WASHINGTON–The sharp divide over the CFPB and government efforts to reduce or eliminate fees and to impose other regulations was apparent during a congressional hearing here, where a credit union CEO testified (see related story).
Indeed, the political divide was apparent in the name of the hearing held by the Financial Services Committee: “Politicized Financial Regulation and Its Impact on Consumer Credit and Community Development.”
Rep. Andy Barr, a Kentucky Republican who chairs the House Financial Services Subcommittee on Financial Institutions, stressed the position backed by Republicans that the Biden Administration is using “quote independent end quote” agencies to pursue its agenda, and that the Bureau’s “mandated fee caps and price controls” are part of the “leftist transformation” in financial regulation.
A ’Lazy Narrative’
“The CFPB’s (efforts) to eliminate so-called junk fees is a clear illustration of this effort, as the concept junk fees is not legally defined and the Biden administration has failed to outline any illegal activity taking place regarding fees,” said Barr. “They are leaning into the lazy narrative of corporate greed. To be clear, fees serve a purpose and I support proper disclosure and discerning use of them. Today's hearing is particularly timely given the release of the CFPB's misguided credit card late fee final rule earlier this week.”
Barr, who took time to praise Karen Harbin from his home state of Kentucky, said politics is “driving the train” at the CFPB.
“In an election year all Americans should be outraged that the cost of credit is going to skyrocket and access to it will be meaningfully restricted in the name of politics,” said Barr. “The credit card late fee rule punishes borrowers who pay on time to subsidize those who don't.”
Turning FIs into Public Utilities
Barr said fees allow financial institutions to hedge against risks, and that Democrats are seeking to turn financial institutions into public utilities.
“If the CFPB is going to operate as a political arm of the administration, then it must also be answerable to Congress through the appropriations process,” said Barr. “The CFPB seems to be in the business of eliminating competition and choice, therefore it is our duty to ensure the financial laws and regulations foster innovation and competition to ensure that all borrowers have the opportunity to access affordable financial products and services.”
Democrats Respond
Arguing the other side of the issue, Dr. Bill Foster (D-IL) said markets do not automatically work perfectly by themselves and that if “businesses are competing not on the basis of providing the best product at the best price but on the number of surprise and junk fees that they can unload on unsuspecting consumers, that is not an efficient market.
Foster said the solution is transparency and standardization of fees “so consumers can make their choices accurately.”
Foster, who noted when he was first elected to Congress in 2008 the country was in financial crisis, and the CFPB was created in part due to consumer protections that were lacking or weren’t being reinforced. He said the CFPB has fulfilled its purpose, and that surveys show 82% of Americans support the Bureau, including 77% of Republican voters.
Religious Differences
Later, again illustrating how partisan the issue is, Rep. Brad Sherman (D-CA) said “Thank God for the CFPB. It returned $17 billion back to Americans. That is the tip of iceberg. They have discouraged a whole variety of bad practices that otherwise would have cost Americans tens of billion of dollars.”
Rep. Blaine Luetkemeyer called that $17 billion “extortion money.”
Now With Free Shipping! The CUToday.info Daily News Email Keeps Getting Better!
The biggest, best and freshest news reporting in credit unions remains free, and now has an added bonus---free shipping to your email address! That’s right. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?