WASHINGTON — The House Appropriations Committee approved a bill Thursday that would subject the Consumer Financial Protection Bureau to the appropriations process, among other things.
The bill is mostly focused on providing $21.7 billion in funding for the Treasury Department and the Securities and Exchange Commission, which represents a $1.5 billion decline from 2016 levels and $2.7 billion less than what President Obama requested.
But banks are closely watching changes the bill would make to the CFPB, including moving it from a single director to a five-person commission and requiring the agency to revisit recent payday and arbitration rulemakings.
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Lenders are questioning the legal justification for the Consumer Financial Protection Bureau's putting a 36% annual percentage rate threshold in its payday proposal, claiming loans made at that rate are unprofitable. That figure has been the subject of intense debate in the past decade.
June 8 -
The Consumer Financial Protection Bureau's long-awaited proposal to establish the first federal rules for payday, auto title and high-cost installment loans did not include a provision that banks had planned would allow them to compete by offering small-dollar installment loans.
June 2 -
Rep. Randy Neugebauer introduced a bill Thursday that is designed to reverse some of the negative effects of legislation enacted last year that cut the dividend the Fed pays larger banks. His bill would allow banks to redeploy capital held at the Fed.
April 21 -
The sweeping, five-year highway bill may include some key concessions for small financial institutions, but the deal has left many in the industry frustrated. Here's why.
December 2
One of the amendments to the bill would deny funding for the CFPB's payday lending proposal until the bureau conducts a study of the populations most reliant on nonbank lenders and identifies products that could fill the void of the estimated 60%-70% decline in payday loan volume.
"We applaud House appropriators for taking steps to make needed improvements to the CFPB on behalf of consumers," said Richard Hunt, the president and CEO of the Consumer Bankers Association. "Chief among the reforms is the creation of a five-person, bipartisan board that would preserve it as a stable, strong and effective regulator, regardless of a President Trump or Clinton."
Hunt added that the industry welcomed the amendments "to take a second look at its arbitration and small-dollar lending proposals before consumers are potentially harmed."
But Democrats continue to oppose any changes to the CFPB, including subjecting it to annual appropriations.
"Republicans, once again, are using every tool at their disposal to push an agenda that would hurt consumers and threaten the stability of our financial system," Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, said in a statement. "I am also deeply concerned about harmful provisions in the bill that would strip away consumer protections for some of our most vulnerable populations."
