Consumer Financial Protection Bureau
Financial Regulation Reform Tracker
Congress and the Trump Administration may be embarking on making far-reaching changes that will recalibrate the manner in which financial services are regulated in the United States, including amending the Dodd-Frank Act and its implementing rules. We expect to see vigorous debate regarding the appropriate approach to financial services regulation, leading to rewrites of the structures and goals of federal banking and securities agencies and other government agencies.
This page is dedicated to tracking legislative and regulatory developments related to the CFPB.
For more information, please contact David L. Ansell, David J. Harris or Robert J. Rhatigan.
Date | ActionH.J. Res. 122 Sponsor: Rep. Ross (R-FL) (Co-Sponsors – 3 D, 2 R) Key ProvisionsThe resolution would disapprove under the Congressional Review Act the CFPB’s payday loan rule published in the Federal Register on November 17, 2017. Potential ImpactThe payday loan rule was one of the last major actions under former CFPB Director Cordray. Given the recent disapproval by Congress of the CFPB’s arbitration rule, another controversial action taken by the agency, there may be a significant effort mounted in Congress to void this rule as well. | Important Link |
Date | ActionS.J. Res. 47 Sponsor: Sen. Crapo (R-ID) (Co-Sponsors – 31 R) Senate passed 51-50, October 24, 2017. H.J. Res. 111 Sponsor: Rep. Rothfus (R-PA) (Co-Sponsors – 34 R) House of Representatives passed 231-190, July 25, 2017. Signed by the President, November 1, 2017. Key ProvisionsThe resolution disapproves the CFPB’s rule regarding Arbitration Agreements published in the Federal Register on July 18, 2017. Potential ImpactThe resolution disapproves a controversial CFPB rule that would have prohibited providers of consumer financial services from contractually preventing consumers from participating in class action law suits against the provider. | Important Links |
Date | ActionPortfolio Lending and Mortgage Access Act (H.R. 2226) Sponsor: Rep. Barr (R-KY) (40 Co-Sponsors – 39 R, 1 D) House Committee on Financial Services: passed 55-0, January 18, 2018 House passed by voice vote, March 6, 2018 Senate version S. 2013 (identical bill) Sponsor: Sen. Perdue (R-GA) Key ProvisionsThe Bill would provide qualified mortgage (“QM”) loan treatment to residential mortgage loans originated and held in portfolio by a depository institution that meet certain requirements regarding prepayment penalties. The Bill would also provide favorable regulatory treatment to third party mortgage originators where (i) the creditor-depository institution informs the originator of its intent to maintain the loan on its balance sheet for the life of the loan, and (ii) the originator informs the consumer of the depository institution’s intent. Potential ImpactThe Bill would allow depository institutions to have the benefits of QM treatment for residential mortgage loans that they plan to hold in portfolio. This would expand a lender’s flexibility to use their own experience to design loans to meet consumer needs and preferences.
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Date | ActionCommunity Lending Enhancement and Regulatory Relief Act of 2017 (H.R. 2133) Sponsor: Rep Luetkemeyer (R-MO) (Co-Sponsors – 13 R) Key ProvisionsThe Bill includes a wide range of provisions aimed at reducing regulatory requirements on depository institutions. In regard to the CFPB the Bill would (i) raise the threshold for depository institutions to be subject to CFPB supervision from $10 billion to $50 billion, and (ii) would eliminate the CFPB’s authority with respect to “abusive” practices. The Bill would amend the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act to expressly provide that those laws prohibit “intentional” discrimination. This would have the impact of superseding the Supreme Court’s decision in Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) which held that FHA liability could be established based on disparate impact rather than intentional conduct. The Bill would seek to restrict Operation Choke Point by requiring that a formal or informal request or order by a federal banking agency to a depository institution to terminate a specific customer account or group of customer accounts must (i) be made in writing, and (ii) explain why such termination is needed including identification of any laws or regulations the agency believes are being violated. Potential ImpactThe Bill seeks to provide a range of regulatory relief to depository institutions, especially smaller institutions. | Important Links |
Date | ActionCFPB-IG Act of 2017 (S. 626) Sponsor: Sen. Portman (R-OH) (Co-sponsors – 9 R) Key ProvisionsThe Act would give the CFPB its own Inspector General (IG) who would be appointed by the President and subject to Senate confirmation.
Currently, the Chairman of the FRB appoints an IG who has jurisdiction over both the FRB and the CFPB.
Potential ImpactThe Act is another example of a Congressional initiative that would provide Congress and the Executive Branch with more influence over the CFPB. | Important Links |
Date | ActionCommunity Financial Institution Exemption Act (H.R. 1264) Sponsor: Rep. Williams (R-TX) (Co-Sponsors – 29 R) House Committee on Financial Services: passed 30-25, January 18, 2018 Key ProvisionsThe Act would create a general exemption from regulations issued or modified by the CFPB after the enactment of the Act for any insured depository institution or credit union with less than $50 billion in consolidated assets (CFIs). The CFPB may revoke the exemption with regard to a particular new regulation or modification if it (i) makes a finding that a specific class of financial institutions has engaged in a pattern of activities detrimental to consumers; (ii) consults with the FRB, FDIC, OCC and NCUA; and (iii) each agency provides the CFPB with a notice that it agrees with the revocation. Potential ImpactCurrent law gives the CFPB discretion to exempt a class of regulated entities from its regulations. The Act would go much further by imposing substantial hurdles on the CFPB if it wishes to impose new regulations on CFIs, which comprise the majority of the total number of insured depository institutions and credit unions and which have generally argued that they are being overly burdened by new regulations. | Important Links |
Date | ActionTaking Account of Institutions with Low Operation Risk Act of 2017 (“TAILOR Act”) (H.R. 1116) Sponsor: Rep Tipton (R-CO) (85 Co-Sponsors – 80 R, 5 D) House Committee on Financial Services: passed 39-21, October 21, 2017 House passed 247-169, March 14, 2018 Senate version S. 366 (substantially similar) Sponsor: Sen. Rounds (R-SD) (Co-Sponsors – 9 R) Key ProvisionsThe TAILOR Act would require regulatory agencies (FRB, OCC, FDIC, CFPB and NCUA) to fashion new regulatory actions (regulations, guidance and interpretations) to take into account the risk profile and business model of each type of institution or class of institutions subject to such actions. Agencies would be required to explain how they addressed this requirement in regard to new actions and to report to Congress. The agencies would also be required to conduct a look-back tailoring review of all regulations adopted after Feb. 16, 2010. Potential ImpactThere has been much discussion of the burdens that increased regulation imposes on depository institutions and the challenges this creates for smaller, less complex institutions. While the TAILOR Act would not amend existing laws to reduce the requirements they impose on institutions, it would seek to cause agencies to craft their regulatory actions in a manner that limits their impact and costs, as appropriate, based on the particular risk profile of an institution or class of institutions. | Important Links |
Date | ActionConsumer Financial Protection Bureau Accountability Act of 2017 (S. 387) (the “Act”) Sponsor: Sen. Perdue (R-GA) (Co-Sponsors – 19 R) Key ProvisionsThe CFPB is currently funded by the Federal Reserve Board (“FRB”) in amounts not to exceed a formula specified in the Dodd-Frank Act. The Act would end this process and subject the CFPB to the regular appropriations process. Potential ImpactThe CFPB Director currently determines the amount of funding reasonably necessary to carry out the authorities of the agency, which is to be provided by the FRB. This method has been a controversial aspect of the CFPB since its establishment. The Act would end this process and subject the CFPB to the normal Congressional appropriations process. The change, if enacted, would provide significantly enhanced Congressional control over the CFPB.
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Date | ActionRepeal CFPB Act (S. 370) Sponsor: Sen. Cruz (R-TX) (Co-Sponsors – 7 R) House version H.R. 1031Sponsor: Rep. Ratcliffe (R-TX) (Co-Sponsors – 29 R) Key ProvisionsThe bills would repeal Title X of the Dodd-Frank Act, which established and empowered the CFPB. Under the bills, those provisions of law that were repealed by Title X would be restored or revived as if Title X had not been enacted. Potential ImpactThese bills would return rulemaking and enforcement authority regarding federal consumer financial laws to the financial regulatory agencies that previously had those authorities. They would also eliminate the broad authority that the CFPB was given over a wide range of consumer financial services companies.
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Date | ActionJoint Resolution Disapproving the Prepaid Accounts Rule (S. J. Res. 19) Sponsor: Sen. Perdue (R-GA) (H.J. Res. 73) Sponsor: Rep. Williams (R-TX) (42 D Co-Sponsors) (also H.J. Res. 62) Sponsor: Rep. Graves (R-GA) Key ProvisionsThe Resolution would disapprove the CFPB’s rule regarding prepaid accounts under the Electronic Fund Transfer Act and the Truth in Lending Act (“Prepaid Rule”). Potential ImpactUnder the Congressional Review Act, if the Joint Resolution is enacted it would prevent the Prepaid Rule from going into effect. It would also prevent the CFPB from adopting a substantially similar rule in the future unless it is expressly authorized by subsequently adopted legislation. | Important Links |
Date | ActionConsumer Financial Protection Board Act of 2017 (the “Act”) (S. 105) Sponsor: Sen. Fischer (R-NE) (Co-Sponsors – 4 R) House version H.R. 1018(substantially similar) Sponsor: Rep. DesJarlais (R-TN) (Co-Sponsor – 1 R) Introduced February 13, 2017 Key ProvisionsThe Act would replace the single-director structure of the CFPB with a five-member, five-year staggered term board appointed by the President and confirmed by the Senate. Board members would be removable for cause, and no more than three board members could be from the same political party. Potential ImpactThe operation, goals and track record of the CFPB is likely to be a central de novo focus of the new Administration, particularly in light of the D.C. Circuit decision on October 11, 2016, determining that the controversial structure of the CFPB is unconstitutional in that its Director could only be removed for cause by the President. PHH v. CFPB, 839 F.3d 1 (D.C. Cir. 2016). The court held that the statute should be construed to allow the President to remove the Director at will. See Dechert OnPoint Court of Appeals Says CFPB Is Unconstitutional; Rejects Agency Effort to Apply New Interpretation of Law Retroactively. On February 16, 2017, the D.C. Circuit agreed to hear the CFPB's appeal en banc and vacated the prior decision. Proponents of the structure proposed by the Act argue that a multi-member governing structure will eliminate issues caused by having broad power in the hands of a single Director. Such a restructuring is also an element of Rep. Hensarling’s (R-TX) Financial CHOICE Act, which was passed by the House Financial Services Committee on September 13, 2016 during the last session of Congress. | Important Links |
Date | ActionFive bank regulatory agencies issue statement (“Interagency Statement”) clarifying role of supervisory guidance. Key ProvisionsThe Interagency Statement clarifies that, unlike a law or regulation, supervisory guidance does not have the force and effect of law and that the agencies do not take enforcement actions based on supervisory guidance. Rather, the purpose of supervisory guidance is to outline the agencies’ supervisory expectations or priorities and articulate the agencies’ general views regarding appropriate practices for a given subject area. In that respect, the agencies noted that supervisory guidance often provides examples of practices that the agencies generally consider consistent with safety and soundness standards. Perhaps most noteworthy, the agencies stated that they intend to limit the use of numerical thresholds or other “bright lines” in describing expectations in supervisory guidance. Where numerical thresholds are used, the agencies intend to clarify that the thresholds are exemplary only and not suggestive of requirements. Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. The Interagency Statement was issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Comptroller of the Currency and the Consumer Financial Protection Bureau. Potential ImpactThe Interagency Statement signals the agencies’ intention to move towards a more subjective approach in applying supervisory guidance that is more reliant on examiner judgement and less on bright line metrics. While it remains to be seen how the Interagency Statement will be applied in practice, one area that particularly bears watching is the impact on the Leveraged Lending Guidance issued by the agencies in 2013. Among other things, that guidance provides that a borrowers’ leverage level in excess of 6X EBITDA raises supervisory concerns for most industries. This metric has often been strictly applied by the regulators, which has had a chilling effect in some cases on banks’ ability to compete in the leveraged lending market. Several agency heads had previously expressed support for a less prescriptive approach to leveraged lending and the Interagency Statement is further evidence of the agencies’ intent to adopt a more flexible and risk-based approach not only to leveraged lending but also to other areas that are the subject of supervisory guidance. | Important Link |
Date | ActionCFPB issued a final rule on arbitration agreements. The rule became effective on September 18, 2017 and the mandatory compliance date is March 19, 2018. Rule was voided by Pub.L. 115-74, November 1, 2017. Key ProvisionsThe rule would have prohibited providers of consumer financial services and products from contractually preventing consumers from participating in class action law suits against the provider. The rule also would have required providers who engage in arbitration pursuant to a pre-dispute arbitration clause with a consumer to submit certain records to the agency so the CFPB can monitor such proceedings. Potential ImpactThe House of Representatives and Senate have voted to disapprove the rule under the Congressional Review Act. Prior to the Senate's action, on September 29, 2017, the U.S. Chamber of Commerce, the American Bankers Association and other industry groups filed a complaint in federal court seeking to set aside the rule on several grounds under the Administrative Procedure Act and on the ground that the rule is ultra vires because the CFPB itself is unconstitutionally structured. | Important Links |
Date | ActionFinal rule delaying the effective date of the CFPB’s prepaid account rule (“Prepaid Rule”). (See Proposed Rule, March 9, 2017.) Key ProvisionsThe final rule makes the effective date for the Prepaid Rule April 1, 2018. Potential ImpactThe CFPB indicated that it does not plan to provide further extensions of the effective date. Resolutions to disapprove the Prepaid Rule under the Congressional Review Act remain pending in the Senate and House of Representatives.
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Date | ActionProposed rule to delay the effective of the CFPB’s prepaid account rule (“Prepaid Rule”). Key ProvisionsThe proposal would delay the October 1, 2017 effective date for the CFPB’s Prepaid Rule until April 1, 2018. Potential ImpactThe CFPB states that it understands that some industry participants believe they will have difficulty complying with the Prepaid Rule by its current effective date. The CFPB believes the additional time will be sufficient to allow industry participants to achieve compliance. | Important Links |
Date | ActionPHH Corporation v. Consumer Financial Protection Bureau, No. 15-1177 (D.C. Cir.) Brief for the U.S. as Amicus Curiae Key ProvisionsThe full U.S. Court of Appeals for the D.C. Circuit, sitting en banc, is currently considering a challenge to the constitutionality of the CFPB. The Department of Justice (“DOJ”) has now asked the court to follow the reasoning of the earlier decision of a three-judge panel holding it unconstitutional to limit the President’s removal authority over the Director of the CFPB. The panel’s reasoning would require that the President have unrestricted authority to remove the Director at will. Potential ImpactUnder the Obama Administration, DOJ took the position that the for-cause removal restriction was permissible. The DOJ brief now creates a relatively unusual situation where two components of the Executive Branch are taking directly opposing positions on a constitutional issue in a high-profile case. Ultimately, this case could come before the Supreme Court. | Important LinksAmicus brief |
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