Rep. Jeb Hensarling [R-Texas], the chairman of the House Financial Services Committee, today proposed a sweeping overhaul of the regulatory framework for the financial services industry. The overhaul, called the Financial CHOICE Act, would end “too big to fail” bailouts, require all financial regulators submit to the Congressional appropriations process, and dramatically overhaul the Consumer Financial Protection Bureau.
The Financial CHOICE Act would repeal much of the Dodd-Frank Wall Street and Consumer Protection act.
For the collections and debt-buying industry, the largest impact would come in the proposed changes to the CFPB. Among the changes proposed by the act:
- Change the name of the CFPB to the “Consumer Financial Opportunity Commission (CFOC),” and task it with the dual mission of consumer protection and competitive markets, with a cost-benefit analysis of rules performed by an Office of Economic Analysis.
- Replace the current single director with a bipartisan, five-member commission which is subject to congressional oversight and appropriations.
- Establish an independent, Senate-confirmed Inspector General.
- Require the Commission obtain permission before collecting personally identifiable information on consumers.
- Repeal authority to ban bank products or services it deems “abusive” and its authority to prohibit arbitration.
- Repeal indirect auto lending guidance.
“The CFPB may arguably be the single most powerful and least accountable Federal agency in the history of our nation,” Hensarling said in his remarks this morning to the Economic Club of New York. “The CFPB Director – one man – has the unbridled and unprecedented power to unilaterally declare virtually any mortgage, credit card or bank account “unfair” or “abusive” at which point Americans can’t have it – even if they need it, want it, understand it and can afford it.”
There is little chance that the bill will become law this year. The expectation is that the Democratic majority in the Senate would block legislation should it make it to there, and that President Barack Obama would veto legislation should it make it to his desk. The likelihood of introducing this legislation now is establishing a framework for what Republicans would likely do should their nominee with the election this November.
When asked today about the chances of becoming law, Hensarling said, “I wouldn’t hold your breath,” but added, “It is time to replace Dodd-Frank.”
