill seeks to increase oversight over the Consumer Financial Protection Bureau (CFPB).
“Increased Oversight”
So what will this increased oversight look like? The relevant provision in FY17 details a three-part strategy for regulating the CFPB:
- According to the bill, the CFPB’s funding will be subject to the annual congressional appropriations process. Due to Dodd-Frank, funding is currently given to the CFPB directly from the Federal Reserve. Channeling the money through the appropriations process instead will require the CFPB to be accountable for, and transparent with, their use of tax dollars. The CFPB will have to explain what funds are needed, why they are needed, and how they were used.
- The CFPB will be required to explore pre-dispute arbitration options before issuing and enforcing a regulation. A provision of the bill states that no funds given to the CFPB “may be used to regulate pre-dispute arbitration agreements…and any regulation finalized by the Bureau to regulate pre-dispute arbitration agreements shall have no legal force or effect until the requirements regarding pre-dispute arbitration specified in the report accompanying [the bill] under the heading “Bureau of Consumer Financial Protection” are fulfilled.”
- The legislation also seeks to change the way leadership is structured within the CFPB. Instead of having a single Director, it would be run by a five-member Commission. The member of the Commission would be appointed by the President.
One Amendment
Throughout its time in the House, several amendments were added to FY17. A bipartisan amendment proposed by Republican Congressman Steven Palazzo and Democratic Congressman Henry Cuellar suggested the bill be used to restrict the most recent rule the CFPB proposed—the Payday Lending Rule. Under this amendment, before receiving funding for the rule, the CFPB would have to complete a report with comments from the public, detailing the impact the rule would have on people with limited access to credit. The CFPB would also have to identify what credit products exist that can replace short-term, small-dollar credit.
Immediate Effects
The changes to the CFPB that the bill wants to implement regarding funding would be effective October 1, 2017. But thanks to the amendment, if the bill passes, it won’t take us until then to see the changes. Once the commenting period is up in September 2016, the CFPB plans to implement its Payday Lending rule within the 15 months following. However, the stipulations indicated in the FY17 bill and its amendments would put the brakes on the whole process.
Bill Status
The House Appropriation Committee approved the bill on May 24, 2016 by a vote of 30-17. The bipartisan amendment sponsored by Congressman Palazzo and Congressman Cuellar was adopted by the committee through a vote of 30-18.
As of their June 10, 2016 press release, the House of Representatives approved the FY17 Legislative Branch Appropriations bill by a vote of 233-175.
FY17’s next stop is the floor of the Senate. If it passes there, the President’s signature will make it law.
“The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on the over-spending and overreach within federal bureaucracies. This bill makes great strides on all accounts – carefully investing taxpayer dollars in programs that promote opportunity, while keeping these agencies accountable to the American people.” -Chairman Hal Rogers
Increased monitoring of the use of taxpayer dollars is good news in general, but what financial institutions are especially looking forward to is the part that says, “to tightly hold the reins on the over-spending and overreach within federal bureaucracies.”
When it come to worrying about compliance issues, it would be nice to sit back and let the CFPB take a turn.
Visit the House of Representatives’ website to read a draft of the bill or press releases regarding FY17.
