2016-04-05

--Senator Shelby Hammers CFPB For Overstepping Mandate --Shelby: Agency Is One of 'Least Accountable' in Gov --Dem Senator Sherrod Brown Calls CFPB A Success

By John Shaw

WASHINGTON (MNI) - Senate Banking Committee Chairman Richard Shelby has never been a fan of the Consumer Financial Protection Bureau and Tuesday he continued his assault on the agency, saying it's doing far more harm than good.

But the top Democrat on the Senate Banking Committee, Sen. Sherrod Brown, strongly defended the CFPB, arguing it has been a successful champion for consumers.

In remarks at a Senate Banking Committee hearing on the effects of consumer finance regulation, Shelby said the CFPB has been distinctly harmful.

"Because of the Bureau's structure and the means by which it is financed, it remains one of least accountable agencies in the federal government," Shelby said.

"As a result, the very consumers that the CFPB was designed to help have been harmed by the Bureau because some of its rules make it more difficult for companies to lend and offer products in the marketplace," Shelby charged.

The CFPB was created by the Dodd-Frank law in 2010.

Shelby argued that certain CFPB rules will make it more difficult for a consumer to get a prepaid card or take out a short-term, small-dollar loan.

"Such regulations may restrict access to credit entirely for individuals, households and businesses," he said.

"I have long advocated for sensible consumer protections, but I do not believe they should be used as a substitute for an individual consumer's independent judgment," he added.

He also said the CFPB issues rules without factoring their costs, impact on economic growth, or the safety and soundness of any particular financial institution.

"The Bureau has enormous power over consumer financial matters. It has, however, no statutory mandate to write balanced regulations that protect the economy or promote institutional safety and soundness," he said.

The Senate Banking chief said the CFPB's work in several areas "has set a dangerous precedent for the role of a regulator in our financial markets."

Shelby said he is determined to take steps to "prevent the Bureau from overstepping its boundaries at the consumer's expense."

But Brown, the top Democrat on the Banking Committee, said the CFPB has been a clear success.

"The agency has taken strong actions in a number of consumer finance markets that previously had no federal oversight, including credit reporting, debt collection, payday loans, student loan servicing, and auto finance," Brown said.

"The benefits of the CFPB are clear: its actions have resulted in $11.2 billion being returned to over 25 million consumers. Over and over, the CFPB has exposed unfair and abusive behavior by financial companies - such as companies adding on hidden fees to credit cards, attempting to collect on debt that has already been paid off, discriminating against minorities, or deceptively marketing financial products," Brown declared.

Brown said the CFPB has made consumer financial products safer and better for consumers, but more must be done.

He said the CFPB is now working on important rules to rein in payday loans, prepaid cards, and debt collection.

The Senate Banking Committee is receiving testimony Tuesday from private sector critics of the agency.

The Senate Banking Committee will hear Thursday from the CFPB's director, Richard Cordray.

--MNI Washington Bureau; tel: +1 202-371-2121; email: john.shaw@mni-news.com

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