The Consumer Financial Protection Bureau (CFPB), which last week “celebrated” its fourth year in existence, was hit with a barrage of scrutiny in the United States Congress. First, Senator Ted Cruz and Representative John Ratcliffe introduced legislation (S. 1804, H.R. 3118) to abolish the Bureau, saying that while the Bureau was intended to “help consumers by regulating and reigning in larger financial institutions,” in actuality, “big banks have only gotten bigger and the number of smaller banks and options for consumers have only decreased.”
Separately, Chairman Richard Shelby of the Senate Banking Committee progressed legislation that would place the Bureau within the appropriations process and replace its director-driven governance model with a five-member commission. While Shelby’s amendment is not expected to hold up in its entirety, its place in the subcommittee-approved bill provides an opportunity for debate on meaningful regulatory relief measures for community and regional banks.
In survey results released by SNL Financial last week, 33% of respondents identified the creation of the CFPB as the byproduct of Dodd-Frank that has most impacted their bank.
“Despite lacking direct supervisory power over community banks, the CFPB has left an indelible mark on the regulatory environment overshadowing community banks,” said IBAT President and CEO Chris Williston. “While we support efforts to hold the too-big-to-fail banks responsible for their misdeeds in the marketplace, we believe consumers are under equal threat by having credit availability and banking services limited by CFPB rules,” Williston added. “It’s nothing short of regrettable that the actions of the agency cannot be focused on where the real problems exist.”