By Ray Birch
WASHINGTON—Calling the CFPB the most unchecked and unaccountable agency in the entire federal government, Andy Barr called for heavy reforms to the Bureau.
Barr (R-KY), chair of the House Financial Services Subcommittee on Financial Institutions, made those comments during the subcommittee’s hearing Wednesday titled "A New Era for the CFPB: Balancing Power and Reprioritizing Consumer Protections."
Barr, and others, addressed many of the long-called-for changes to the Bureau, such as moving the CFPB’s leadership to a bipartisan commission and changing its funding structure. Several of those who testified before the subcommittee addressed the CFPB’s unclear authority when it comes to UDAAP (Unfair, Deceptive, or Abusive Acts or Practices). As CUToday.info reported, UDAAP concerns have been raised within the movement following the CFPB’s $1.5-million fine issued to VyStar for its botched rollout of its online and mobile baking platforms.
“Under former Director (Rohit) Chopra, the CFPB prioritized politics over sound policy, leading to disastrous outcomes for American consumers,” Barr said. “The good news is that a new era has begun under President Trump—an era where businesses are not attacked through press releases or Tweets, curtailing their ability to offer financial services and products. Instead they are encouraged to provide them in a competitive, safe and sound manner in an era where the Bureau's approach is not opaque and abusive, but transparent and fair.”
Barr said he looks forward to working with the CFPB in “this new era, where past abuses… stem from significant structural flaws at the CFPB, which reduce accountability and lead to regulatory swings that stifle innovation and competition…Today we'll propose transitioning the CFPB to a bipartisan commission and bringing it under Congressional appropriations. I recently reintroduced the TABs Act, which would require the CFPB to go through the traditional congressional appropriations process. This would restore the power of the purse to Congress and ensure that the elected representatives of the American people have a say in the Bureau's operations and budget.”
Barr, too, cited the CFPB’s “abuse” of power regarding civil investigative demands (CIDs).
Credit Union Testimony
Ana Fonseca, president and CEO of Logix Federal Credit Union, testified before the subcommittee on Wednesday, representing America’s Credit Unions.
Fonseca told the subcommittee that as a result of the CFPB’s actions over the years that her credit union and her fellow members of the CU movement have been “dying a death from 1,000 cuts.”
Fonseca emphasized that CUs, such as Logix, are inherently different from the “unregulated entities and bad actors” that the Consumer Financial Protection Bureau was created to address.
“Our member-owned cooperative structure makes credit unions the original consumer protectors. Still, credit unions find themselves subject to the rules, burdens and costs associated with being regulated by the CFPB,” she said. “For an institution like Logix, crossing the arbitrary $10-billion threshold that subjects us to greater CFPB scrutiny has a cost that takes millions of dollars away from programs to serve our members.”
Fonseca said recent years have seen the CFPB focus less on its statutory mission and become more focused on changing the marketplace in a “politicized” fashion.
“Change needs to come to consumer protection, and we believe the time for Congress to act is now,” Fonseca said.
The Logix FCU CEO said if Congress decides to maintain the CFPB and reform it, credit unions would recommend a series of legislative changes that include:
- Moving the leadership to a bipartisan commission
- Increasing Congressional oversight of the CFPB
- Providing greater clarity on UDAAP
- Expanding and clarifying exemptions for credit unions from the CFPB
- Increasing CFPB usage of cost-benefit analysis and SBREFA panels
- Reforming the Civil Investigative Demand (CID) process
“These statutory changes and clarifications should be combined with a renewed focus and commitment from the Bureau to be a data-driven organization that focuses on its specific statutory obligations to protect consumers from unregulated entities and bad actors operating in the financial system. New CFPB rulemaking should follow principles that will help ensure this approach,” Fonseca said.
CBA Testimony
David Pommerehn, senior counsel and assistant vice president at the Consumer Bankers Association, had strong words regarding the CFPB’s unchecked and undefined UDAAP authority.
“The Bureau's UDAAP authority has been largely undefined and closed to input from stakeholders,” Pommerehn said. “A clear and defined process will provide guardrails, which are needed to ensure regulated entities know what is, and what is not, permitted, and how they can comply. The Bureau has put all companies that it regulates at risk of inadvertent non-compliance because it is unclear how and when the abuse of this (UDAAP) standard will be applied.”
Ranking member of the subcommittee Bill Foster (D-IL) attacked the efforts of the Trump Administration and the Department of Government Efficiency (DOGE) to dismantle and shut down the agency.
Saying DOGE has abused its authority, Foster asserted that DOGE employees “raided the Bureau's headquarters, CFPB employees were told to stop all work, hundreds were let go, its contracts were cancelled. Lawsuits brought by the agency against bad actors were summarily dropped—and even the Bureau's name was ripped from the building. These are not reforms, they are illegal attacks on the CFPB's congressionally mandated existence and also attacks on dedicated civil servants…The CFPB has been the only cop on the beat and if it is shut down it will be open season on scammers. The CFPB needs to reopen and be allowed to do its job.”
What’s Going On At CFPB Today?
CFPB General Counsel Seth Frotman addressed the “attacks” on the CFPB by DOGE and the Trump Administration.
Frotman asserted that the actions of the current Administration is “taking money from working people and giving it to the rich. That speaks louder than words, especially any empty rhetoric about reprioritizing consumer protection that will be said at this hearing…You, your family, your neighbors and your community are at risk today because President Trump and Elon Musk have corruptly handed over the keys of our nation's consumer watchdog to the largest banks and tech companies in the world.”
Frotman also shared a warning about an impending financial crisis if the CFPB is not allowed to function as it did under the Biden Administration.
“We've heard a lot of attacks on CFPB leadership, but these are really attacks on dedicated public servants who wake up every single day, just trying to make their neighborhood safe,” Frotman told the subcommittee. “Many of us who work at the CFPB lived through the financial crisis and watched community after community decimated while a bunch of billionaire bankers got off scot-free. What we do every day at the Bureau, or what we did every day the Bureau, was to try to make sure that doesn't happen again. What is happening now at the Bureau, where there is no oversight over massive non-banks in this country, is bad for businesses, it is bad for consumers and they are setting up for another financial crisis in this country. And you all, sitting in these chairs, will be forced to deal with it once again.”