More than 150 Academics Pen Letter Urging Congress Not To Move Forward With Financial Choice Act

A group of more than 150 academics have come together and sent a letter to the chairmen and ranking members of the House Financial Services Committee and Senate Banking Committee urging them not to move forward with the Financial Choice Act, which would dramatically overhaul the Consumer Financial Protection Bureau.

The bill, if enacted, would “gut” the CFPB and “kill the CFPB by a thousand cuts,” the academics argued in their letter, which was sent last week to Sen. Michael Crapo [R-Idaho], the chairman of the Senate Banking Committee, Rep. Jeb Hensarling [R-Texas], the chairman of the House Financial Services Committee, Sen. Sherrod Brown [D-Ohio], the ranking member of the Senate Banking Committee, and Rep. Maxine Waters [D-Caif.], the ranking member of the House Financial Services Committee.

Enacting the Financial Choice Act, introduced by Rep. Hensarling earlier this year, would undo many of the consumer protections that were put into place by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law following the financial crisis of 2008. The Dodd-Frank law established the CFPB and “insulated it from industry capture and partisan politics,” the academics argued in their letter.

In their letter, the authors cite the importance of maintaining a single director who can only be fired for cause and not for any reason, why the CFPB should be independently funded and not rely upon Congress for its budget approval, and the need for oversight of Unfair, Deceptive, and Abusive Acts & Practices (UDAAP).

With respect to debt collectors, the letter points to the need for supervision over large market participants, including collection agencies, which has never existed before, and other “non-bank” financial services organizations, including collection agencies.

Admitting that they themselves are sophisticated consumers, the academics asked Congress to please think of the children. And the elderly, too.

Rather, we need to think about our children and those of others who have or will someday become consumers of financial products. What protections do they need so they can safely enter the world of credit? What worries do we have for them when they encounter providers of financial products? How would we feel if they were victims of the Wells Fargo scam? Similarly, we should think about parents, who could be deceived about the need for and benefits of products like reverse mortgages or home equity loans. Most of us have seen our parents’ mental capacity diminish with age. Do we want financial firms to have the ability to exploit our parents’ vulnerability unchecked? We will have greater reassurance about preventing these dangers if Congress retains the CFPB’s UDAAP authority.