By Nicole D. Prysby, J.D.
The report, which contains extensive recommendations to the Bureau, Congress, and state and federal regulators, immediately received both praise for regulatory modernization and criticism for gutting consumer protections.
The Consumer Financial Protection Bureau has announced the release of a report from its Taskforce on Federal Consumer Financial Law, containing extensive recommendations on how to improve consumer protection and maintain competition in the financial marketplace—including a wide variety of concepts such as financial technology (Fintech) regulation. The Competitive Enterprise Institute and the Consumer Bankers Association both released statements praising the January 2021 report, while U.S. Sen. Sherrod Brown (D-Ohio) issued a press release stating that the report was clearly "just a pretext to gut regulations and protections for consumers."
The Bureau’s Jan. 5, 2021, announcement explains that the Taskforce, chartered in January 2020, made approximately 100 recommendations in its report to the Bureau, Congress, and state and federal regulators, using five interrelated principles: consumer protection; information and education; competition and innovation; regulatory modernization and flexibility; and inclusion and access
Two volumes. Volume I of the report contains references to original data and analyses, including: a historical and economic overview of consumer finance; a presentation of the framework of consumer financial protection; consumer protection, competition, innovation, and inclusion; and a discussion of modernizing the regulatory framework and expanding consumer empowerment. Volume II of the report contains recommendations on numerous concepts, such as competition, consumer empowerment, cost-benefit analysis, disclosures, enforcement, and Fintech regulation.
Recommendations. The report recommends that states consider eliminating or streamlining licensing requirements for financial services providers to avoid anticompetitive barriers to entry. It also recommends that the Bureau establish independent review of its regulatory cost-benefit analyses and that Congress and the Bureau should focus on shopping disclosures and reducing the cost to consumers of locating the product or service they want. It recommends that Congress consider repeal of the restrictions on marketing credit cards to consumers age 21 and under. With respect to Fintech, the report recommends that the Bureau consider the benefits and costs of preempting state law in some specific cases in which the potential for conflict can impeded provisions of valuable products and services, such as the regulation of FinTech companies engaged in money transmission.
CFPB Director’s remarks. Bureau Director Kathleen Kraninger released remarks about the report. She stated that the taskforce was established to identify regulatory gaps and regulations that need modernization, and that the Taskforce’s recommendations span spurring innovation, increasing competition, expanding access to credit, reducing friction in financial markets, effectively enforcing the law, and empowering consumers. She also stated that the Bureau, along with other governmental bodies, will be able to use the Taskforce’s recommendations to modernize the framework of consumer financial law and regulation.
CEI, CBA reaction. The Competitive Enterprise Institute (CEI) and the Consumer Bankers Association (CBA) both released statements praising the report. The CEI stated that the recommendations in the report would advance financial inclusion and reduce the number of unbanked consumers. The CBA stated that the modernization of banking practices would held ensure continued and expanded access to credit for consumers.
Senator Brown. Senator Sherrod Brown, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, issued a press release about the report, stating that it was clearly "just a pretext to gut regulations and protections for consumers." Brown previously grilled Director Kraninger over the Taskforce, claiming that the Bureau director "stacked the Taskforce with representatives of payday lenders, Wall Street banks, and other industry interests."
Companies: Competitive Enterprise Institute; Consumer Bankers Association
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